Mind the Gap

The Gap Inc. saga is certainly one of the most compelling questions and stories in specialty retailing in the last few years. Questions have abounded over the past 6 years as to whether the company became too big for its own good; whether they overexpanded and thus overexposed its brands; whether the leadership was effective enough; whether they fell out of fashion; whether they lost ‘it’ (aka “cachet” or a certain “je ne sais quoi” they had in spades during “khaki swing” and Old Navy’s launch); whether any fashion retailer can last that long etc.

It was never a question of financial strength or lack of resources (specifically cash). But perhaps it was a lack of common sense and foresight. I would love to hear about whether you shop any of their brands including Gap, Gapkids, babygap, Gapbody, Old Navy or Banana Republic. One disclaimer I will inform you is that I worked there in the late nineties and early 2000’s – but hasn’t everyone worked there at one time or another?

Here are a few theories and observations…

1) It did get too big too fast starting when it was about $5 billion in 1996. When they talked about ramping the business to $20-40 million (not a word of a lie) and spend $1 billion on advertising to ensure the brands were top of mind and rival the spending of a Coca-Cola, I thought it sounded a bit strange. We did all drink the Kool Aid, but no one asked if the organization (including the leadership) possessed the skill sets to manage this growth and lead a $15 billion plus apparel retailer. HR was not a major influence at the strategy sessions and the work force was simply overwhelmed and overmatched.

2) Because of that growth sprint, managing o company of that eventual size was not Mickey Drexler’s forte. He is brilliant, don’t get me wrong and the proof that his forte is a smaller brand with huge potential where he can be hands on in the merchandising and imaging of the brand is never clearer than today at J. Crew. What he has done with that company and that brand is nothing short of phenomenal. He did the exact same thing at Gap when it was J. Crew’s size back in the late eighties and early nineties. But at Gap Inc., it quickly became too unwieldy and did not play to his strengths and hence his departure in 2002, which was the right thing for both parties.

3) I never understood why the individual brands were allowed to compete so fiercely with each other. The race for real estate and fashion trends and key items was intense and quite frankly, obscene. Old Navy was totally bent on eating Gap’s lunch and Gap was panicked as to what to do about their assortments and their store formats. Gap built much larger footprints to give it more of a department store feel with all 4 sub-brands in one box of 20,000 square feet (which was, not coincidentally, the average size of the Old Navy standard box). Each brand took the same type of real estate space and went after the same malls and in some cases opened right next door to each other. It also forced Gap to try and go after a more upscale customer, which then started infringing on the Banana Republic business. Gap was truly “Malcolm in the Middle” and like a middle child, started kicking and screaming and making poor decisions, including, at one point, ridding itself of all its tried and true basic commodities on which the brand was built (like denim, khaki, pocket t-shirts etc.). Gap swung the pendulum toward a trendy and fashion forward look that the company dropped 25% comp overnight. Gap then scrambled to get back in stock but it took close to 12 months for the pipeline (which was constantly replenishing the basics in an orderly, just-in-time way) to refill since it was completely emptied out.

4) Old Navy stayed too boring and basic. With the influx of European players such as H & M and Zara, Old Navy did not react fast enough to the changing tide of fast fashion and fresh looks. Even Steve and Barry’s came up with a fresh approach by synergistically using celebrity endorsements to attract a new customer and create excitement and hype (I call it “news” as it were) with Stephon Marbury (for the teen athletes), Amanda Bynes (for the teen girls), Bubba Watson (for college age and older males) and Sarah Jessica Parker (for the college and young women set). Ironically, Sarah Jessica Parker was featured prominently in two global Gap ad campaigns not 2 years prior to her signing a deal at Steve and Barry’s.

5) I also believe that Gap could have taken a road less traveled at the time, grounded itself in denim of all sorts, regained its authority over the category and morphed into more of what Lucky Brand looks like today. Between Buckle and Lucky Brand, they have stolen the mid-priced, fashion and basic denim market away from Gap in the malls across the United States and soon elsewhere.

6) Through it all, babygap and Banana Republic have remained strong and sharp. Their brands are solid and the merchants in those brands have separated themselves from the competition and stayed true to their strengths. They constantly differentiate themselves very well from their sister brands, something the other namesake brands of Gap and Old Navy failed to do at the outset and throughout the turmoil.

Having said all the above, I still believe in the brands and in Gap Inc. I know a number of people who are working hard every day to regain each of the brand’s prominence in the marketplace and in share of customer’s mind. They have a new CEO, a brilliant merchant as president of Gap and a very grounded, committed and humble founding family still holding around 30% of the shares outstanding. The Fisher family are among the nicest people you will ever meet.

So I am rooting for them and so should you be as they helped define specialty retailing over the years. What doesn’t kill you only makes you stronger and I believe Gap Inc. will be stronger for this extended period of transition and education.

TheRetailTherapist

Branding Stories

It seems that everyone has a plethora of branding stories no matter whether you are relating to business issues or even personal issues. Any experiences with companies, stores, websites, or your own “personal brand” (as we are often called by some talking heads) make up branding moments. Nevertheless, there are thousands upon thousands of stories people have. It would be fun and instructive to hear yours.

