Will faster deliveries prove to be a valuable loyalty perk for Gap?
Gap Inc. said it will prioritize online fulfillment to its biggest spenders as part of its upgraded loyalty program.
“One of the things we are using loyalty for — and we’re designing it for — is to tier fulfillment based on if you’re a bronze, silver, gold member, for example,” said Sonia Syngal, Gap Inc.’s CEO, on the retailer’s fourth-quarter investor call. “And so that will also allow us to optimize the speed of delivery and fulfillment based on our best customers and manage fulfillment costs effectively while pleasing our most valuable lifetime value customers.”
Last September, the company replaced its multi-banner loyalty program, BRIGHT Rewards, with programs tailored to each of its core brands: Navyist Rewards, Gap Good Rewards, Banana Republic Rewards and Athleta Rewards. Although each brand’s program has a different look and feel, customers earn and redeem rewards for spending across banners. In 2020, Gap Inc.’s customer file grew 14 percent to over 183 million.
Ms. Syngal said “one of the biggest value drivers” for the company in 2021 will be the full implementation and integration of its loyalty program across all banners this summer.
“We know members of our loyalty program outspend non-loyalty customers by more than 80 percent,” she said. “This integrated program will offer our loyalists benefits across our entire portfolio while still providing unique and emotional brand connections. If we can get a customer from a single transaction to multiple transactions, to multiple channels, and to multiple brands, we see value accretion at every step.”
Gap Inc., like other retailers, has been grappling with outsized online demand due to restrictions placed on in-store shopping. Online sales across the company’s banners jumped 54 percent in 2020 to represent 45 percent of sales, up from 25 percent in 2019. E-commerce grew 49 percent in the fourth quarter.
Gap Inc. officials also noted that deliveries are being impacted by COVID-related U.S. port congestion.
- Gap Inc. Reports Fourth Quarter And Fiscal Year 2020 Results; Provides 2021 Outlook Gap Inc. – Gap Inc.
- Gap (GPS) Q4 2020 Earnings Call Transcript – The Motley Fool
- Gap Inc. Expands Loyalty Program Nationwide – Gap Inc.
DISCUSSION QUESTIONS: Do you see more benefits than drawbacks in prioritizing online fulfillment to a retailer’s best customers? What’s the likelihood that other retailers will or are making similar moves?