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J. Crew CEO Millard Drexler explains why the retailer is expanding into Asia

J. Crew is finally opening stores in the city. CEO Millard Drexler tells Jing Zhang why the brand sees a bright future in Asia

PUBLISHED : Monday, 19 May, 2014, 9:21am
UPDATED : Monday, 19 May, 2014, 9:21am
 

We are just days away from what could be the city's biggest fashion retail opening this year - when J. Crew's stores finally launch in Hong Kong.

After successfully testing the market in a partnership with Lane Crawford that began in 2012, the American fashion brand sees Hong Kong as a central part of its global expansion.

When I spoke with J. Crew's chairman and CEO Millard Drexler at the opening of two London stores last November, he was upbeat about the company's future foray into Hong Kong.

We're not a bling company, we're a style business and a design business
millard drexler, j. crew ceo 

We're excited about it," Drexler said in his distinctive New York accent. "Needless to say it's an important location, with important stores for us.

"We expect to learn a lot there. We are not in a rush. We follow our instinct, and our instinct is that we were ready to go into the world, into vital markets. We're going to school, essentially."

As of February 1, the company's revenues stood at US$2.4 billion, an increase of 9 per cent year on year.

The joint opening of two stores in Central marks the brand's proper re-entry into the Asian market.

"We were in Japan years ago, but we closed those shops," said Drexler. "We weren't ready to be there, the stores weren't right, or in the right locations."

News came in March that talks with Japanese company Fast Retailing (which owns Japanese high street giant Uniqlo and US labels Theory and J Brand) to acquire the brand from its private equity firm owner for about US$5 billion had broken down. Rumours persist of an initial public offering, although the company has refused to comment.

Drexler noted "the real estate in Hong Kong will be smaller, as the rents are relatively sky high, so we hope that the productivity will be sky high, too."

The two Hong Kong openings include a women's J. Crew Collection store at the IFC Mall which has an edited, luxurious selection of items featuring premium fabrications, limited edition designers, and Italian cashmere.

There will be shoes and handbags, too. The On Lan Street boutique will have the men's collections, including the Ludlow suiting, shirting and shoes, along with their range of "in Good Company" collaborations with unique brands such as Barbour, Vans and New Balance.

Drexler, credited with turning around the fortunes of Ann Taylor, Banana Republic and, most famously, Gap, has been working on J. Crew's global expansion for the past few years.

"It takes time to build reputation and loyalty in any new market. But Hong Kong is already one of our top five online markets; there's Japan, UK, Australia, Canada, and Hong Kong," he said.

The volume of middle-class mainland tourists shopping here also provides a massive opportunity for J. Crew to gain traction across the border.

"We're not a logo business, and I know people buy logos [in China]. But I hear that this is also shifting. We're not a bling company, we're a style business and a design business," he said.

Drexler believed the brand would translate well to the city, and said that, for mainland customers, it was part of "a really long-term investment and decision".

Fashion had become "an international language in a sense" since the world had turned to digital and online.

"People will hopefully see that you can shop in J. Crew and buy beautiful, hip, yet classy clothes. We're never too trendy," he said. "Then there is the pricing - we give great value."

His J. Crew strategy is about selling quality, design and value. He identifies key elements such as affordable cashmere or men's Ludlow suiting, and then promotes them.

"You can buy things for more money or less money. I like to buy value, whether it's automobiles, or homes. I think our consumer recognises that when they come."

The innovative CEO has been labelled a "retailing legend", the "merchant prince", as well as "the man who dressed America". Together with Jenna Lyons, the brand's president and executive creative director, they form a fashion power team.

Lyons' creative mash-up of quirky eccentricity with classically cool wearable pieces, has hit the right notes with consumers. Even Michelle Obama is a fan.

Over the years, J. Crew has transformed itself from a struggling American catalogue business into a serious international fashion contender with an almost cultish following. So is there a magic formula for such a turnaround?

"It starts with vision and instinct, and knowing what the opportunities are," Drexler said. "It also starts with seeing around the corner, seeing what's coming."

This skill, for which he renowned, is "a combination of innate curiosity, learning from your mistakes, knowing what you don't know, and having a great imagination", he said.

His management style has been well documented in the media, from the loudspeaker system he installed in the New York headquarters of J. Crew, to his hands-on approach to staffing and consumer experience.

"As a boss, I want total openness when it comes to comments on what you feel. I love it when people say what they think," he said.

"No one in a leadership role has done anything wonderful by themselves," Drexler said. "I've been on the board of Apple for 14 years, and people always talk about Steve Jobs. He was probably one of the most successful visionaries and business people in the world. But Steve had a great team, and you can't do it without a team."

Drexler's own team has been doing well. As of May 7, the company was operating 458 retail stores worldwide, including 266 J. Crew stores. And although people still want to link what he did with Gap and what he is doing with J. Crew, he said that was a role that finished more than 10 years ago. "Frankly, there is no comparison," he said.

"Gap has a different market, a different demographic and frankly [at J. Crew] we're not reaching to be on every street corner in the world."

Of course, there is a solid strategy to J. Crew's expansion, but some of it has to be organic and intuitive, he said. Drexler is wary of planning things too far in advance "because the world has changed more in the last 10 years than perhaps in the last 30 before that".

"Great companies continue to grow, but they grow better," he said. "A lot of them grow, but they don't necessarily get better. It's hard to manage a big, big company where you don't have this hands-on approach."

But that's not to say that he doesn't have a wish list for the immediate future of the company. The abbreviated version includes reaching a lot more people. "Once you try us, they tend to like us. We're not an elitist company, we're a friendly company and I think that we connect emotionally, and we have a sense of humour about ourselves," Drexler said.

He wanted to see the smaller division of their business called Madewell (an old workwear company founded in Massachusetts in 1937) become "a really important business and style in the world".

J. Crew's enormously successful online business needed to remain a priority, said Drexler. But the key would be maintaining, "the quality, design and craftsmanship of what we do", despite expansion.

"It can't just become this big monolithic company that pumps out things by formula," he said.

jing.zhang@scmp.com

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