We went to J. Crew and saw why sales are plummeting

j crew may 27Mallory Schlossberg/Business Insider

Once a great retail success story, J. Crew has been struggling in recent years.

J. Crew's sales slid 8% in the most recent quarter, with the company blaming a "challenging retail environment."

It's true - it's rough out there for most retailers -but a walk around the store shows why the company may be having a hard time getting consumers to pay a premium for its clothing.

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Here's what you would have been greeted with if you walked into the company's New York City Flatiron store at the end of May.

Here's what you would have been greeted with if you walked into the company's New York City Flatiron store at the end of May.

Promotions are common, especially around Memorial Day, but this eerily reminds us of J. Crew's neighbor Banana Republic.

Because just like the ailing Banana Republic, J. Crew doesn't let you forget that you can get an extra percentage off your purchase.

Because just like the ailing Banana Republic, J. Crew doesn't let you forget that you can get an extra percentage off your purchase.

J. Crew has been working to bring customers back into stores.

J. Crew has been working to bring customers back into stores.

Though style is subjective, J. Crew has faced criticism that its styles have been too trendy to attract customers who got hooked on basics.

Though style is subjective, J. Crew has faced criticism that its styles have been too trendy to attract customers who got hooked on basics.

Source: Business Insider

It looks like the company is trying to display more classics, like this t-shirt.

It looks like the company is trying to display more classics, like this t-shirt.

In September, the company said it would be going back to basics. A selection of simple apparel with bright colors is evident of that.

In September, the company said it would be going back to basics. A selection of simple apparel with bright colors is evident of that.

Source: Business Insider

...as is a wall full of gingham.

...as is a wall full of gingham.

The company is selling some on-trend apparel, too, like this off-the-shoulder top.

The company is selling some on-trend apparel, too, like this off-the-shoulder top.

But a few blocks down, customers can get off-the-shoulder tops at other stores for much less, like H&M and Zara.

The store also shows off its bridal business, which has sold unusual bridal trends, such as wedding pants.

The store also shows off its bridal business, which has sold unusual bridal trends, such as wedding pants.

"Nothing can change the simplicity and timelessness of a perfect blazer — it is at once familiar and made fresh by changing the context," Creative Director Jenna Lyons said in an email interview with Vogue last year.

"Nothing can change the simplicity and timelessness of a perfect blazer — it is at once familiar and made fresh by changing the context," Creative Director Jenna Lyons said in an email interview with Vogue last year.

Source: Vogue

...But no matter if consumers like the apparel or not, they've been conditioned to not pay full price.

...But no matter if consumers like the apparel or not, they've been conditioned to not pay full price.

"It starts to train the customer to expect 30% off or 40% off going forward, and the only way to untrain her is to have a big fashion hit that they happen to buy very little of, and train her to start [shopping] more like [the store was] a fast fashion retailer," Mizuho Securities Managing Director, Betty Chen, told Business Insider

The company's wear-to-work section has been a bright spot.

The company's wear-to-work section has been a bright spot.

In fact, this is one of the reasons why — full disclosure — I occasionally shop at J. Crew. It sells dresses in my size that actually fit me. But I've got to admit: I've never paid full price for a dress there.

It raises the question: would these ensembles stand out to consumers who already might have been hesitant to walk into the stores?

It raises the question: would these ensembles stand out to consumers who already might have been hesitant to walk into the stores?

Here's the sale section.

Here's the sale section.

The clearance section tells the story that every other clearance section tells: excess inventory and unwanted, misfit apparel. The excess of sweaters is not entirely J. Crew's fault; pretty much every other traditional apparel retailer has blamed slipping sales on unseasonable weather this past fall and winter.

The clearance section tells the story that every other clearance section tells: excess inventory and unwanted, misfit apparel. The excess of sweaters is not entirely J. Crew's fault; pretty much every other traditional apparel retailer has blamed slipping sales on unseasonable weather this past fall and winter.

Though sales are often necessary for a retailer, it can be hard to get customers to pay full price when they come to expect discounts. That could be especially harmful for a brand like J. Crew that's trying to restore its image.

Though sales are often necessary for a retailer, it can be hard to get customers to pay full price when they come to expect discounts. That could be especially harmful for a brand like J. Crew that's trying to restore its image.

"That people are unwilling to pay full price means that discounting at mainstream stores and via the mainstream website is also very frequent," Neil Saunders, CEO of consulting firm Conlumino wrote in a note to clients last quarter. "While this is a necessary evil to clear down inventory, J. Crew is building a reputation as a retailer from which customers should never buy at full price — something that is hampering its ability to rebuild its brand and price integrity."

There's a second sale section, too.

There's a second sale section, too.

Even brightly colored summer garb is discounted.

Even brightly colored summer garb is discounted.

But once the company clears excess inventory this summer, there's good news: hailed designer Somsack Sikhoumuong's (formerly of successful sister line Madewell) first line for J. Crew will debut come fall of this year.

Some of this store is in disarray, detracting from any level of luxury. However, there appeared — on the surface (or on the first level) — to be an onslaught of customer service.

Some of this store is in disarray, detracting from any level of luxury. However, there appeared — on the surface (or on the first level)  — to be an onslaught of customer service.

And while the Flatiron store is not wholly representative of the company's entire business, it's pretty telling if a major store in a major city is lacking such attention to detail. Why pay a premium in a place characterized by disarray?

And while the Flatiron store is not wholly representative of the company's entire business, it's pretty telling if a major store in a major city is lacking such attention to detail. Why pay a premium in a place characterized by disarray?

Fortunately, J. Crew is making some steps in the right direction.

Fortunately, J. Crew is making some steps in the right direction.

CEO Mickey Drexler encouraged shoppers to email him to tell him exactly what he wants.

"Our job is to give them what they expect," Drexler said on an earnings call in August.

He pointed to do the company's relatively new CFO, Michael J. Nicholson, who had a "stellar history of controlling expenses at Ann Inc.," where he previously worked.

"If he can bring over similar measures at J. Crew, that would be instrumental," she said.

That — coupled with fashion (and quality) that customers want and are willing to pay a premium for — could potentially help solve some of J. Crew's problems. Ideally for J. Crew, Sikhounmuong's designs will be a major boon.

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