My observations on the branding movement are diverse. I happen to think that in a retail brand, you have three legs of a stool that you must develop – the merchandising (product selection, assortment, visuals, store layout, store design); the marketing (messaging to the consumer either inside the store or externally, a strong brand image and the ability to capture a place in a customer’s mind); and most importantly to me, the customer experience (the sensory experience of the store – sight, touch, smell, sound, vibe – along with the quality of the staff interaction/store interaction or website speed and entertainment factor).

In the case of a store, the most important branding moment is between a customer and a sales associate/staff member on the floor of the store at any time of day or night in any store around the world. To me that is what makes or breaks your “brand” in the bricks and mortar world.

In cyberspace, it is the speed and accuracy with which the website responds to the customer along with any entertainment and visual stimulation that can be added along the way that does not interfere with the efficacy of the transaction or intent.

This is easier said than done. I remember at Gap, branding the “Blue Box” (the Gap logo) became a global initiative. So much so, that the head of marketing at the time (the very eloquent Michael McCadden) flew around the world to deliver a well rehearsed and highly informative and entertaining Power Point presentation on branding in general and branding Gap in particular to every store manager globally. I thought that was impressive and I have not heard of anything like that done since. It sure made a powerful statement and certainly had everyone singing from the same song sheet.

A few other musings on branding…

Why is Tim Horton’s always lined up across Canada- is it really their coffee? No, it has more to do with the fact it is a Canadian icon/brand and that it is a quintissential “experience” for Canadians.

J. Crew with Mickey Drexler at the helm has gone from zero confidence in the brand to about as cocky as one can get. Any brand that can feature cashmere sweaters for $118 at full price on the front tables of each of their stores in the middle of July during the height of clearance season certainly has a ton of brand confidence.

Someone once told me it takes years to build a brand but about 10 seconds to destroy one. Look at what has happened to Land’s End. Their catalogue was the ultimate in focused, branded merchandising, appealing to a large but very specific group of consumers. Since Sears has bought the place and tried to integrate it into its retail surroundings, it has been a disaster. Why? Because it is clear that Sears has no appreciation for or understanding of what it takes to maintain and nurture a brand. The last Land’s End section I walked into (a few weeks back) was an insipid display of basics, with very little signage or messaging, one large “Land’s End” sign and ‘lifestyle’ posters that were half covered up by the ceiling overhang as they were leaned against the back wall. It is sad and embarrassing. More on Sears at a later date.

For now, I would say that if you are lucky, a brand (retail, personal or otherwise) will occupy a specific piece of real estate in people’s minds that they will commonly refer to and think of fondly. Once that happens, that is the best “Brand Story” anyone could hope for.

TheRetailTherapist

What Would Peter Glen Say? (W.W.P.G.S.)

For those who have been in the retail business for quite some time, you will remember the name Peter Glen. Not only that, I hope you remember the voice, and particularly the emotion and passion that emanated every time he spoke. I think it fitting that I dedicate my first entry to TheRetailTherapist’s Weblog to him and wonder “What Would Peter Glen Say” about retail today?

I will take a crack at answering that myself, but for those of you who remember him and care to comment, I would love to hear how you would answer that question.

I suspect Peter would be less than thrilled with the “sameness” factor walking the malls today. Amongst Abercrombie & Fitch, American Eagle, Aeropostale, Bluenotes and Campus Crew (in Canada), the merchandise all seems the same and not very original to be sure in that category as an example. Would he be thrilled with Abercrombie’s reincarnation and sense of theatre? Absolutely. But their product innovation even in their other lifestyle brands Hollister and Ruehl, leaves something to be desired. Maybe new brand Gilly Hicks, Sydney will offer something unique.

He would shake his head at the demise of Gap Inc.’s mall dominance. He will say they lost their “specialness” and merchandising edge. They forgot who they were and their stores became too cavernous, too boring and didn’t lead their customers any longer. He would still be a fan of Banana Republic and babygap because they have never lost sight of who they are and keep creating freshness and excitement within their brand guardrails.

I think he would rave about Tory Burch in Soho for being original and unique in every way. He would say she smacks of self confidence and whimsy yet, at the same time, knows her customer intimately. Judging from the size and placement of her presentation at Neiman Marcus I observed this past weekend, I would say she certainly is doing something right.

He would admire Lucky Brand stores for their visual presentation energy and focused assortment. They have taken a middle of the road brand and given it life through their own interpretation of how it should be presented and sold rather than leaving it to the department stores to figure out: Smart move.

He would also have predicted Buckle’s recent success, based on store visits over the past 9 months and their unique approach to denim presentation and customer focus. Their price points, their visual merchandising and their assortments (increasingly private label as a balance to their traditional branded assortments) are evolving in breadth and depth.

As we head into an economic storm, Peter would tell the retail community that it is a simple equation: If you offer a stunning store design, exciting visual merchandising, and an unflinching understanding of your customer from a product and service level standpoint, you will be just fine.

I can hear him now, and I certainly miss him.

TheRetailTherapist