Photos: Gap Inc.
Gap’s New CEO Looks To Crank Up the Volume
Last week on an analyst call, Gap Inc.’s new CEO Richard Dickson said all four of the company’s brands — Old Navy, Gap, Banana Republic, and Athleta — have “incredible heritage” but need to have a “clear point of view” communicated through “innovative marketing to regain a powerful ongoing voice in the cultural conversation.”
Dickson was the former president and COO of Mattel, as well as a Gap board member since November 2022.
Old Navy’s heritage is “rooted in fun, fashion and value,” but the banner has to be more consistent in delivering “bold and breakthrough narratives,” according to Dickson. He also believes product assortments need to be enhanced, “balancing essentials with exciting new trends and a pricing strategy that clearly communicates jaw-dropping value, all of this to remind customers why they love Old Navy and give them compelling reasons to love us even more.”
The flagship Gap banner “has been far too quiet in the cultural conversation,” Dickson noted, given its over 50-year heritage. He explained that the company needs to “reignite that dialogue” by providing confident and trendy assortments that are priced well and include culturally relevant messaging.
Banana Republic is finding some success with cashmere and leather offerings but needs to further refine its product, pricing, and marketing approaches to transition from its prior “promotional and transactional” stance. Dickson said, “We think Banana Republic has an opportunity to thrive in the quiet luxury space and represents a unique position in our portfolio.”
Athleta likewise has “gotten off track” with lackluster performance. This may in part be due to product misfires, poor marketing choices, and unsuccessful retail execution that didn’t resonate with customers. The brand is now refocusing on its performance roots. On the call, Dickson explained, “While we are progressing each quarter, we know that a full brand reset will require a more comprehensive approach and will take more time.”
Gap’s shares surged more than 30% on Friday after the company’s third-quarter results topped expectations amid signs of improvement at Old Navy and the Gap banner, although cautious guidance was provided for the holiday quarter. Shares have nearly doubled since the July hiring of Dickson, who was credited with reviving the Barbie franchise during his time at Mattel.
In the Q&A session during the analyst call, Dickson underscored that all four of Gap’s brands need a much stronger point of view and fine-tuned storytelling approaches to increase their relevance. Additionally, according to Women’s Wear Daily, he said in a recent interview, “We’re telling too many stories. We need to edit ourselves to tell a more clear and precise story that stays consistent and has a relentless, repetitive narrative to it.”
Discussion Questions
Are lackluster messaging and a weak point of view core problems at Old Navy and other Gap Inc. banners? What advice would you have for Gap Inc.’s new CEO?
Poll
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Jeff Hall
President, Second To None
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
Happy to see GAP’s good quarter. I think Mr. D is spot on. There is so much inherent value in all the GAP brands but they have not kept up as well as they could in several areas:
Messaging and marketing of the various brands are part of the issue, but the problems run much deeper than that and include positioning and the general proposition. Old Navy needs to be reinvigorated and infused with a lot more interesting, on-trend product. It also needs to double down on value if it is to survive the future growth of Primark. Gap is as dull as dishwater and needs a personality transplant: its position should be great classic products with some fashionable twists. Inspiration can come from companies getting it right like Uniqlo, Marine Layer, and Abercrombie & Fitch.
The good news here is that Richard Dickson is saying all the right things, which is a big change from Gap’s previous CEOs. However, it will take a lot of work and time to transform words into action.
Agreed it is a step in the right direction but how is Athleta down 9% when the segment is still strong? Much to do and wish them well. Will be interesting to see if he stays with the close more mall locations for free-standing.
I would go back to the future, back to the original basics that made them famous. I bought 2 pairs of jeans last year. One was from the Gap the other from another well known entity. The Gap jeans will last forever while the other brand fell apart. There is quality in what they sell but the brand has lost sight of its heritage.
I hope Gap’s board gives Richard Dickson the resources and just as importantly, the time to execute on his vision of resetting the portfolio. It is such a shame that all four brands find themselves with such fundamental challenges, given at one time or another each was performing well and resonating with its target customer – though unsurprising, given the long history of inconsistency in merchandise and marketing. Dickson is clearly articulating the right path forward. The question is, will shareholders and customers be patient during the transformation, or fickle and simply move on to alternatives?
