Monday, May 8, 2017

The New Yorker: J. Crew "2 Billion Dollars in Debt"

New Haven's J. Crew
This New Yorker article was sent this morning from a reader.
The current state of J. Crew - 2 billion dollars in debt - brings several questions to mind.

Is this the result of the same tide that has impacted all clothing retailers?  Brands like Sears and J.C Penney are facing their own cliffs, and Lands End, L.L. Bean and Ralph Lauren appear to be scrambling.  Does the focus on any one company or market too specifically represent a Rorschach test of any author?  Is this the inevitable conclusion of decades of selling over-priced commoditized clothes that are trendy and of poor quality?  Did the article brush off too neatly the importance of aesthetics and construction?  Is this result predicable given the overall anti-intellectual commentary around clothing and the clothing industry by academics and the press?  (We are, as a culture, at least two decades more sophisticated in talking about food than clothes.)  Should clothing companies that used lifestyle to sell disposal clothes be surprised when customers choose to follow the lifestyle (travel, etc.) and forget the clothes?

Or is this more relevant to the current incarnation of "preppy?"  Specifically, the term was resurrected around 2009 as something similar to but different than the 1980 version of preppy, which itself was derivative of a regional culture before that (which is shown beautifully in these Westport, Connecticut New Yorker covers <http://www.saltwaternewengland.com/2015/04/the-new-yorkers-geraghty-era-at.html>).   This current preppy, let's call it Naught Preppy, was always doomed as impractical and more shtick than not.  It was aimed at some theoretical, well off, easily influenced, social media creature that has turned out to be more elusive than the Loch Ness Monster, but that didn't (and still doesn't) stop companies from trying.  Naught Preppy gave us L.L. Bean Signature, Ralph Lauren Rugby, and dozens of smaller shops as well.  The first real campaign of Naught Preppy was "Meet the Hilfigers" launched in 2010, an ironic riff on Ralph Lauren's earlier campaigns which itself echoed Slim Aarons' initial work.

Or is this a J. Crew issue?  Many have argued for years that J. Crew was never a preppy company, and was born instead out of opportunistic marketing rather than any DNA forged in producing great clothes.

Does brand over product never end well?

51 comments:

  1. "...preppy clothes may be inherently nostalgic, but the whimsy of these items seemed over the top. During the Obama years, nostalgia might have seemed harmless, even admirable, but today it feels like a troubled and doubtful impulse."

    I dislike the presumption that “nostalgia” always translates into a flight of fancy; the pursuit of a time that can no longer be as a means to irresponsibly deny present realities. I think the responsible thing to do is to stop keeping up with things simply because they are new and now if to do so means forgoing what’s timeless and true. Is dressing like a denizen of a dystopian nightmare somehow necessary to show I care about what’s happening in the world? The nostalgia I think of in relation to preppy “fashion” is anything but impulsive. Of course there was nothing disposable about it which is bad for business in the short-term. I still have many of the clothes I bought in the late 1990s when I lived in Freeport literally two blocks from L.L.Bean. They were made in the USA. My L.L.Bean duffle coat from 1997 has real leather toggle accents instead of plastic like my newer one as well as real wooden buttons. I grew up with the idea that I would always own fewer well made things that cost more but weren’t out of reach for the working middle class. That seems to be an impossible thing today and for that I am most nostalgic.

    By the way, does anyone remember when L.L.Bean launched the short-lived “Freeport Studio” for women in 1999?

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    1. I purchased a cute Freeport Studio handbag that is still in use. It has held up very well.

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    2. Yes I do. That didn't seem to go anywhere.

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  2. Well, a billion dollars isn't what it used to be. That's what my wife keeps reminding me but she says "million."

    The problem with the clothing business is that there are a dozen things happening and nobody controls any of them. Once upon a time, you bought clothes at a local men's shop that stocked what the local men and boys wore and, alternatively, the local men and boys wore what the local shops carried. College towns all over the country had shops like that that sold what also used to be called "collegiate" style clothing. I don't believe there are any such stores anymore.

