New York - In their heyday, middle market mall brands reigned as royalty in American fashion and retail. The Gaps, Banana Republics, and J. Crews of the world were go-to apparel stores for those looking for everything from something casual to hang out with their friends to more formalwear in the case of Banana Republic and J. Crew. In the rising era of fast fashion, these brands started losing their ground to the likes of Zara and H&M, though.
The status of these brands was helped in no part by the Great Recession, which shrunk consumers' disposable income for clothes. During the economic rebound under the Obama Administration, middle market brands saw a rebound though. J. Crew can thank Michelle Obama for its stellar growth in the late ‘00s and early 2010s. Thanks to Michelle Obama’s penchant for the occasional head-to-toe J. Crew ensemble and mix-and-matching her J. Crew pieces with higher-end American designers, J. Crew became one of the most talked about middle market brands in America. Then they weren’t.
Can middle market brands still thrive?
As the wealth gap in America widened, consumers' penchant for fast fashion became a necessity, with less disposable income to spend on clothes. At the same, the democratization of luxury brands also led to an increased focus on people buying or trying to acquire luxury. The high-low style of dressing came into play, with people happy to pair an investment piece, like a Louis Vuitton bag, with an H&M dress.
In the Spring of 2022, Gap Inc., the parent company of Gap, Banana Republic, and Old Navy, reported a 162 million dollar loss in the first quarter of 2022. Net sales fell 13 percent to 3.5 billion dollars. Former Gap Inc. CEO, Sonia Syngal, had a plan to restabilize Old Navy after the losses, but due to her ouster, that will fall in someone else’s lap.
J. Crew had been on the decline for quite some time when they filed for bankruptcy in May 2020 during the height of COVID-19 lockdowns. Apparel companies suffered across the board during the COVID-19 lockdowns, but for brands and retailers already in a fragile state, the lockdowns only served to exasperate their woes.
All hope was not lost for J. Crew. Before the pandemic, the company saw an overall sales increase of 2 percent last year to 2.5 billion dollars, but sales at J. Crew were down 1 percent, and their sister brand Madewell saw sales increase 10 percent. Madewell is the sweet spot in proving consumers still shop middle market brands.
The company, which is best known for its denim, has helped carry J. Crew’s portfolio since the flagship brand's initial fall from grace. J. Crew had hoped to launch an IPO for Madewell to help pay down the company’s debt, but COVID-19 put a wrench in those plans.
To help revitalize J. Crew, specifically the menswear, the company brought on Noah Babenzien, a former creative director of cult streetwear brand Supreme. Olympia Gayot, who was a design director at J. Crew during its heyday, was brought on as executive vice president of women’s design. While the long-term effects of J. Crew’s turnaround strategy are still a bit early to report, judging by the reaction to Babenzien’s debut collection on social media, there’s hope.
The middle market consumer hasn’t gone the way of the dodo brand, people’s approach to trends ebbs much faster than it used to. With rising inflation and economic woes, people are also more cautious about where they spend their money. In the immortal words of Heidi Klum, “Fashion, one day you’re in, the next you’re out.” As trends come and go and brands fall in and out of popularity, every brand will have its moments of crowning glory and its moments of engineering turnaround plans. For now, the middle market consumer is here to stay, it’s just a matter of how to get and keep their attention and retain their business.