It sounds like the diagnosis of the problems and the prescription for the different cures is absolutely on the money. Now let’s remind ourselves that implementing the remedies is waaaaaay harder than calling them out. The really good new is that each of these brands has enough success in their past that, in my opinion, those previous successes can be attained again. Which is not to say that it’s a simple matter if turning the clock back. I think there is a huge lesson to be taken from Abercrombie’s current success. That was a total reinvention of attitude and aesthetic. It was difficult and risky. Really risky. But it worked. I’m wishing Gap Inc. similar levels of success.
I agree that these brands have recently struggled to establish clear identities. It’s important that each one say something different, since they do all stand for such disparate types of value. Beyond messaging though, most important is that these brands sell product that consumers actually want to buy. Assortment is everything in the fashion space.
Lackluster messaging and a weak point of view are definitely part of the story but no amount of messaging will cure a poor business strategy and bad execution. However, the job of the critic is the coward’s job so I trust that the “brave” Mr. Dickson understands that marketing isn’t the only thing that needs help. The shifts of the consumer away from traditional malls, of brands to direct to consumer strategies, of its brands to “silly” product mixes are also part of the story that contributed to the decline of Gap Inc. Gap may have a combination of its own problems and may unfortunately be a poster child for the problems affecting its type of retailers. There’s a lot to peel back but Mr. Dickson has to start somewhere and I’m looking forward to the day we’ll all be wearing Barbie and Hot Wheels inspired clothing. He has a difficult job but appears to have the track record, leadership and vision to turn things around.
things CMOs say…nothing wrong with those statements but it takes so much more. I wonder how much they are leveraging their data assets. I wonder if their ad budgets are sufficient. Brand stories and culture are not necessarily the same so they need to focus on both and create living breathing brands that people can relate to as if they were family members.
I am a Gapper from way back. The company has lost its way and I am excited to see what Mr. Dickson has planned to set things right. Old Navy is a lot and Gap has no identity, except all sale, all day. I do like what’s happening at Banana Republic. I am shopping there again, but some of its recent collections seem to be designed only for women who are tall, willowy, and stand posed like the models in the marketing materials.
I also like what he said about Gap brands telling too many stories, the namesake store certainly is. I am looking forward to following what happens in the stores as new plans unfold. I wish him and his team the best of luck.
This is the clearest communication I have seen from the company in decades, and it gives everyone from the designers and buyers right down to the store staff something consistent and simple to focus on. As the old saying goes, “knowing is half the battle.”
I think the issue is product, not marketing. All three brands have to reinvent their style ethos.
If ‘point of view’ means an unclear strategy then I’m in agreement. There is very little merchandise differentiation and no compelling reason(s) for consumers to shop at these brands, especially Gap.
Each of the brands was succeeding the past because they had a clear target customer and an assortment and experience that resonated. It’s not been the case for years, sadly.
Please don’t ice the cake before you fix the recipe. GAP needs a fundamental audit of profit optimization focusing on key essentials–good quality, high value. Just going after the messaging/marketing—while I am a marketer, is not the right starting point. I agree that BR should compete in the quiet luxury space, but this brand needs to compete for the 30 somethingers. Athleta needs a quality and consistency of fit focus. I would also look for consumer syngergies across brands and elevate the instore experiences.
I mean, what is the messaging, exactly? I have no idea. If I am in the majority, the CEO needs to get this figured out immediately. Job one.
Mr. Dickson seems like a talented executive who “gets” the critical need for powerful and distinct brand storytelling. I believe he will have an impact there.
Less clear as of now is how he will lead the four banners forward in terms of product, price position and stores. There is no shortage of brand equity to leverage. Each will require a distinct strategy, and significant investment.
Are there sufficient resources (capital and intellectual) available to win with all four? If GAP can pull off a solid Q4, perhaps they will find the needed cash to move ahead smartly.
That’s among their problems. Here in the Bay Area, for those following the Athletics’ saga, the name “Fisher” has become synonomous with incompetence and cluelessnes, and while I can’t , of course, say how much of that rubs off on the GAP brands, it’s still hard to escape the obvious point that the one commonality over the ( many, many) years of decline has been ownership.
My advice to Mr. Dickson is to keep his networking strong, never know when that might pay off (tho my guess will be in a couple years).