    I'm not sure how much difference the internet has made because I think the changes began before the Internet (B.I.?). Fashion, if you can call it that, comes from the street. College kids still wear clothes except in a few places. So what do they wear and where did they get it?

    What can't be done is to stop changes in fashion or to seriously revive a style. Remember the so-called Edwardian styles of around 1970? No, I didn't think so.

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  3. This is a J. Crew issue, but it’s also symptomatic of a larger market issue. At its most basic level, it comes down to poor management and a failure to accurately judge where the future of the market was going. Retail clothers of all stripes have been struggling, from traditional department stores like Macy’s, Sears, and J.C. Penny, to more niche retailers like Lands End, L.L. Bean and Ralph Lauren. The day of the department store is over; they’re no longer economically viable in the internet age with instant access to a myriad of competitors, who often provide better quality clothing at more competitive prices. For the niche retailers, I think it’s as you point out: the result of decades of selling over-priced, commoditized clothes that may be “trendy” but are of increasingly poor quality. Lamentably, “preppy” has become more about “fashion” than “style”, but I think there is hope for the future. What we’re witnessing today is the necessary, and sorely needed, “creative destruction” that will ultimately ensure that preppy “style” trumps “preppy” fashion. While “traditional preppy”, which I prefer to refer to as “paleo preppy” (J. Press, Brooks Brothers, etc.) in contrast to “neo preppy” (J. Crew, Vinyard Vines, etc.), was always more about “value” than “price”, should have hope for the future: they will have more choice of better quality items, at more palatable prices.

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    1. What year are we speaking of anon?

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  4. For me the drop in quality with oftentimes higher prices have turned me off of most of these big fashion companies. I now buy most clothes from high quality small companies that make their clothes in the US, (there are so many good ones now) or I buy vintage.

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  5. Speaking generally, the common denominator is that they all treated their customers like dirt. They didn’t care about us, so why should we care about them? Fact of it is, their products’ quality declined a long time ago

    They participated in closing American mills and workshops where Americans were employed making American products with their labels on them, and shipped those jobs to South and Central America and Asia, especially China. But they kept the prices the same or higher to reap extraordinary profits while the economy hummed, and sold us the cheap foreign-made junk that put our neighbors out of work.

    Now that the economy has been in a slump for nearly a decade, the American Middle Class is barely holding on by its fingernails, and high-end brands are being seriously squeezed by the vastly reduced amount of money floating around for non-essential purchases, we are supposed to care what happens to them? Sorry. Maybe in Newport. Not in Peoria.

    Woke up crabby this morning.

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    1. Regardless of waking up crabby, I believe you hit the nail squarely on the head. Retailers, both internet-based as well as brick-and-mortar, must reinvent themselves to adjust to the economy. My family has to adjust and prioritize needs, so why should they be any different? Adam Smith's Invisible Hand.

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  6. @ Anonymous at 12:37PM: Very well said!

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    1. Not crabby, just the truth...well-put!

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  7. This culture has been in a race to the bottom for a number of years, led by the "artistic" products of Hollywood and "fashion" that resembles a freak show. When your young people are being taught to self-identify with gangsters, meth cookers, prostitutes, and crazies you know we're in trouble. Movies are comic-book violence, TV aspires to dead, rotting CGI bodies and aberrant prison behavior and "reality" resembling nothing of the kind. "Made ya look" is the low common denominator.

    Due to the rising (and increasingly unhinged) fashion of campus radicalism,
    we're in a moment where all things smacking of "white privilege" are too hot to touch; and I'd place preppy clothing high on the list of what's not "cool" among the Snowflake Generation who'd rather "appropriate" the dress of disaffected minorities if not actual homeless people in the name of "empathy."
    The result is a bunch of hypersensitive, unemployable slobs who'll still be in their parents' basements (one hopes) when they're 40 at the rate they're going.
    The resumes listing schools who foster obnoxious behavior will be "occupying" many a circular file of people who might have hired them had they acted like adults aspiring to a career, instead of toddlers throwing tantrums.

