These are the biggest sibling rivalries in the clothing business

H&M and Facebook/COS

Some of the world’s largest and most popular clothing brands are being superseded by their sister labels.
Many of these smaller sister stores are able to respond to changing trends more quickly.
Gap, Abercrombie, H&M, and American Eagle all have popular sister stores.

Sibling rivalries are the clothing business’ latest trend.

Increasingly, some of the most popular apparel stores are finding themselves outpaced by the very brands they created.

This week, Racked reported that J.Crew would be bringing its successful sister brand Madewell to some of its stores. Madewell is known for its denim but prides itself on its effortless and timeless clothing that doesn’t chase after fast-fashion trends. While J.Crew has struggled in recent years, Madewell has become one of the company’s sweet spots.

J.Crew isn’t alone. H&M, American Eagle, Abercrombie, and Gap have all increasingly found themselves being outshined by their sister labels, which are helping to boost sales at the parent company overall.

Take a look at some of these stores and their wildly popular sister brands:

J.Crew and Madewell

Facebook/J.Crew and Madewell

As customers leave J.Crew, citing poor quality and expensive prices, Madewell’s sales are soaring.

Same-store sales have been down at J.Crew for the past three years, dropping by 8% in 2016 following a 10% decrease the year before. In its most recent earnings report, in the third quarter of 2017, sales had dropped by 12%. The company has not yet released its fourth-quarter results.

Meanwhile, Madewell’s same-store sales grew by 5% in 2016 and increased by 10%, 11% and 13% in the first three quarters of 2017.

The company is now rolling out Madewell products in some of its J.Crew stores in an effort to revitalize sales, Racked reported Friday. J.Crew did not immediately respond to Business Insider’s request for comment on the arrangement.

Madewell has been around since 1937. It was founded in New England by Russian immigrant Julius Kivowitz, who originally sold bib overalls, jeans, and dungarees for factory workers and fishermen.

It was acquired by J.Crew in 2006 under the direction of former CEO Mickey Drexler. Drexler set his mind to make it huge and put Somsack Sikhounmuong, who started out at J.Crew, in charge of design in 2013.

“We are cleaning and simplifying, so we’re steering the collection towards the classic, straightforward, and effortlessly sexy design and taking the things Madewell has done best — tomboy pieces, denim, and leather — and giving them a bigger platform,” Sikhounmuong told WhoWhatWear in 2013.

The secret to Madewell’s success has been knowing its customer and not jumping on fast-fashion trends. Its focus is on good-quality, longer-lasting clothing, which historically had a lower price point than at J.Crew.

Drexler said that increasing prices contributed to J.Crew’s downfall.

“We gave a perception of being a higher-priced company than we were — in our catalog, online, and in our general presentation,” Drexler told the Wall Street Journal in May 2017. “Very big mistake.”

Gap and Old Navy

Facebook/Gap and Old Navy

Former J.Crew CEO Mickey Drexler, who oversaw the takeover of Madewell, was also responsible for creating another popular sister brand during his time as CEO at Gap Inc.

In 1993, Drexler set up Old Navy as a more budget-conscious store to appeal to low-income shoppers.

Old Navy has become the parent company’s saving grace. While Gap Inc. has struggled in recent years, Old Navy has seen positive same-store sales growth for the past five years.

The store has a cult following of price-conscious customers who choose it over Gap because of its lower prices.

“Maybe there is a little bit of difference [in quality], but not enough that is making me feel like I need to spend more money,” Dana McKay, a 39-year-old mother of two who does all her shopping at Old Navy and has done so since her college days, told Business Insider in May 2017.

Old Navy is better at jumping on trends than its sister brand Gap.

“I wouldn’t call it fast fashion but they are replenishing the merchandise more frequently. You are constantly getting new stuff into the store and it tends to be what the consumer is craving,” Bridget Weishaar, an analyst at Morningstar, told Business Insider.

Old Navy also has an efficient system in place whereby it can trial products in smaller batches in order to see how successful they are before rolling them out on a larger scale, a spokesperson for the brand told Business Insider. This helps the brand to gauge what sells well.

Gap Inc. did not immediately respond to Business Insider’s request for comment.

American Eagle and Aerie

Facebook/American Eagle and Aerie

American Eagle’s sister brand Aerie has taken the underwear market by storm, winning over the hearts of millennial shoppers with its body-positive ad campaigns.

In the fiscal year of 2016, American Eagle’s same-store sales grew by a modest 1%, while Aerie was up 23% in the same period.

This growth gap defined 2017 as well. Same-store sales at Aerie were up 25%, 26%, and 19% in the first, second, and third quarters of the year. Meanwhile, at American Eagle, same-store sales grew by 1%, 0%, and 1% in the same period.

Aerie’s decision to nix airbrushed ads has paid off and helped sales to skyrocket in the past four years. It’s been an effective way to appeal to customers who favor authenticity over anything else.

Meanwhile, American Eagle has fallen out of favor as there is greater competition among teen and low-cost fashion retailers such as H&M and Forever 21.

American Eagle did not immediately respond to Business Insider’s request for comment.

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