More proof that the retail clothing industry is undergoing a transformation as consumers flock to discount vendors comes courtesy of downsizing news from both J. Crew and Gap.
Both retailers have announced plans to make major staffing cuts while one also intends to shutter some of its stores.
J. Crew Trimming Jobs, Rethinking Quality
J. Crew’s downsizing announcement comes amid news of lackluster sales figures. J. Crew’s sales toppled by 5% in the three-month period that ended May 2.
The decline in income is being blamed on merchandise mistakes, mainly in regard to knits and sweaters that failed to resonate with consumers.
The company’s overemphasis of its “Collection” line is also thought to have come at the expense of other, more affordable items.
With $595 shirts and $950 dresses in that product line, the collection is out of reach for many consumers.
J. Crew has announced strategic changes meant to stem the flow of losses. The company intends to eliminate 175 jobs, mostly from its New York headquarters.
Its leadership has also acknowledged the mistakes that may have driven consumers from J. Crew’s doors and is taking steps to remedy them.
Closing the ‘Gap’ to Shore Up Earnings
J. Crew isn’t the only retailer to announce downsizing plans to combat slumping sales.
Gap, the country’s largest specialty clothing store chain, has announced the impending closing of 140 stores throughout North America. It also intends to cut about 250 jobs, mainly at its headquarters.
Another 175 stores in North America and Europe are also on the possible chopping block over the next few years.
“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” Art Peck, Gap’s CEO, explained in a statement.
While Gap full-priced retail outlets are closing, the company’s outlet locations will remain untouched. The move will leave the company with an estimated 500 full-price stores and 300 outlets.
The closings are expected to save the chain an estimated $25 million annually starting in 2016.
Analysts say news out of J. Crew and Gap coincides with industrywide price-cutting measures that have come on the heels of declining mall traffic.
While Gap and J. Crew are shoring up their assets, other chains such as Wet Seal, Deb and Delia’s have had to shutter their doors as competition continues to grow from discounters like Nordstrom Rack, Forever 21 and T.J. Maxx.
Both J. Crew and Gap have also attempted to shine their full-price stores’ luster by slashing prices in recent weeks.
Some of the offerings in the full-priced chains, in fact, have been selling for less than comparable items in the stores’ outlet locations.
Whether the moves will be enough to right size the two retail giants remains to be seen.
Regardless, J. Crew’s CEO Mickey Drexler indicated on a conference call that “there is work to be done and we’re on it.”
