CEO David Butler unveils his change of tack for coastal-inspired British brand Crew Clothing.
“We’re not trying to be Zara and we’re not as expensive as some of our competitors. We have a great brand and we know who our customer is,” insists Crew Clothing CEO David Butler, over a plate of pastries in a private members’ club in London’s Mayfair.
Dressed smartly in a Crew Clothing white shirt and well-tailored blazer, Butler, is friendly but direct. He is here to discuss his strategy to defy the general doom and gloom plaguing the British high street – including a better, broader product offer, improved digital proposition and healthier channel mix.
It has been all change for Crew Clothing over the past 18 months. Inspired by the British coast, it was founded in 1993 by professional windsurfer and skier Alastair Parker-Swift. The entrepreneur launched his first collection of men’s rugby shirts from the back of a windsurfing school in Salcombe, Devon, and went on to build a brand known for its affordable take on casual, nautical-inspired men’s and women’s clothing.
Performance had faltered over recent years – pre-tax losses at Crew Clothing grew from £2.5m to £2.9m for the year to October 2017.
“Crew has a very loyal customer base, which it used to understand perfectly, but it has lost its sense of who that person is over recent years,” says one former supplier.
Parker-Swift and private equity firm Livingbridge sold Crew to a silent investor in December 2017 for an undisclosed sum, and the retailer’s former CEO, Louise Barnes, quit the business.
Butler, who says he had identified the business as a retailer with growth potential and possible acquisition target, took the reins after Barnes departed. He worked on a strategy for Crew, liaising with the previous owners and raising funding for the transaction, but he declines to reveal whether he has a stake in the business.
Butler’s career in retail started on the shop floor of Debenhams, where he took a Saturday job in Stockport after training as an accountant left him “bored rigid”. A stint at BHS as senior store manager and store development manager followed from 1992 to 2005. Before joining Crew Clothing, he headed the European arm of Danish footwear brand Ecco from 2010 to 2016. On his return to the UK, Butler looked for a business with unrealised potential.
Although approachable – he plays five-a-side football every Thursday with Crew’s finance and operations team, and is part of a Retail Trust mentoring scheme – Butler expects results and has big ambitions to make Crew a name to know on the high street.
The business had historically been far too reliant on shops
He says Crew is lucky to have a loyal customer base in a fickle market, but acknowledges that it failed to keep pace with the rapid change in buying behaviour.
“As a business and as a team, they weren’t listening to what the customer wanted as closely as I believe they should have done,” he tells Drapers.
“If you look at the retail landscape at the moment, the business had historically been far too reliant on shops. It had 77 stores when we purchased it, but all the other distribution channels were relatively small – and they hadn’t been a priority.
“It isn’t that we think stores aren’t important – they absolutely are. But they are only one part of all the complementary channels where consumers want to interact with a business.”
Today, Crew has 79 stores across the UK and online represents 25% of sales. It also has a small wholesale business, comprising 120 key accounts, which Butler plans to grow. The business is split roughly 50:50 between men’s and women’s wear.
A subsidiary of Crew Clothing bought leisurewear retailer Saltrock Surfwear in a pre-pack administration deal last August, which Butler said would “present huge opportunity for Crew” because of its strong presence in the south-west, and the opportunity to optimise supply chains and operations across the two businesses.
Turnover was up 3% to £61.2m in the year to the end of October 2018 and Butler expects EBITDA to “significantly increase”. Retail like-for-like sales are up 3% in the current financial year and ecommerce sales by 25%.
To help realise his vision for growing the business, there has been an injection of fresh talent at Crew since Butler joined. New faces include former head of concept at Boden Amanda MacMillan as head of design and director of buying and merchandising Catherine Tooke, who joined from Coach.
Creating a better, more comprehensive product offer was at the top of the to-do list. The business was, as Butler puts it, calling itself a lifestyle retailer without giving customers a true lifestyle selection. It was too reliant on core basics and has now expanded its offer to include more printed dresses, blazers, denim and outerwear. Retail prices range from £22 for classic T-shirts to £195 for a men’s herringbone blazer.
Widening the offer is a smart strategy. Competitors in the lifestyle sector include Joules, where customers can purchase everything from passport holders and luggage tags to dresses.
We didn’t buy the business to double the store count to 150. We wanted to try to redistribute the level of business by channel
“Crew product has been very safe and very well regarded by customers in terms of value for money,” says Butler. “If a guy wants a piqué polo shirt, he knows he’ll get a good one if he comes to Crew.
