In 2015, Joe Fresh was experiencing some serious growing pains. The Loblaw-Cos.-owned fast-fashion brand, so popular in grocery stores across Canada, was struggling to break into the brutally competitive U.S. market.
It had lost its creator and namesake, Joe Mimran; in May, it announced the end of its distribution deal with J.C. Penney, and the closure of all but one of its New York City storefronts.
So far in 2016, it isn’t fairing much better—this time last year, then-president Mario Grauso stated that the line would focus on its stand-alone store networks and international partnerships; in June, it quietly closed its remaining U.S. store. (On July 21, Loblaw announced that Grauso would be leaving Joe Fresh in September for another Weston family holding, Holt Renfrew and Co.).
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While there has been plenty of speculation around the brand’s future (or lack thereof) in the States, it remains to be seen how it will fare in other international markets. With existing stores in South Korea, Saudi Arabia, Mexico and the Philippines, the brand plans to open 140 locations in 23 countries over the next four years.
Joe Fresh launched six Manhattan locations in 2013, and partnered with J.C. Penney to put its products in 700 stores across the U.S. Neither move seemed to work out for the line—lack of foot traffic and sky-high rent plagued the New York stores, while J.C. Penney struggled in the midst of an unsuccessful rebrand.
“J.C. Penney was a very troubled chain,” explains retail consultant John Williams, of J.C. Williams Group. “It had an ill-conceived strategy when it came to its partnership with Joe Fresh, and it flopped. It was the wrong partner at the wrong time.”
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Many attribute much of the line’s success in Canada—14 independent storefronts and 350 Loblaws locations—to its association with the grocery-giant that owns it. “They really had a big godfather helping them out in Loblaws, when it came to Canada,” explains retail consultant Maureen Atkinson. “They were reasonably sheltered; to go to the most competitive international retail market from that, that was a big move.” Without a partnership with a successful company, the brand floundered in a market dominated by industry heavyweights like Zara and H&M.
The question facing the line now, is whether it can learn from its blunders in the States and establish itself as a successful international clothing brand. At first glance, at least, its prospects are looking better: in 2015, it partnered with SSI group, a publicly traded specialty retailer, in order to establish franchises in the Philippines. SSI Group’s wholly owned subsidiary, Stores Specialists Inc., is the franchise holder for several successful international fashion brands, including Nine West and Marks & Spencer.
“They’ve been smart in some of these other countries, in their use of partners,” says Bruce Winder, co-founder and partner of Retail Advisors Network. “In the Philippines, they’ve partnered with a company that understands the local market, and the local consumer. And it seems like it’s a pretty capital-light solution— a local host purchases a Joe Fresh franchise and establishes a store. It seems that they’ve learned that in some of these emerging economies, it’s better to have a partner,” says Winder.
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Kevin Groh, a spokesperson for Loblaws, is quick to point out that the brand is experiencing a steady growth. He says that as the line has continued to grow, it has “adjusted key elements” of its retail strategy. Groh says the brand’s consistent focus on “optimal retail locations in prime shopping areas” resulted in a store sales growth of 5% in 2015.
Groh is positive about the brand’s ongoing expansion into Mexico and the Philippines, and quick to point to its newest store, which opened just last week in Manila’s Shangri-La Plaza. Still, not all consultants are so optimistic about the line’s international future.
“Apparel retailers should be concerned regardless of what market they’re entering,” says retail advisor Doug Stephens. “The apparel category right now is so fragile, and it’s being impacted by so many factors.” Ultimately, Stephens, like so many others, is concerned about the brand’s ability to find an international foothold without the help of Loblaws stores. “I think they need to be wary of miscalculating the needs and preferences of a specific market,” he says. “They’ve had great success in Canada, but to simply assume that you’re going to enjoy the same sort of success with customers in other markets can be perilous.”
It seems those wondering if Joe Fresh can find a place for itself on international shelves will have to wait and see. For customers in the States, there’s no telling if, or when, the brand will ever make its way back to brick-and-mortar storefronts. For now, they’ll have to add it to their ever-growing list of online apparel-only retailers.
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Why do you think Joe Fresh’s U.S. expansion faltered? What’s your strategy for cracking global markets? Let us know by commenting below.