Gap learns a few things from Zara – me too

gap-zara-11-28-16-wsj

I read a very interesting article in this week’s Wall Street Journal – As Gap Struggles, Its Analytical CEO Prizes Data Over Design

Khadeeja Safdar’s November 28th WSJ article:

I was quite surprised to learn that in terms of market value, Zara is four times the size of Gap. From Steven Rosenbush’s WSJ November 28th blog:

“Gap’s market value has shrunk to about $10 billion, from roughly $40 billion at its 2000 peak and revenue has stalled at about $16 billion—flat from a decade ago, the WSJ says. The company faces a new generation of successful rivals such as Zara, owned by Spain’s Inditex SA. “Zara, by comparison, sends small batches of apparel to stores and waits for consumer reaction. Using real-time data, the company airlifts additional products to stores within days to meet demand. The chain is also known for few markdowns,” the WSJ reports. “Orders at Gap require corporate approvals, while Zara permits an employee or agent to authorize new stock on the spot, according to a supplier who makes garments for both companies.”

In response, Mr. Peck is putting more emphasis on data and establishing mechanisms for faster response. He has shifted some manufacturing from Asia to the Caribbean and he also wants to stagger product releases throughout the year and shorten the time it takes for items to go from the drafting table to stores to take into account the most recent data trends, according to the WSJ. “

The ever more challenging brick and mortar retail environment has become all about speed.

 Again from the article:

 “Executives still see the company as a cut above. Mr. Peck recently announced plans to ramp up marketing, including the first national TV ads for the Gap brand since 2014. Banana Republic is revisiting its catalog tradition. “I think the product is better than the business right now in Banana Republic and Gap,” said Mr. Peck on a conference call with analysts. “Not perfect by a long shot but better than our business.”

Mr. Peck’s comment does not inspire confidence.

One final but telling quote from a Millennial shopper:

 “Gap’s brand is not terribly cool, and it’s overpriced,” said Andrew Martin, 24, a shopper from Los Angeles. “If I’m going to splurge on clothes, I would be so much more likely to buy things I think are cool.”

At $10 billion in market value it’s not as if Gap is on life support. Many companies apparel and otherwise would be happy with 10% of that kind of market value. But when it comes to investors the future is what it’s all about – but probably not more than three or six months is the ‘future’ when it comes to investors. Clearly the investing future isn’t what it used to be.

Can Gap return to its former glory? I wouldn’t want to bet on it. Would you?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Advertising, Advertising to Millenials, Brand Advertising, Retail marketing and tagged , , , , , , . Bookmark the permalink.

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