Jack Wills

An Analysis of Jack Wills’ U.S. Market Entry

Strategy

Per Obiora
November 2019
Table of Contents
Executive Summary ................................................................................................................ 3
Introduction ........................................................................................................................... 4
An Analysis of Jack Wills' U.S. Market Entry Strategy.............................................................. 4
Corporate Success in the U.S.: The Key Issues & Best Remedies ....................................................... 4
One Size does not Fit all: The Wholesale Model. .............................................................................. 6
The Target Customer: Student or…? ................................................................................................. 7
From Mobile to E-Commerce: Jack, it is Time to Catch Up ................................................................ 9
References ............................................................................................................................ 10
Executive Summary
For the 2020 U.S. business landscape, we are expecting a dampened economic outlook
specifically for the fashion industry. We find this due to the upcoming political turmoil, high-
competition, and the rapidly changing consumer demands. According to these expectations, Jack
Wills will need much capital to sustain its business operations following their desired Wholesaling
strategy. Furthermore, due to the risk of potential trade wars that may impact supply channel
productivity, Jack Wills will need to act agile, coupling productivity with adaptable supply
channels. To navigate successfully through the highly competitive U.S. business landscape, we
then consider a differentiation strategy through geospatial analytics with rapid learning-decision
cycles in order to outperform the competition. To address the rapidly changing customer
landscape, we suggest customer feedback-loops. These facilitate customer-centric decisions so
that Jack Wills can find the product-market-fit.

Afterwards, the nuances of Jack Wills' proposed wholesaling market entry strategy will be
discussed. To be effective, potential partnerships are elaborated and should conclusively be
selected carefully as e-commerce continues to disintermediate wholesale. While posing as a
potential cost-effective approach, wholesaling can also erode the customer experience by
discounting a premium brand such as Jack Wills. Therefore, an integrated direct-to-consumer and
e-commerce functionality within social media is suggested as a contingency approach. This
approach will effectively streamline the customer experience and checkout process, maintaining
the brand experience while increasing mobile conversion rates.

Furthermore, the report will analyze the target student customer from a demand and
economic viewpoint. As students continue to value social and environmental action to the extent
that 73% of U.S. millennials are willing to spend more on sustainable goods, we suggest a "green"
marketing strategy. Additionally, as most U.S. students spending power is made up of family
income and savings, broadening the targeted market to parents aged 45-65 similarly proves as
an economic opportunity.

To improve online presence in the U.S., the report then discusses potential marketing
channels such as Blog collaborations, micro-influencer marketing, and Facebook user-generated
content. By making use of a blog collaboration strategy with student fashion-centered blogs such
as Collegefashionista, organic SEO traffic can be increased to the website, in addition to presence
in a medium that optimizes customer-brand trust. Micro-influencers on Instagram that engage
in relevant conversations with the target buyer can also be a cost-effective medium to acquire
customers while building long-lasting relationships. Additionally, user-generated Facebook
content can spark relevant conversations with customers while growth-hacking Jack Wills' U.S.
brand presence.
Introduction
Jack Wills, the "preppy" high street retailer of the U.K., founded in 1999, quickly
developed into a brand that would sell elite and cliquey values through premium prices –
targeting affluent schools and private universities such as Eton, Oxford, Winchester, and St.
Andrews. At its apex in 2011, Jack Wills was valued at £140 million, but as the brand’s early
adopters aged, Jack Wills failed to engage the upcoming, increasingly egalitarian and tech-savvy
generation. Being left only with its 10+ years loyal customers, Jack Wills hit rock bottom in August
2019 –due to increased pressures from the sluggish U.K. retail industry– to the tune of a £12.7
million buyout and store closures throughout Hong-Kong, the U.S., and Singapore. To recover,
Jack Wills decided to reestablish their U.S. presence by taking on a novel strategic approach:
partnering with wholesalers such as Nordstrom in order to reach scale.