    The majority of Americans not living in Silicon Valley or the Acela Corridor have frankly HAD IT with all this. Voting with their checkbooks, they have stopped consuming "products" that signify the cultural race to the bottom. If the purveyors of traditional clothing are smart, they can fire the "fashion" marketers trying to pander to the dystopians and instead serve their real clientele--those ages 35 to 70 who need respectable and suitable clothing to wear to work, who have actual jobs where they make the lion's share of the nation's money and have it to spend on quality goods.

    Stop trying to be all things to all people.

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    1. ...a cold compress helps.

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    2. This is the best thing I've read in a long time. Spot on.

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    3. "Stop trying to be all things to all people."

      That's the liberal mindset. They try to be everything to everyone but end up being nothing to anyone.

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    4. I have two points to contribute to this conversation...and stem more from the conversation than from the J.Crew article:

      My husband and I put the TV in the basement several years ago (It doubles as our gym - we use a lot of workout videos and needed a place to play them). We're better off for it. I also unsubscribed from facebook, deleted twitter, and so on...

      Because we've tuned out from a lot of the media we have developed a distinct life and personal style that is isolated from what's on TV and the media. There's no one to keep up with. We are entirely our own people. We wear what feels right and fits the task. I dress like a grown-up because I am one. None of this "adulting" stuff, which makes adulthood seem like something temporary you put on for the sake of paying your bills and then discard at the close of your workday or after you're done signing your mortgage papers...

      Second...I believe that it's important for there to be a time in a young persons life to experiment. To try things out. To dress off kilter, to drop the moorings and go out. College is and always has been the time for this. I am certain that it's developmentally appropriate for college to be a time of experimentation and seeing what life outside of the nest you grew up in is like. If your parents raised you in a way that was wise and given you a strong foundation of truth, values, and integrity, you will return to that in a way that is wholly your own and be stronger because of it. I'm not talking about out-and-out craziness - this isn't the time to keep up with the kardashians - but wearing the latest thing from forever 21, making friends with people who are nothing like you and trying to understand them as people, being forced to live with a stranger in the dorms, trying out new things, and making mistakes are all part of being in college. I'm not for the extended adolescence that stretches into a person's thirties and beyond but I don't see anything unreasonable about young people in college trying out new things, moving towards the unfamiliar...it's part of the process of becoming an independent adult. What I am more concerned about is a lack of values instilled in younger people for them to return to when they have reached the limits of their wandering and are ready to put down roots. The issue is not the students but a lack of values and Societal guidance. Simply writing off a generation as "Snowflakes" and hoping for them to have miserable lives dooms them (and our larger society) to failure. Instead, I respectfully suggest that you work towards shifting this in whatever community you have access to. Start a gardening club. Take someone in their 20's out sailing and teach them how hard work can be excellent fun. Teach them personal finance under the guise of an investment club...there are endless ways to instill common sense values.

      "When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put the ways of childhood behind me."

      - ER

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    5. Blaming Hollywood and TV for leading the race to the bottom is to ignore the reality that this plummeting sense of values is a by-product of American public schools and their inability to teach anything other than how to pass a mandated test. We are graduating kids who even at the end of their college years can't write a coherent sentence, speak another language, solve a simple quadratic equation, name the 50 states of the union let alone locate them on a map. Our Precious Snowflakes learn nothing at home, either, as parents think it's the school's job to parent their children while they work hard at making their children their friend. And they do that by catering to their every whim, telling them they are winners when they come in last, and setting low expectations in terms of social behavior.

      If you attended any college in the US during the late '60s and early '70s you know that what passes for campus radicalism today is a mere wisp of smoke compared to the real fires of the Viet Nam era. Anger without a cause is the best the Snowflake can muster in the absence of a world vision or moral foundation.

      How does this relate to the demise of clothing stores? J. Crew was NEVER about value. Its goods were horrendously over priced, it's selection limited and arrogantly focused on a body size that eliminated a large portion of the population. And you can substitute Ralph Lauren, the Gap, and a host of other stores for J. Crew. A Snowflake with money to spend will never spend it at these stores. These retail locations are a bell weather for what is to come as the reality of paying off huge student loans without a job becomes an even greater influence on the economy.

