Gap turnaround well underway?
A little over a year ago, Gap announced an end to its search for a CEO in the hiring of Glenn Murphy – a food and drug retailer. Count me as part of the group of skeptical on-lookers wondering if the Gap brand was all but dead. Gap claimed that Murphy was the man for the job given his ability to lead Shoppers Drug Mart, a mature retailer with 800 stores, to 22 straight quarters of rising revenues. Now, it’s always important to have an operationally competent CEO and, yes, Gap desperately needed just such a CEO, but could a man with no merchandising or fashion experience really bring back the Gap’s brand cache and relevance?
The answer, not quite. But, Gap decided this time not to put all its eggs in a CEO much like it had when it was near single-handedly built by Mickey Drexler in the 80s and 90s and then attempted to find again in an overmatched Paul Pressler. Instead, Gap went with the operationally savvy CEO and brought in high-fashion designer – Patrick Robinson – to give him a hand. And, I have to say, a year later, their presence is felt.
Glenn Murphy initiated a buy back, began focusing on inventory management and margin dollars, and knew enough to shy away from the dangerously tempting game of chasing comp store sales growth. But, just focusing on efficiency does not a fashion retailer make. The thing that differentiates apparel retailers from all other retailers is that, more than any other industry, success in apparel is inexorably tied to finding a way to connect with the consumer. For Gap, this meant bringing back brand clout, establishing true target demographics for their three brands, and getting away from the discounting trap.
How can Gap do all this? Well, enter Patrick Robinson and this fall’s collection that has recently gone up on the Gap website. More importantly, take a cruise through the Old Navy, Gap, and Banana Republic online catalogs. What will you see? Gap has its mojo back. The color choices allow for mixing and matching, Gap and Old Navy are shedding their images as carrying “basics” and really showing up with everyday clothes that shouldn’t end up in a cameo on a Weird Al music video.
The “new classics” line couldn’t come at a better time with consumers scaling back purchases and less likely to be purchasing for the season more likely necessity shopping. The idea of classic, timeless looks that still give you a chance to express yourself could really resonate going forward. Add in Gap’s truly impressive embracement of web retailing with a terrific online shopping cart which allows for cross selling between it’s four major retailing properties – Old Navy, Gap, Banana Republic, and Piper Lime – and you have all the makings of more than an operational turn around, but a legitimate rebirth. It may be time to start taking a hard look at this company’s stock.
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