The purpose of this report is to (1) identify the key issues inherent to the complex market
dynamics of the U.S., which are likely to impact Jack Wills. Secondly, the report will (2) analyze
the risks and benefits in order to come up with appropriate recommendations for Jack Wills’
wholesaling strategy. The report will then (3) resolve the question of whether Jack Wills should
broaden their U.S. target segment beyond affluent high school and university students. Finally,
the report will (4) develop a potential online strategy to attract the desired target customer by
dissecting the critical digital channels.

An Analysis of Jack Wills' U.S. Market Entry Strategy

Corporate Success in the U.S.: The Key Issues & Best Remedies
Jack Wills decided to enter the United States during a period of geopolitical turmoil:
while the 2020 U.S. elections are knocking on the doors of risk-averse investors, the Brexit
instigates similar financial unrest within Europe. Due to the political uncertainty from the
electorates contrasting policy recommendations on taxes, regulations, and CapEx spending,
investors are anticipating a dampened economic outlook. This may specifically be the case
within the U.S. fashion retail industry, as stagnant growth rates of 1.9% are expected for 2020
(Statista, 2019). As rated by the IMD competitiveness yearbook 2019, the U.S. is also the third
most competitive economy in the world (Bris, 2019). While the U.S. is running on a consumer
spending engine with a 68.1% to GDP ratio, it also reports the worldwide highest revenues in
fashion retail of $348,000 million in 2019, making each player want to grab more of the share
(Statista, 2019) (Federal Reserve Economic Data, 2019). Alongside the potential political
disruption and high competition, 2020's fashion industry is also predicted to be shaped by
shifting consumer trends linked to social causes, technology, and trust issues.

Once the 2020 elections come into full swing, healthcare costs, Social Security, Medicare
& Medicaid, long-term care costs, and the climate crisis are likely issues to be addressed. The
political standoff that companies in the U.S. will face during the 2020 - 2021 period is likely to
take its toll on business. This is due to the contradictory policies proposed by the two parties on
how to tackle the given challenges. The prospective policies differ not only significantly in
comparison to their respective congressional counterpart, but also among the parties' internal
candidates (Rosenberg, 2019). The discrepancy of the current president's policies and a
potential impeachment is already impacting business' commitments because political
uncertainty generally tends to drive company spending down. Currently, the Republican side,
proposes the apparent candidate for next year's election: Donald J. Trump. Throughout Trump's
presidency, he, i.e., dismantled the Dodd-Frank Wall Street Reform and Consumer Protection
Act and introduced a tax reform for corporations and individuals, which mostly benefit
investors, enterprises, and wealthy individuals. However, his protectionist approach, specifically
regarding tariffs on Chinese goods and services, ramped up much of the domestic retailers'
cost, making it hard for import-dependent companies to make ends needs. Specifically, a
potential trade war with China could directly impact Jack Wills' strategic decision to enter the
U.S. as some of their products appear to be made in the far east. This could potentially increase
the cost further, as the protectionist approach tightens budgets. On the other hand, the
Democratic side, there is an urgent need for a clear leading forefront. For now, J. R. Biden has
the highest chances but is closely followed by E. Warren and B. Sanders. The Democratic
debates have recently shed light on the proposed policies. For example, Warren decided to
focus on penalizing wealth creation, Biden on intensive investment to curb climate change, and
Sanders on a 77% tax on billionaire estates as well as a financial transaction tax. Regardless of
the outcome of the elections, the business environment will be jolted through tax reforms, new
drafted economic policies, and potential trade wars – impacting the overall market direction.
While the fashion industry already performed with decreased growth in 2019 –with some big
players such as Forever 21 declaring bankruptcy– finding capital during periods of political
turbulence might prove to be an ever-bigger obstacle as investors lose confidence. In order to
reduce that risk, Jack Wills will need much capital to sustain itself in the uncertain environment
of political turmoil and prove organizational agility by optimizing their ability to adapt supply
chains rapidly.