Crew Clothing spring 19
“But my view was that we didn’t leverage the opportunities for those customers, so the guy who wants a polo might also be happy to have a printed shirt or a blazer. We didn’t give them the whole outfit option to choose from us and, in doing so, alienated some customers and got a lower conversion [rate].”
Expanding into childrenswear could prompt another growth spurt. The retailer is currently developing its first range for children, which it will unveil for spring 20.
“If you look at our adult offering, there are opportunities to take that kind of look and put it into kidswear,” Butler explains. “There are plenty of family occasions and environments where our product DNA could be rolled over.”
Product diversification is vital if lifestyle retailers are to keep customers engaged, argues Sofie Willmott, senior retail analyst at GlobalData: “Generally, lifestyle retailers are doing well, and they have been for a while, but there is a lot of competition in this part of the market. Those who have moved out from the crowd have taken the opportunities to extend into other product categories.
“Lifestyle retailers have to harness customer loyalty, and expand into other areas to keep them interested and drive revenue growth.”
Better product and more choice will also help Crew bolster its wholesale arm, which has been earmarked as a key area of growth. Current stockists include House of Fraser and Leeds independent Accent Clothing, but Butler admits the retailer does not have as many accounts as he would like. Growing wholesale to 10%-15% of overall sales is an ambition.
We’d love to be in John Lewis but we’re not there yet – we don’t have the reputation
“We didn’t buy the business to double the store count to 150,” he explains. “We wanted to try to redistribute the level of business by channel, so it was more balanced. I want to build a wholesale partnership across the UK and then hopefully internationally next year, so where there isn’t enough demand for us to have a store, there is a great wholesale partner we can work with.”
Crew has recruited new designers to create product exclusively for its partners and opened a new central London showroom in November last year. It is in discussions with two “very large” accounts, although Butler refuses to name names, stressing that it is still early days for the wholesale proposition.
“Wholesale partners are going to be cautious, because there are other brands out there that can give them what they need. We’d love to be in John Lewis but we’re not there yet – we don’t have the reputation. But we have now got everything we need in place to build that.”
Although Butler has been busy ensuring that Crew is not entirely reliant on its own bricks-and-mortar stores, they are still important. In an industry dominated by headlines about rent reductions, store closures and company voluntary agreements, Crew has taken some of the uncertainty out of stores by focusing on lower-risk market towns, avoiding expensive cities and shopping centres.
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“We’ve targeted towns where there’s a clear demographic link to our loyal customer base,” Butler explains. “We’ve also targeted seasonal destinations. Crew was created in Salcombe [its headquarters are now in Earlsfield, south London] and still has a heavy link to that part of the world, so we’ve opened stores in Abersoch and Padstow, Cornwall – places like that. That’s where our customer goes for half term, summer holidays and bank holidays.”
Ecommerce is Crew’s fastest-growing channel and Butler says the business is now embracing digital, instead of viewing it as a “necessary evil”. The website is in the process of being refreshed and redesigned. A new logistics model that allows Crew to distribute from stores was unveiled last year and a four-strong data team appointed to analyse customer insight.
We’ve targeted towns where there’s a clear demographic link to our loyal customer base
“I love that ecommerce is very data driven and very mechanical in terms of how you target certain customers,” he says. “We’ve seen some great growth. In the last financial year, ecommerce grew by 11% and this year it’s growing by almost 30%. Conversion rates are sitting at 4.5%-5%, which is above the industry average. But there’s more we can do.”
Exclusive product has been introduced to help drive the Crew customer online.
“Crew stores are quite small – the average size is 1,000 sq ft-1,200 sq ft and the biggest is 1,600 sq ft-1,700 sq ft – so we’re never going to get thousands of SKUs in our store. The bizarre thing was that online had the same small selection, so right from the start we began developing products that were online exclusives.
“We’re in the very early stages: those products began to hit at the end of last year and there’s another tranche planned for Easter. We’ve got high hopes.”
Crew is jostling for position in a competitive part of the market against lifestyle heavyweights including Joules, Seasalt and White Stuff. Emerging from the pack is no mean feat, but Butler has a clear vision on how to sail through any choppy waters ahead.
*The print edition of this piece included an EBITDA figure that had yet to be confirmed.