Gap Inc.
| Author | Rayna Bailey, Rebecca Stanfel, Mariko Fujinaka |
| Pages | 595-608 |
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2 Folsom Street
San Francisco, California 94105
USA
Telephone: (800) 333-7899
Fax: (415) 427-2553
Web site: www.gap.com
In 1999 Gap Inc., with a reputation for offering consumers affordable casual clothing basics such as khakis, jeans, and T-shirts, shifted its marketing focus to teen shoppers. To attract teens to its stores, Gap began offering trendy merchandise such as glitter-decorated denim jackets and body-hugging shirts. The strategy backfired when Gap's core customers, baby boomers who had relied on the chain's basic, casual styles, took their clothing dollars elsewhere. Gap's sales went into a downward spiral, and in April 2002 the company reported a 24 percent drop in sales at stores that had been open for a year or more.
In 2002, in an effort to win back its core customers and reverse its declining sales, Gap again changed its focus. Working with the New York-based advertising agency Laird + Partners, the chain launched a global marketing campaign titled "For Every Generation," which was aimed at a broader audience. Although executives declined to release the campaign's budget, a spokesman for Laird + Partners stated that it was one of the largest projects Gap had undertaken in several years. The campaign included television spots, print and billboard ads, and direct mailings. Commercials featured a roster of some 50 celebrities dressed in their own Gap clothes.
By the end of 2002 it had become clear that Gap's marketing strategy had accomplished its goal. Prior to the campaign's launch, the chain had reported 29 consecutive months of declining sales. Following its launch in October 2002, Gap's sales were on the rise, up 1 percent compared with a 17 percent drop in the same month the previous year. In addition USA Today's weekly poll Ad Track concluded that consumers, especially adults between the ages of 25 and 64, found the ads highly appealing.
In 1969 Doris and Don Fisher opened the first Gap store in San Francisco. According to the company Don Fisher's motivation for opening the store was "to make it easier to find a pair of jeans." In an effort to update the look of its merchandise, Gap in the late 1990s turned away from its founder's original idea and began selling trendy fashions geared toward teens instead of the basics preferred by baby boomers. As a result it lost many of its core customers, sending the company into a financial free fall. In 1999, prior to the shift in product, the company had reported $1.13 billion in earnings. After the switch in 2001 Gap reported a loss of $7.8 million. In early 2002 Gap reported its worst financial performance in its 30-year history.
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Gap's product switch was partly a result of a shift, in the late 1990s, in fashion trends away from basic casual clothes to a flashier look favored by young women. In 2002 the Washington Times described Gap's product change as a fashion faux pas. The paper stated, "Gap's problems started well before this season as the company moved away from the look that made it famous and added trendy clothes like denim jackets with glitter and tight-fitting fashions to its product mix." Customers walking into their favorite Gap store in search of a pair of basic khakis fled when they instead saw orange and turquoise cropped jeans embellished with silver studs. The chain also found itself losing business to its sister chain, Old Navy (also owned by Gap Inc.), which sold products similar to Gap's but at lower prices. Further confounding Gap Inc. was what many analysts saw as the company's lack of focus when it came to establishing an identity for the Gap brand that would help distinguish it from Old Navy.
When the brand launched its new campaign in 2002, it returned to its roots and original philosophy of enabling people of all ages to buy Gap products and adapt them to fit their personal styles. The company admitted that chasing fickle teens with trendy clothes was a no-win plan. Kyle Andrew, vice president of marketing for Gap, said in a Women's Wear Daily interview, "Let Gap be Gap. Let's not try to be trendy." For the new campaign, in addition to returning to its offerings of basic jeans, khakis, and tees, the company also revived and slightly modified a slogan it had used in the past but had failed to take full advantage of: "For every generation, there's a Gap."
Although Gap's "For Every Generation" campaign alienated trend-obsessed teens, it shifted the company's focus back to a broader range of customers. The consumers Gap's new campaign targeted ranged from infants to senior citizens. It also was designed to win back its former core customers, baby boomers who had always relied on the chain's quality, affordable basic clothing styles.
Explaining the new strategy, company president and CEO Millard Drexler told Business Wire, "Gap speaks a common language that everyone understands, and this campaign reflects the connection that people of all ages have with Gap. Whether you are six, sixteen or sixty, nothing is more universal than a pair of Gap jeans. That's the kind of classic style, product and message we stand for."
As Gap struggled to reverse more than 22 months of negative same-store sales, one of its top competitors, Abercrombie & Fitch, was embroiled in its own problems related to marketing and product offerings that many considered offensive. Also among Gap's top competitors was American Eagle Outfitters, which was on the opposite end of the marketing spectrum from Abercrombie, with climbing sales and a reputation for offering wholesome advertising and merchandise.
Abercrombie & Fitch was founded in 1892 as a purveyor of quality camping, hunting, and fishing clothing and equipment, and by 1917 it was the world's largest sporting-goods store. Among the store's customers were Teddy Roosevelt, who purchased gear at the store before setting off on an African safari, and Ernest Hemingway. In 1988 the chain was bought by the Limited (which also owned Victoria's Secret) and shifted from selling sporting clothes and equipment to outfitting suburban kids.
With Gap promoting the idea that it was for everybody, Women's Wear Daily wondered who Gap Inc. expected to shop at its other chains, Old Navy and Banana Republic. Gap's vice president of marketing, Kyle Andrew, explained that many customers would shop at all three chains but that efforts were being made to separate the brands. "Old Navy is more family and value shopping. Gap can move up to be a more stylish place, and Banana Republic can move up to be an even more stylish place." Gap was also especially known for its jeans, a feature the company emphasized in its fall 2002 line. By 2002 Old Navy was being pressured by—and losing customers to—discount stores that carried similar merchandise but that also offered the convenience of one-stop shopping. Because of its higher customer profile and merchandise offerings that were trendier or more stylish, the other store in the trio, Banana Republic, was having fewer problems keeping its customers.
The Limited phased out its ownership in 1998, and Abercrombie became an independent public company. The chain's marketing and merchandise, produced in-house, turned toward the explicit and sexual. In 2002 the company was listed by PR Newswire as producing one of the 10 worst public relations blunders of the year. The publication reported that Abercrombie had offended the public with its thong underwear for prepubescent girls
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and its T-shirts that portrayed stereotyped images of Asian-Americans. Despite pulling the controversial merchandise from its product line, the company remained known for the "sex sells" theme in its marketing. The company's 2002 catalog, titled "XXX," included sexually suggestive photographs on more than half of its 280 pages. Despite consumer complaints about its merchandise, Abercrombie reported a 21 percent sales increase in October 2002 compared with the same period the previous year. It noted, however, that same-store sales had dropped 5 percent from January through November 2002.
American Eagle Outfitters, founded in 1977, was originally known for selling men's outdoor gear. In 1992 it underwent a rebranding and became known for its classic American, mainstream style, which successfully appealed to its target market: mature teens and young adults. By 1997 the chain had begun making additional improvements to its selection of merchandise, and it introduced marketing—which included ads in such magazines as Mademoiselle, Seventeen, and Spin—intended to broaden the brand's customer base by promoting its affordable, casual, and basic clothing. American Eagle reported that first-quarter sales overall in 2002 were up 14.9 percent over the same period in the previous year; however, same-store sales for the first quarter of 2002 were down about 2 percent.
As Gap's "For Every Generation" campaign was prepared for its launch, a company spokesman said that the new marketing strategy had been created to broaden its appeal to consumers and to attract...
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