J.Crew Finally Launches a Loyalty Program, Looking to End Long Losing Streak

July 31, 2018, 3:01 PM UTC

J.Crew’s shoppers have been defecting in droves for a long time now, so the apparel chain is trying something new to win back some of their loyalty: its first rewards plan open to everybody.

The chain, which has reported 13 straight quarters of sharp comparable sales declines, on Tuesday announced a loyalty program that offers standard perks such as a $5 store credit for each $200 spent and goodies like free standard shipping to people who sign up for the program, which costs nothing to join.

While J.Crew, part of J.Crew Group along with smaller but growing Madewell, does already offer rewards to its store card holders, the program, called J.Crew Rewards, goes further by being open to anyone regardless of how they pay.

The move is also the first major initiative led by President and Chief Experience Officer Adam Brotman—the former Starbucks (SBUX) digital executive behind its mobile order service hired by J.Crew five months ago to overhaul its digital firepower, and who serves as CEO James Brett’s second-in-command.

While the J.Crew Rewards perks are not particularly innovative compared to what has become standard among store chains today, the idea, Brotman said, was to get the program rolling and set the stage for J.Crew, equipped with reams of data, to offer in the near future customers personalized promotions and better targeted ads instead of sending everyone the same deals.

“Before we can do those things on an advanced level, we wanted to get this foundational element in place, which is the J.Crew loyalty program,” Brotman told Fortune.

Rewards programs might sound like a utilitarian consideration, but the successful ones can be a chain’s lifeblood. Ulta Beauty’s (ULTA) wildly popular program generates 80% of the beauty store chain’s sales and has nearly 29 million members. Brotman’s alma mater Starbucks gets 40% of its sales via its rewards system. Kohl’s has 26 million members. And the marketing spending required to land a new customer is about five times that to simply keep one, according to industry estimates.

That was thinking behind the relaunch last year by Macy’s, when it revamped its program. The department store chain gets half its sales from 10% of its shoppers, many of which were drifting to other retailers for more of their spending. And Macy’s program was frankly antiquated. So it borrowed a few moves from Nordstrom’s and Ulta’s industry-leading programs, for instance giving members first dibs on some exclusive products or access to a special event such as a fragrance launch and offering free shipping for spending above a certain threshold. These are perks that J.Crew is now offering.

Kohl’s (KSS) and J.C. Penney (JCP), are also among the many retailers to have revamped their loyalty programs in the last two years. Kohl’s, which per standard industry practice used to try to direct people to its store card, opened it up to all customers a couple of years ago, whether they wanted to pay by cash, store card or their own card, a strategy now being mimicked by J.Crew.

For J.Crew and many of its peers, the new approach to loyalty is also a key way to tame the discounting beast. J.Crew in particular has suffered from its own strategy of constantly offering discounts and coupons, to the point it has severely hurt its brand aura and trained shoppers to wait for deals. And giving the cadence of J.Crew deals, they’ve never had to wait very long.

So for J.Crew, the program is a key tool to emphasize what’s different about it and to court customers and make them feel valued. After all, those 40% off sales that pop up constantly on J.Crew’s site don’t give customers any extra goodies for being regulars.

“There’s a real emphasis now at J.Crew on personalized engagement versus just site-wide promotion,” says Brotman. “This is laying the groundwork for that.”

J.Crew the brand has a lot of work to do to win back shoppers. In the first fiscal quarter of 2018, comparable sales fell 6%. J.Crew the brand hasn’t grown in nearly three years. (Its sister brand, Madewell, continues to be red-hot but it is much smaller.) The chain has been trying to carve out a new space for itself in shoppers’ intentions, hurt by years of fashion misfires, uneven quality, and what many consumers perceived as overly high prices. And there was until not long ago a lot of turmoil in J.Crew’s top echelons: Brett, a former Williams-Sonoma executive replaced iconic leader Mickey Drexler, last year as CEO a few months after creative director Jenna Lyons stepped down.

J.Crew has begun to renew its clothing offering (though the ubiquitous sales events remain, for now at least) with efforts such as adding plus-size clothing this year. A new loyalty program on its own won’t be enough to get shoppers to give J.Crew another try. But if and when they do, J.Crew plans to be ready to keep them and cultivate them.

“This is a key step in establishing a relationship strategy with our customers,” Brotman said. “It’s a key piece of a bigger picture.”


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