Two questions for retail success

Vanessa Friedman of the FT says there were two reasons why Mickey Drexler helped clothes retailer J Crew to sales of $1.7billion in his eight years with the company (previously he took Gap from $400 million to $14 billion in 18 years).

First, he saw the opportunity to raise the style quality and move to where there was a “lot of white space” between very cheap clothes and designer.

Second, he “took a page from Brooks Brothers’ book and it was a high margin, high profit page: you don’t pay wholesale. Because if you pay wholesale you have two problems: one, discounters – you always have to drop your prices; and two, margin. Say something costs you $50 to make. You mark it up to $150 for wholesale. The retailers mark it up 2.2 or 2.3 times, which is standard. You can’t undersell them, so you have to sell your sweater for $350. But if you are the only retailer, you sell it for $150.”

Two questions for local retailers:

  1. Where is the white space for you?
  2. What can you source direct from the supplier and control the margin of?


This article doesn't have any comments yet, be the first!

Become a member to have your say