Gap Vows to Enhance Marketing Strategies in Effort to Boost Effectiveness
Gap commits to reviving its iconic marketing status by shifting focus towards impactful storytelling and abandoning tactical approaches, emphasizing effectiveness and delivering compelling narratives
Gap is prioritizing marketing "with conviction" as a key element of its revival strategy. In the past, the company has overly relied on tactical executions, which hindered its ability to focus on effectiveness. Gap Inc CEO Richard Dickson acknowledged yesterday (16 November) that there is room for improvement in the company's marketing efforts, emphasizing the importance of applying financial discipline to enhance marketing and media effectiveness.
Dickson, who recently transitioned from his position as chief operating officer at Mattel to join the company in August, assures customers that they can expect to witness an increase in innovative, cohesive, and impactful marketing efforts. However, he emphasizes that this does not imply an escalated expenditure.
"Our goal is to maximize the efficiency of our investments. Historically, our marketing strategy has predominantly focused on short-term tactics. As a result, certain brands have lost their relevance and distinctive storytelling," he stated.
Looking at our company's history, we have a legendary track record in marketing. I am highly optimistic that we will once again excel in this field, as it is a vital aspect of our revitalization efforts.
The focus should not be on increasing spending, but rather on maximizing the value we derive from our expenditures.
Richard Dickson, Gap
Total net sales fell 7% to $3.8bn (£3.06bn) in the third quarter to 28 October, with store sales down 6% compared to the same period last year.
In Q1 of this year, the company reached a total of 3,533 store locations in over 40 countries. In 2021, Gap decided to exit the UK high street and instead formed a joint venture with Next. Through this partnership, Next now oversees the management of Gap's UK website and certain store concessions.
On a global scale, online sales witnessed an 8% decrease compared to the previous year, accounting for 38% of the company's total net sales. Despite the decline in sales, analysts have commended the company for surpassing expectations.
Dickson highlighted media and marketing as an area in which Gap has room for improvement. He emphasized the need to enhance their performance by leveraging the scale of their media expenditure to achieve greater efficiency and effectiveness. Importantly, Dickson clarified that the goal is not to increase spending, but rather to maximize the value derived from their current expenditures.
Gap's sales declined by 15% to $887m (£715m) at a brand-specific level. However, when factoring in the sale of Gap China and the shutdown of Yeezy Gap, the company's collaboration with Kanye West, net sales only dropped by approximately 6% compared to 2022 levels.
In the broader portfolio, Old Navy recorded third quarter sales of $2.13bn (£1.7bn), a 1% decrease compared to the previous year. Banana Republic, on the other hand, experienced an 11% decline in sales, amounting to $460m (£371m), as its repositioning efforts continue.
The company aims to reconnect with its Athleta sportswear label's customers through "brand right marketing" following a decline in sales of 18% to $279m (£225m). Emphasizing the brand's heritage, Dickson asserts the importance of bolstering the company's portfolio through distinct identities and a compelling pricing strategy.
Prioritising storytelling
According to him, in order to reclaim a strong and continuous presence in the cultural dialogue, we must employ inventive marketing techniques. Simultaneously, ensuring exceptional execution at every point of contact and interaction is crucial.
Gap recognizes the potential for investment in storytelling, capitalizing on a remarkable 90% brand awareness among US consumers, according to Dickson. The aim is to embrace significant concepts and culturally significant messages, as exemplified by the launch of Gap's festive campaign in October, which showcases a fresh and unified creative approach.
"If you visit our website today and have been following our brand, you'll notice a significantly improved and consistently creative marketing narrative in our online experience," Dickson stated. "Our focus will be on making storytelling a more prominent feature, and we will actively integrate Gap into cultural discussions."
Old Navy also places a strong emphasis on storytelling, aiming to "reestablish" the brand. The CEO highlighted the positive outcome of a targeted marketing campaign for women, coupled with engaging online content centered around compelling creativity and value messaging.
Banana Republic is currently undertaking efforts to improve their marketing effectiveness and implement a broader repositioning strategy. The aim is to establish Banana Republic as a "quiet luxury" brand, reducing dependence on promotions.
Meanwhile, Athleta faced challenges as the CEO openly acknowledged a series of marketing errors that had derailed the brand.
However, the focus on improving the brand seems to be yielding positive results. Dickson reports that NPS scores and sales are increasing for important products promoted through the new brand voice. Although the Gap CEO acknowledged that a complete brand overhaul will require more time, the new digital dialogue, store experience, and product mix are already in place.