Secondly, as rated by the IMD Competitiveness Yearbook 2019, the U.S. is the third
most competitive market in the world and potentially the most competitive when it comes to
the fashion retail industry. U.S. Fashion retail constitutes the biggest market in gross and per-
capita numbers worldwide (Statista, 2019). Adding to the dangers of competitiveness is also the
massively overcrowded retail space in the U.S., which is 15-20 times more crowded than that of
developing nations (Podreciks, Uhlenbrock and Ungeman, 2019). Furthermore, consumer
spending makes up almost 68.1% of the U.S. economy. Spending money has been imprinted in
the average U.S. consumer, such that this is expected to translate into $1,072,6 in revenue per
person for Apparel companies in 2020 (Statista, 2019). As competitors like Abercrombie &
Fitch, Ralph Lauren, Hollister, and Top Shop will attempt to capture the market, Jack Wills
should aim for a competitive strategy within the wholesale model that separates Jack Wills
from its competitors. This can be reached by striving for a more agile business model, using
geospatial analytics in combination with the proposed U.S. wholesale partnerships –identify
best partnerships and invest there– as well as an analytics-based decision system to minimize
mistakes. In order to remain relevant in the competitive U.S. retail industry with a limited
budget, it is also essential to use the available funds most efficiently to capture the desired
customer segment. Additionally, Jack Wills will have the opportunity to move outside the arena
of established, rather static, and overly hierarchical U.S. fashion businesses, being able to
implement an agile organization. Therefore, to establish U.S. presence, Jack Wills will need to
operate through rapid learning-decision cycles in order to outperform the competition.

Thirdly, the possibly most recent and most apparent identifiable risk is that consumers'
tastes and values are evolving at a faster rate than the retail industry can adapt to. Consumers
are becoming increasingly conscious of a brand's negative externalities. These can range from
exploitative practices, such as gender inequality and child labor, to unsustainable supply
channels and their repercussions on the environment (Cheng, 2019). Especially, Jack Wills'
target audience of students are increasingly interested in brands that sell values such as
diversity, equality and transparency, such as Everlane –a San Francisco based fashion brand
that differentiates through radical transparency (Frost, 2019). To turn this momentum of
changing consumer shifts into an advantage, Jack Wills needs to use real-time consumer
feedback, looking for product-market-fit, to make decisions centered on their customer
demands. This way, Jack Wills will be able to encompass what their target audience is expecting
from them, ranging from social issues to elitism.

One Size does not Fit all: The Wholesale Model.

When deciding on the partnerships for Jack Wills U.S. wholesaling approach, three
questions must be kept in mind. First, what are the risks and opportunities inherent to
wholesaling? Second, through which wholesalers can Jack Wills best reach the target audience?
And third, what is the best addition or alternative to wholesaling?

As there were more than 7000 retail store closures in the U.S. in 2017 and more than
9300 closures in 2019, wholesaling can be a tempting approach for risk-averse brands
(Peterson, 2019). Wholesaling tends to be a very cost-effective method to deliver inventory as
it tends to cut required working capital. In the case of Jack Wills, management believes it will
add scale, as it decides to partner with wholesalers such as Nordstrom to distribute its
products. Working with suitable partners is an effective method to enter foreign markets with
relatively high velocity and stability. If the proposed partners are willing to accept the contract
with Jack Wills, there is barely anything that stops Jack Wills' apparel from being positioned
next to other boutique brands. That way, Jack Wills can develop a brand reputation in the U.S.
without the otherwise high costs of marketing. If the clothing can be brought into association
with other high-quality brands, then some of these "premium values" may spill over to Jack
Wills. Unfortunately, though, for the case of wholesaling, it is nearly impossible to provide a
tailored branding experience, which may prove as an obstacle for Jack Wills to meet the ever-
changing U.S. consumer demands.
 Elaborating on this downside, wholesaling can erode the branding experience,
sometimes to the point of no return. This may specifically be the case for high-end brands like
Jack Wills, that attempt to attract affluent students. This is due to the discounting factor
wholesaling implies, which in turn may permanently harm the brand image. In that way,
wholesaling contradicts Jack Wills' traditional value proposition of being a premium brand. U.S.
students are also becoming increasingly self-aware and thus use clothing as a way to express
their personality. If a brand does not have the crucial channel to convey brand personality, how
can it expect demanding students to associate their personality with the brand? Even more so,
wholesaling makes it hard to react to the increasingly specific consumer demands, as
wholesalers buy in bulk, limiting possible variety. This makes it very difficult to establish a real-
time consumer feedback loop that can be used to make long-lasting customer relationships.
This is the case as inventory decisions are primarily guided by the wholesaler, who in turn
decreases the potential for Jack Wills to provide the desired product variety. As increased
technology adoption disintermediates the wholesale fashion industry in general –through
disrupting forces such as Amazon–, consumers also demand more branding experiences in
stores rather than stores for the sole purpose of exchanging money for clothing.

