Fixing The Gap

Lot’s of folks are chiming in on how the Gap can be fixed. Analysts working on Wall St. contend Gap needs to hire a CEO who knows fashion as much as they know finance. While customers living on Main St. are saying Gap should focus on clothing basics like jeans, t-shirts, and chinos. And consultant-types want Gap to better differentiate between its three brands, especially between Old Navy & Gap.

AdAge.com recently shared a few expert opinions from marketing and industry folks, including Paco Underhill, "shopping scientist" and author of WHY WE BUY, and Seth Godin, marketing clairvoyant.

Paco said, “They [Gap] have to stick with Monday through Friday, which is where America works and plays, and not be distracted by Saturday night. They have to be in the uniform business rather than the costume business.”

Seth doesn’t think Gap can bounce-back, “I don’t think it can be done. The Gap represented a movement. It nationalized something regional at the same time they profited from the death of business dress. Both are over, quirkiness is back, and that’s that.”

I’ve thought a lot about this question of how to fix the Gap from the perspectives of a former Gap sales associate, a once-loyal Banana Republic shopper, and a current marketer.

You see … in the fall of 1992, I was fresh out of college and trying to weasel my way into freelance gaffer jobs on television commercial shoots in Dallas. In between these infrequent gaffer gigs, I worked part-time at the Gap. A few years later, in the mid-90s, nearly every piece of clothing I owned from boxers to blazers to shirts to slacks was from Banana Republic. And of course these days I make a living sharing marketing advice.

With that clarified, my business advice for the Gap is to prune it’s portfolio of brands. Keep the higher-end Banana Republic brand. Keep the lower-end Old Navy brand. But take the middle in-between Gap brand out from its retail portfolio.

It’s become too challenging for the company to keep the Gap merchandise distinct from the Old Navy merchandise. It’ll be much easier to go forward with just having two retail concepts. Banana Republic would be free to better appeal to the hip business professional audience with higher end fashions and Old Navy would be unencumbered in appealing to the wide swath of everyday people, young and old, looking for lower-priced casual clothes.

As far the Gap brand … I’m talking about closing all the Gap retail locations and refocusing the Gap brand as solely a licensed apparel brand for retailers like Target, J.C. Penny, and Kohl’s. Leverage the ubiquity of the Gap brand name and reposition it as a clothing brand and not a clothing retailer.

The Gap brand still has lots of value and could command a hefty price on the open market. I’m sure there are private equity firms eager to sell clothes under the Gap name to mass retailers like Target, JC Penny, and Kohl’s. And the cash from the sale of the Gap brand name could go back into sprucing up the Banana Republic and Old Navy brands.

Sure, this would be a different Gap from the one we know today. But with this plan, Gap wouldn’t be going away. We would still have the opportunity to buy Gap branded clothes—just not at a Gap retail store. Dig? Thoughts?

Comments

[Tom]

Hire Bob Nardelli he can fix it! It will cost you.

[Will Ashworth]

While I like your idea, I believe the GAP needs to be more upmarket than down. Sell the Old Navy brand. Then you create a natural divide between the two without an Old Navy distraction. Then they could go up up market with their Forth and Towne for women. 3 brands for women, 2 for men. At that point you might be able to succeed with a men's brand similar to Ralph Lauren's Rugby stores.

Why be in the low-cost arena if you don't have to be? It's a thankless demographic. Walmart can have it.

[Matt Steele in the Hour of Chaos]

Not a bad thought, John. I think of Old Navy as a Gap with lower prices. I shop at Old Navy quite a bit. The Gap? Never.

[matt]

I spent Saturday milling around 5 Gaps, 2 Old Navys and 1 Banana Republic. What I saw in terms of merchandise and the customer experience not only made me realized why they are tanking, but also helped to realize that their formula is old, tired, and in need of something - anything - to bring them into 2007.

I wish there was a simple answer, as it's quite sad that a former favorite retailer has fallen to such lows in the course of a few years.

[Mario Vellandi]

Close the GAP and position Old Navy like H+M.
Create metro/bus advertisements across the nation with happy person wearing item. draw line to item, insert name and price. Simple and very effective, especially with excellent photography.

[Patrick Lefler]

The line between The Gap and Old Navy has become much more blurred. I've come to think of The Gap as "Old Navy with higher prices" - not exactly a recipe for success. A better distinction (and a different value proposition to the consumer) needs to be made. That's the challenge.

[Thomas]

I too saw Old Navy as "Gap only cheaper", so I never went to Gap anymore. (I also dislike malls, that's another reason.) But the fact is, I miss the Gap's actual clothes, (trousers in particular), because Old Navy quality is really crappy sometimes, and now I'm just about done with them as well. So, Old Navy canibalised Gap customers for the same styles, at cheaper prices and probably thinner margins. But, Gap could get me back, if I did not have to go to a mall to get to them. So...

I'd get rid of Old Navy and reinvigorate Gap. Old Navy really has no meaning, and will in the long haul get beaten on price by Costco, Target, Wallmart, etc. Gap has a history, a story, therefore a chance to succeed again, with some tweaks to the line and image, and perhaps a few more non-mall stores.

Also, perhaps most importantly, Gap is a Global brand, (as is Banana Republic), Old Navy not so much. As we see time and time again nowadays, you don't want to get stuck being a large, one-continent-only company/brand here in North America, because the growth is on other continents for the next 100 years, (selling something to the 2.3 billion people in India and China for example). Larger US brands will either figure out how to be a part of that growth somehow, (Nike, Coke, Microsoft, McDonalds, Caterpillar), or they will get bought/trounced/killed by those who did. Old Navy brand likely doesn't have a chance in that equation, but Gap and Banana Republic perhaps do, and that would drive my decision to get rid of Old Navy as much as anything.

[Jason]

Does anyone have any ideas on how to save Old Navy ? What if we do not want an idea that involves closeing something down? How about limiting the product line so they are no longer trying to serve everyone. Get it back to basics. Just as Mcdonolds had to give up on the Pizza and Nachos idea maybe old Navy should just get back to its target base.

[mathias]

I am AD student and i have to present for this tuesday a strategy for the gap. I was making research and i found your comments that i think they are really interesting. maybe it's true that the old navy is the worst enemy that gap has. Maybe closing the old navy stores and sell old navy cltohes to the department stores such as Target, J.C. Penny, and Kohl’s could be the solution for old navy and gap.
I was thinking also changing the designers for the gap could be a solution, it can be well know designers or for example some designers from the last project runway (michael knight is designing the cup from starbucks). I also think that if people can costumize some clothes of the gap to their tastes it can increase the sales. They can do it online or in-store. they can choose different colors of chinos, t shirt, jeans, differents stamps. there's a lot companies doing this kind of customization. what do you think about everything a said?