      Better buckle-up...it's going to be a bumpy ride

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    6. Brilliant, as always, Greenfield. I could use a daily dose of your words, and so could the whining snowflakes--if they could actually read anything longer than a tweet. Oh, I do see plenty of those since I live in a college town: Lexington, VA, which is hone to Washington & Lee and Virginia Military Institute. VMI does not cater to snowflakes, of course, but W&L...egad! There are those who major in "poverty studies," and they are the ones you so accurately describe as dressing to emulate the disaffected. W&L has changed drastically, as we have alums in the family from back in the day. It used to be a very "preppy" school. Once again, Greenfield, you made my day. I so appreciate people who truly get it and can really say it!

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  8. The quality of the clothes at J. Crew has fallen dramatically. During a recent visit, I saw paper-thin fabrics and poor workmanship that signaled "cheap". Old Navy and H&M made this type of clothing - cheap and disposable - popular and unfortunately, many retailers followed suit. I'm not in the garment industry, so don't know if that choice was made out of necessity or simply bad managers chasing a fad. Anyway, what I am happy about is that, so far, LL Bean has resisted this trend and continues to provide quality clothing at fair prices.

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    1. Although now even L.L. Bean is having issues. With their new CEO (who I believe came to them from Wal-Mart/China) they have some new computer system that is causing them problems in filling orders and delivering goods. Even their usual excellent customer service is trying my patience and has not been up to its usual standard (have made attempts to place some orders... never had such problems with L.L. Bean before-- NEVER!)

      As for J Crew I have two wool scarves from them.. otherwise the other items are not cut for me and my hips.

      Even Old Navy used to have much better quality than what they now currently sell.

      --EM

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    2. That's right, they cut their quality but didn't cut their prices. You cannot compete with H&M and Old Navy by offering a slightly better product at 4 times the price. I also think the J. Crew Factory brand is cannibalizing sales from mainline J. Crew.

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  9. People just have a lot of other needs to which they are funneling their hard earned money. The middle class, that incubator of dreams and aspiration, may be facing the meteor of its demise. If you have more than one kid in college, you’re not going to shop at J. Crew. You’re going to hang on to that hand-me-down Made in Great Britain Burberry raincoat from your deceased Aunt Jane that just needs a stitch on the cuff and it’s just fine.

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  10. http://www.prnewswire.com/news-releases/jcrew-group-inc-announces-fourth-quarter-and-fiscal-2016-results-300427223.html

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  11. J. Crew was never the real deal. Some of their clothing wasn't bad, a long time ago, but they were always pretenders to the throne.

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  12. I've only visited the J Crew store in London's Regent Street. It was full of over-priced tat and consumers have cheaper, better quality alternatives. The same applies to other brands nearby - including PRL, Brooks Brothers, Gant and Hackett.

    Who wants to pay premium prices for second rate merchandise that is made in China and Asia? I can buy high quality, made in UK clothes at lower prices? I'll stick to Cordings and Oliver Brown. You get better service too.

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  13. Interesting to note that LL Bean catalogue in the 60's had page after page of classic pieces described "for men AND women";jeans, flannels, shirts, jackets, sweaters etc. Timeless clothing is gender neutral. M. Aldrich has shown us that for years.

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  14. Once again, my fellow readers help me understand and articulate what I have been seeing for years! I believe, however, quality clothing for men is easier to find than for ladies. The House of Bruar has wonderful options are not available for small women, sized US 2-4.

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    1. True. Have couple sweaters from House Of Bruar. I am petite 2-4 and the sweaters are longer than I prefer however the color selection and quality are quite good. Skirts are truly classic. PA

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  15. J. Crew was never the "best" but at one point managed to offer attractive, casual "secret wash" shirts for men. I've never cared for their trousers or footwear, but still have a nice (genuine) English Tweed jacket and several J. Crew ties in classic patterns; they look and wear quite well. By 2010, I felt that J. Crew's style direction had become scattershot and the quality missing. In earlier days, some good if not classic items were sold by J. Crew before they lost their way.

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  16. I don't know how Zara does so well but it has taken over the J Crew demographics for sure. Billions a year in profit seems like they can't be wrong but also wonder how long it will be before clients move on to something else by which it seems the market is going to be H&M or Zara and Chanel in about 10 years.