Given the rise of DTC (direct-to-consumer) business models and e-commerce in the
fashion industry, wholesale fashion is diminished, leaving space to only a few players (Amed et
al. 2019). Therefore, Jack Wills will have to choose wisely from potential partnerships ranging
from Nordstrom to additional upscale wholesalers such as Macy's subsidiary Bloomingdale;
Dillard's; Neiman Marcus and Saks Fifth Avenue –all of which are notably similar to Nordstrom
in terms of the target market and product offerings. Individually, Neiman Marcus, a high-end
retail store that sells similar brands to Nordstrom, should be considered. Neiman Marcus has 42
Neiman retail stores across the United States with two in New York, Manhattan –a city that,
according to a dissertation published by the City University of New York, closely resembles U.K.
culture (Wikipedia, 2019) (Brathwaite, 2017).

Therefore, to spur success offshore a contingency approach should be considered. As

mentioned earlier, DTC business models and e-commerce are changing the game of the fashion
industry, with 20.4% of all U.S. fashion sales already made online in 2018 (Clement, 2019). This
can be seen as an opportunity if Jack Wills decides to implement a direct-to-consumer channel
in addition to wholesaling. A consumer-led distribution channel will effectively minimize the
given inventory risk associated with the standard batch updates of wholesaling and provide a
targeted and personalized customer experience. Further, if the company were to integrate a
commerce functionality into social media, Jack Wills could increase their mobile conversion rate
by improving the customer checkout process.

The Target Customer: Student or…?

Jack Wills historically appealed to the affluent university student aged 18-21. However,
as the age of their early adopters increases, Jack Wills will need to address the shifts in
consumer trends. According to one McKinsey's survey in "The State of Fashion 2020", 57% of
executives expect 2020's luxury apparel industry to perform worse than the year before, with
67% expecting that to be precisely the case in the North American market (Amed et al. 2019).
The report then elaborates on the key topics that will shape the 2020's fashion industry,
identifying sustainability as the single biggest challenge and opportunity.

The fashion industry is increasingly becoming a subject of public scrutiny, triggered not
least by the tune of Greta Thunberg's environmental preaches but also due to new
environmental regulation. Unlike Jack Wills' traditional value statement of unapologetic elitism,
which was bought by its early teen adopters in the late nineties, the upcoming generation of
students is growing to value the two things that go hand in hand: social and environmental
action. A report from Oeko-Tex exemplified this in a study, which shows that 69% of Millennials
look into claims of sustainability and eco-friendliness, of which 73% say they would spend more
on sustainable goods (Curtin, 2018). With driving consumer demand for transformational
change, Jack Wills will need to adapt its practices to reduce some of the energy-consuming,
polluting, and wasteful practices inherent to the fashion industry if they intend to target
students. If done right, Jack Wills can then use these as marketing factors to differentiate
themselves from their high-end competitors while making themselves more appealing to the
younger, more sustainability-conscious generation.

