Picking up Janie and Jack provides Gap with a strong offering in the kids category – a category that has become slightly less competitive with the demise of Gymboree. However, the question remains, is this the right strategy for Gap? The acquisition of Janie and Jack is telling of Gap’s strategy, and while it’s an interesting move, it’s unclear how much impact this will have on the Gap’s business in general – this is very much a work-in-progress, and success is far from certain.

Given Gap’s consistent struggles to find relevance with their core customer, I guess trying to broaden their reach into kids’ fashion is worth a try. The price for Janie and Jack seems right and, in my opinion, the appeal of GapKids and babyGap has been stronger than that of “adult” Gap. Maybe they are on to something…

I have long thought that GapKids was much better merchandised than Gap. They offer fun, well-assorted product. So it makes sense to build on that strength. How will they differentiate the two businesses? Remains to be seen. And $35 million for 140 standalone stores seems like a bargain. Extending the kids business is not the big strategic issue facing Gap. I keep reading about the 200+ underperforming stores they will close. While I am sure they do indeed have stores worthy of closing, underperforming stores is not Gap’s problem. Gap’s problem is underperforming product. Boring, ordinary product. Gap actually succeeded beautifully with ordinary product at one point. They succeeded with brilliant marketing. Gap has what I call a “15 percent problem.” Much of Gap’s product is good product. If they would just step out a little on 15 percent of their assortments, they could be telling a much more interesting story. They need a little less predictability in their assortments. They need a little higher dosage of “fun” and “treasure hunt” product, especially in men’s.

Janie and Jack seems like a sensible addition that will give Gap a presence in part of the kids’ apparel market that it doesn’t already occupy. However, acquiring things is not really the solution to Gap’s problems. It needs to develop a much clearer and a more compelling proposition within its own business if it is to drive growth.

The house is on fire and you go on a spending spree for old Gymboree stores and buy a new brand? Oh yes and cleave the company into an unnamed company. It’s a new direction but you can’t buy your way out of the fundamental problem – the CEO doesn’t know how to manage the brands he has had for a generation.

It’s a good step in delineating differences between Gap and Old Navy children’s products. But overall, bringing outside brands to improve their brand position will not be the solution — just ask J.Crew.

The kids clothing segment has always represented a big area of opportunity for retailers. Gap has an already well established babyGap brand, that has a loyal following which perhaps could use a strategy refresh in a competitive market. However, via this acquisition, the babyGap now has a chance to revisit their merchandising strategies, diversify their assortments, and enable a “good-better-best” approach to their pricing structure.

As with any acquisition, it remains very much a wait and see proposition.