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    1. Zara, like Anthropologie, offers enticing eye-candy made of cheap materials. These products are seductive but will never stand the test of time.

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    2. My teenage daughter shops at Zara, having grown tired of H&M. I find nothing of interest in Zara men's attire, and usually browse the J&M store down the hall while she shops!

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    3. Anthropologie has some lovely high-quality items made in the US. For what it offers, and comparatively speaking, it is quite a bargain.

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  17. I think I preferred this blog without the reader comments feature. What a bitter lot. Do the comments above describe your own kids and grandkids, or just everybody else's?

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    1. I agree, so many negative emotional labels for people, let alone rants in run on sentences. Does anyone remember being a young adult? Oh guess not....

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    2. Thank you! I ththought this was an article about the state of retail, but I'm reading through these comments and I'm appalled at the negativity at outright animosity that exists to the next generation. But yet all of them will likely point to their own children or relative as an exception. In the words of The Who, "The Kids Are Alright"

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  18. J Crew used to have nice flip flops. My last purchase from them was a cashmere sweater (bought online) ended up being so thin that I have to wear something underneath it to avoid offending anyone.

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  19. The problem with J Crew is that they decided to abandon actual classic preppy style and quality in favor of the hipster version of preppy - abandoning their core demographic and embracing an incredibly fickle one that would never dare to buy multiple items of the same brand unless they are all found at the secondhand shop. I never see anything I like in their catalogs any more, but in the late 90's I wanted almost everything in one.

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  20. ubi swne ibi crabby comments

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  21. When I read this piece I immediately thought of Muffy’s posts on “The Overview of Companies, Past and Present …” originally published October 25, 2014 and then updated in 2016. In these posts, she does a great job of illustrating companies along a time line – from “Crucible” to “Company Shell” and makes the case that ownership does matter. It’s definitely worth reading again.

    In the case of J. Crew (private equity owned) or Polo Ralph Lauren (publicly traded) the company’s fiduciary responsibility is to the owners whom, I think is safe to say, are more interested in a return on their investment and future growth than if my khakis have on-seam pockets. FYI - if you’re keeping track at home – Bill’s: private equity, GAP: publicly traded, Brooks Brothers: on its fourth or fifth ill-suited marriage.

    I think a more interesting question might be: “What is the life expectancy of an investor owned “lifestyle” company?” Or perhaps “why are we surprised the demise of these companies?” Ralph Lauren reported revenue of $7.4 billion in 2016 (which was down from 2015) and the investors expect more – so is this sustainable? You have to sell a heck of a lot of polo’s and khaki’s year after year to hit those numbers. As an aside - It’s also interesting to note that that it is the private equity guru’s that have that pesky $2b problem at J.Crew.

    Thankfully we have folks like David & Serena (Mercer & Sons), the Huber’s (O’Connell’s) and others who have recognized an opportunity and who have had the foresight to blend quality merchandise (as we define it) along with technology (internet, etc.) to sustain and build their businesses. Their ownership matters.

    TAC

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  22. I love all the very thoughtful comments I've read here. For me, I stopped shopping at J. Crew years ago, as the price of their clothing far outweighed the quality. I also found so much of it to be trendy rather than what I (in my mid 40s) consider preppy. I do still have a few items of J. Crew clothing that I got as a teenager in the 80s, and I still love them. They have also held up to 30 years of wear, something that I fear would never happen now.

    I agree with so many of the other commenters, that for most mass-market retailers, quality has gone by the wayside and clothing is considered nearly disposable. That's fine if I'm purchasing something on-trend that I only plan to wear for a season or two - then I'm happy to shop at Zara, Mango, or somewhere like that where the quality may not be outstanding but neither is the cost.

    I really noticed the dramatic shift in quality when I went on a search a couple of years ago for a pair of quality trousers. It's nearly impossible today to find women's pants that are actually lined. I finally found a pair at Nordstrom, but it took a great deal of time and research. Fortunately, I'm picky and was willing to wait to find something high quality.