If Jack Wills decides to stick with its elitist value proposition, it will be essential to
understand whether the "affluent American student" is a segment that poses an economic
opportunity. Expensive apparel cannot be afforded by all American students at the sight of
exploding tuition and housing costs. To be exact, Sallie Mae and Ipsos published a study
showing how Americans pay for college. On average, family savings and income contribute 43%
to college tuition, grants, and scholarships cover 31%, 24% of costs are borrowed, and 2% are
contributed by friends and families (Sallie Mae, Ipsos, n.d.). Furthermore, Americans collectively
hold $1.5 trillion in student loans, with 34% of students saying that it is already difficult to
afford food (Chegg, 2018). There are 19.93 million students enrolled in U.S. colleges, of which
5.24 million are enrolled in private universities, harnessing a joined spending power of $574
billion in 2018, of which $21 billion was spent on clothing and apparel (Duffin, 2019) (College
Explorer, 2018).

Further, Jack Wills' largest customer groups are at the age of 45-49 (19%), with 75% of
customers living in a married family household and 67% of the 18-24-year-olds having younger
siblings at home. This might imply that family tradition plays a significant role in the lives of Jack
Wills' customers. Therefore, it should be considered to broaden the target customer base from
solely 18-21-year-old college students to their parents' generation, aged 45-65. This conclusion
can be derived from the above-mentioned factors: family savings and income contribute most
to college tuition, and to the spending power of students while high family cohesion plays a
vital role in the lives of Jack Wills' current customers.

Jack Wills should, therefore, expand their communications from students to parents
(i.e., market on family-focused days such as Father’s Day, Mother’s Day, and Christmas season),
while additionally focusing on a "green" marketing strategy designed to capture the growing
student customer interest in sustainability and transparency.

From Mobile to E-Commerce: Jack, it is Time to Catch Up

E-commerce and social media are spreading like a fever through all retail industries.
Nowadays, the student customer will not stick around if the brand does not provide a seamless
service. The importance here is placed on the key elements: immediacy and convenience. While
customer traffic at malls has been decreasing steadily, and margins squeezed, Jack Wills will
need to rethink its strategy to maximize the benefit of its marketing budget. In fact, Jack Wills'
revenue is already constituted by 30% online, with 65% coming from mobile. Therefore, the
central building blocks for an increased online presence have already been put in place. To
attract more organic traffic from students to its online website, a blog-collaboration strategy
can be of use as 46.74% of Americans aged 18-29 read blogs (Bluelist.co, 2019). A potential
option would be to feature content in blogs such as Collegefashionista. Collegefashionista is a
U.S. fashion blog that presents the universities "best dressed" as inspiration, expertly guiding
the shopping behavior of many students, having 22,2K Twitter followers, and 78.8K Instagram
followers. Featured blog content will provide visibility for the website –with an optimized
landing page– by making it easier to find Jack Wills on google, in addition to the presence in
trustworthy publications. The better the blog, the better the organic SEO traffic will be.

To reach its target customer, Jack Wills will also need to engage with social media, as it
is the place on which most students show increased engagement. A direct-to-consumer
approach, as mentioned earlier, will suffice as a potent medium to streamline the consumer
experience while effectively reducing acquisition cost, and increasing its conversion rate
accordingly. Attention-grabbing content on suitable platforms, seamless calls to action and
streamlined checkout links will be crucial. With an omnichannel approach, using different social
media platforms, Jack Wills can make use of real-time consumer feedback to advertise
customer-centric messages to prospective buyers. Specifically, by using micro-influencers on
Instagram, for example, Jack Wills can increase brand awareness, develop a brand reputation,
and create higher levels of customer engagement. A study from Takumi shows that a high
follower count has inverse effects on engagement, meaning that micro-influencers have a
higher probability of maximizing the benefit from marketing spending (Brand24, 2019).
Brand24 proves as a useful tool that can enable Jack Wills to find the right individual: a micro-
influencer with a substantial follower count (10,000 - 100,000), which is also present in the
relevant conversations that the prospective target customers engage in. Facebook can also be
viewed as a potent medium to develop long-term customer relationships. By not only showing
new collections –organic Facebook reach is not sufficient– but using user-generated content,
such as showing students in everyday situations, or growth-hacking competitions. That way Jack
Wills can establish a deep connection to the customer.
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