J.Crew Loyalty Bankruptcy

Did Fading Brand Loyalty Foreshadow J. Crew’s Chapter 11?

The January 2020 Brand Keys Customer Loyalty Engagement Index ranked J. Crew # 19 out of 20 Retail Apparel brands they tracked for sector loyalty.

More precisely, real 21st century loyalty – the degree to which a brand is seen to meet customer expectations for their Ideal in a category – is a brand KPI that changes before the rest of the brand’s economic structure begins to get better or worse. It’s an early-warning signal that your brand may be in trouble.

J.Crew Ranked #19 out of #20 Brands

The January 2020 Brand Keys Customer Loyalty Engagement Index ranked J. Crew # 19 out of 20 Retail Apparel brands they tracked for sector loyalty. That was down 4 positions from 2019 and down 2 more from 2018. “That’s been the trajectory for J. Crew for nearly a decade.”

By Robert Passikoff

It’s axiomatic – the more loyalty a brand engenders, the better customers behave toward it in the marketplace. That means they buy more more-often and are less likely to switch brands on the basis of promotions or price. With J. Crew’s loyalty status decreasing year-after-year the only thing that surprising is how surprised the category and business press sounded at the announcement that they would file for bankruptcy protection as early as today.

A decade ago J. Crew ranked #1 in the Brand Keys Customer Loyalty Engagement Index, but the loyalty arc has been very clear. It’s true that the pandemic has been an additional setback for the industry as a whole, but in the case of J. Crew it just put extra stress on a brand that wasn’t to loyalty code in the first place.

What Drives Loyalty In The Retail Apparel Sector

Brand Keys uses an independently-validated research methodology that fuses emotional and rational aspects of the categories to measure loyalty. The approach identifies four path-to-purchase behavioral drivers for an Ideal specific to the category, in this case Retail Apparel. For the Retail Apparel category those include:

  • Big Brand Buzz/Exclusive Events
  • Customizable & Personalized Quality Limited Editions
  • Omni-Channel Shopping For Value
  • Ethically & Value-Based

These assessments have been proven to be leading-indicators of consumer behavior, identifying in-market activities 12 to 18 months before they appear in traditional brand tracking or corporate balance sheets.

Out of Fashion

It’s been suggested that  J. Crew wanted to be a high fashion brand when it grew up but the combination of an overly-intense focus on fashion and taking their eyes off the quality-for-value portion of the equation resulted in a loss of loyal customers.

J. Crew hasn’t been the only Retail Apparel brand that’s in trouble for a loyalty perspective. Based on the Customer Loyalty Engagement Index, brands like Victoria’s Secret (#20 in this year’s loyalty ranking) and GAP (#18). You can’t dig yourself out a loyalty abyss on the basis of low-lower-lowest pricing strategies.

The Secret of Customer Loyalty

And therein lies the secret of customer loyalty: If you meet expectations better than the competition, customers are six times more willing to give a brand the benefit of the doubt in uncertain times. You can’t get any more ‘uncertain’ than the Covid-19 crisis. But you can be certain that brands with loyal customers will survive. Even if they have to wear masks to shop.

Robert Passikoff is Founder and CEO at Brand Keys

Robert Passikoff is founder and CEO at Brand Keys.

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