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  23. J. Crew fits in the category of "I just don't get it." Most of their stuff is way overpriced, and the quality and the selection have steadily gone down. It's not so much preppy as it is hipster. And they think you're stupid.
    They'll sell you a Timex watch for $130 when you can buy the same thing directly from Timex on the net for $45.

    But they're not alone. I wanted to get a new pair of Bass weejuns a few weeks ago. You now cannot find them in any store here. The Bass outlet went under, and stores like Macy's which used to sell both weejuns and the more expensive Cole Haan penny loafer (which used to be worth the money) are now just selling cheap plastic shoes from China with a phony Italian name on them.

    For a while, Lands' End was carrying Bass shoes, so I checked there online. No more. But they were selling a generic shoe they called a "penny loafer." So I thought, I'll try those. What came was again cheap Chinese shoes that didn't even look like penny loafers, but had a piece of faux stitched leather on top that was supposed to be the penny insert, but was nothing like it. Sold as "burgundy" brown, the finish began coming off within ONE WEEK after I started wearing them. The "burgundy" color simply scraped off to reveal a garish pink color underneath.

    That is the state of goods you can now buy in the United States. Basically, everything is going down the tubes, and I'm not surprised all these companies are going under. They are selling shoddy merchandise which they should be embarrassed to be marketing.

    Ironically, you can now buy better quality clothing in Korea for just a small fraction of the price charged by American retailers for junk. As a result, Koreans now dress much more nicely than Americans. When you are in other countries and you realize how much the U.S. has fallen apart in the last decade or so, it's really sad, and scary what it says about our future.

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    1. I purchased two pairs of Weejuns at a Bass outlet in South Portland, Maine a few weeks ago. They sell them on their website and Zappos.

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  24. Yes, Chinese manufacturers are very capable of producing a very high quality product, if the business partner requires it. And as the biggest trading partner to other countries in the region, it accommodates the very exacting specifications for apparel required, i.e., woven buttonholes, french seams, gusseted linings, etc. Anyone that has gone to shops in Japan, South Korea, Hong Kong, Singapore etc., can attest to that. Someone in this thread put in a link to J. Crew's 4th quarter financial statement - gentle readers, please note the words Gross Margin. China has the resources & trained labor, but higher quality/workmanship requires materials and skilled workers' wages (even in RMB) that these conglomerates surmise will cut into Margin and prevent them from providing shareholders with "value".

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    1. "Anyone that has gone to shops in Japan, South Korea, Hong Kong, Singapore etc., can attest to that."

      Exactly. I mainly spend time in Korea, and it astounds me that you can find perfectly fine men's suits, shirts and ties for 1/4 of what American retailers will try to charge you for goods of lesser quality. I can buy really cool, Hermes style quality printed ties out of little men's shops in the subway stations in Seoul for 10,000 - 20,000 won (ten to twenty dollars US). I think there are now some structural differences--for example, Korea's tax and regulatory burden is much, much less than the U.S., and the standard of living is now higher (while costs are less). Also there is much more business competition in Korea which keeps prices more reasonable. And, unlike America, many if not most Korean men still wear suits every day. But still, I think we are being played for suckers by the American retailers, because we don't realize how badly we are being ripped off and they are now all nameless conglomerates with no accountability. The old style craftsmen are all going out of business.

      The last independent business tailor (immigrant from India) here recently announced they will be shutting down. That means if I need a new suit, I now will have to make the decision whether to go to San Francisco, Korea or Hong Kong to buy a real suit that isn't some disgrace sold by Men's Wearhouse. I don't trust what I will find in San Francisco, and my guess is I'm going to Korea because I know you can find good stuff there.

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  25. When I was little, my clothes came from G.C. Murphy. Sears was too expensive for us.

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  26. I'm just amazed that anyone would loan J-Crew 2 BILLION dollars.

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  27. I really liked the clothes. However, as a 40+ mom, none of it fit me. I thought the cashmere was beautiful and classic, the seasonal styles very smart and mostly just adored all of it. Too bad they didn't consider anyone over a certain age and over a size 8 in their marketing. Honestly, a large was even snug on a pal that is size 4!

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