In a previous post, I highlighted key areas that can help the Gap brand get back on the right track. 'Stop thinking so hard and focus on the whole experience.' 'Reconnect with customers.' 'Set the company for success.'
Despite stated intent to revamp its strategy and focus on customers, the Gap, it seems, has become an old Dog riddled with old habit. And, as the saying goes, it's a tough thing to teach an old dog new tricks.
Gap's new (Product) Red campaign seems to go even beyond a full-scale Hollywood production; it brings together celebrities (Seal, Cheryl Crow, Kristy Turlington, Kim Basinger), philanthropy (Bono's and Bobby Shriver's Global Fund), music (and this time even a limited edition CD), and a new line of (Red) clothing. And while the color red seems to be the new black this season, Gap brings nothing new; nothing inspiring. In fact, it seems that it is so internally torn between past successes and the search for new paradigms, that it has chosen to emulate the success model of discount/mass retailer Target and invited French Designer Ronald Mouret to create an exclusive line for its collection.
The recent article (below) from Bloomberg News (published in the Chicago Tribune) and the current stock performance are just two testaments of Gap's visibly continued decline.
But as you read it, don't despair. It may just be that the bottom is farther than we had thought; that it'll take some red before the gap goes true black again. Gap is known for its bubbly, young, inventive culture. Let's hope it'll soon spring back up and recapture the spirit- just like that old dog does when his owner comes home.
Designer line fails to ignite Gap sales
Published December 5, 2006
She needn't have bothered. She stood alone for an hour and 20 minutes before being joined in line by two other shoppers. "I was shocked," said the 35-year-old personal assistant from New York. "I thought it was going to be a mob scene."
Sanner's experience suggests that not even borrowing a tactic used by Swedish rival Hennes & Mauritz AB will help Gap ignite holiday sales. The retailer is struggling to lure shoppers after same-store sales, or sales at stores open at least a year, declined in 27 of the last 30 months. Same-store sales are considered the best indicator of a retailer's health.
More retailers are using high-end designers to boost traffic and sales. H&M drew throngs by partnering with designers such as Karl Lagerfeld and Stella McCartney. Target Corp. sells Isaac Mizrahi clothing, while Kohl's Corp. will sell a collection by Vera Wang.
Unlike H&M's treatment of its designs, Gap didn't display Mouret's name in stores or windows or even on the clothing.
"I don't think it was well-publicized," said Kate Casey, 30, a registered nurse from New York who said she hadn't shopped at Gap in two years and came only to buy the dresses. "I even went online, and they didn't have this on the Web site."
Analysts estimate Gap's profit will decline for a second year as slumping sales force the retailer to discount. November same-store sales tumbled 8 percent.
"They already blew" the holiday, said Mike Montagna, an analyst with CL King & Associates.
The holiday quarter is the biggest for Gap and other retailers. Last year, the period November through January accounted for 32 percent of industry profits, according to the International Council of Shopping Centers. Retailers' same-store sales in November and December could rise as little as 2.5 percent, the council said.
The third-quarter introduction of skinny black pants with advertising featuring Audrey Hepburn and clothes supporting singer Bono's AIDS campaign also failed to boost traffic.
"We have lost confidence in management's ability to source the right product," Todd Slater, an analyst at Lazard Capital Markets, wrote in a recent investor note.
Shares of Gap closed at $18.96, up 28 cents, or 1.5 percent, on the New York Stock Exchange.
Copyright © 2006, Chicago Tribune