A winning strategy for brands navigating the lingering effects of Covid-19 has been to focus on categories that are seeing the most success—and for Gap Inc., that’s denim. During a Q2 2021 earnings call last week, the firm told investors that its top-selling products will guide the way for the remainder of the year.
“Our strategy really is about continuing to take market share in the core categories in which we dominate,” said chief financial officer Katrina O’Connell, adding that it’s most successful across denim, active, kids and baby.
The company delivered its highest second-quarter net sales in more than a decade, due in part to a long overdue back-to-school season, which CEO Sonia Syngal noted will be the “first in over a year” for American families.
“Our customers embraced summer with optimism, hungry for mood-boosting clothes, and vacations and reunions became reality,” she said. “We saw a celebration of American style, of ’90s nostalgia and the resurgence of denim. All of this hits the sweet spot across our purpose-led, billion-dollar lifestyle brand.”
New categories
Syngal also attributed the company’s successful quarter to its product extensions and new categories, which it has bigger plans for in the future. Earlier this month, Old Navy launched Bodequality, an omnichannel shopping experience that aims to democratize its fit process and how women of all shapes and sizes shop for fashion. The initiative introduces women’s styles in sizes 0-30 and XS-4X at price parity. All of its 1,200 stores and online shops will offer the size-integrated shopping experience.
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With “very few competitors” offering a similar size range, Syngal said the brand is positioned to take a “significant share of the $120 billion women’s market.”
Body positivity is also a theme celebrated by Gap Inc.’s Athleta brand, which last month launched AthletaWell, an immersive digital platform that connects members with vetted experts on topics like outfitting, fitness, mental health and body positivity.
Gap Inc.’s move into inclusive sizing, along with its recent expansion into home, intimates and fleece, “comprise a combined $326 billion in addressable market,” according to Syngal. “And when you couple that with a partner to amplify strategy, whether it’s through celebrity partnerships like Yeezy Gap or franchise and licensing partnerships like Gap Home, that’s a multiplier for growth.”
Marketing push
Gap Inc. has tapped a number of influential celebrities to promote its portfolio of brands. Old Navy worked with Grammy-nominated recording artist, H.E.R., to celebrate the reopening of America, Athleta partnered with Olympic gymnast Simone Biles to empower young women, and the Gap brand continues its collaboration with Yeezy to expand its products’ reach. According to the company, 75 percent of customers who preordered the Yeezy Gap collaboration’s first item—a bright blue unisex “round jacket”—were new to Gap.
Aside from celebrity influencers, Gap’s presence on TikTok is also helping to fuel the demand for its classic products. In January, content creator Barbara Kristoffersen posted a TikTok showcasing some of her favorite outfits, including one with Gap’s iconic brown logo hoodie—a now-vintage style that originally debuted for boys and babies in 1995. The post immediately went viral and incited a major spike in Google searches for “brown Gap hoodie.”
To optimize its success, the brand dropped a limited-edition release of the hoodie this summer, and introduced the “Gap Hoodie Color Comeback” competition on TikTok letting customers select the next colorway.
“Seven times more people searched for the hoodie on gap.com in Q2 than a year ago. Data shows we are attracting a younger fanbase with our teen logo hoodie, outpacing adult sizes by four times,” said Syngal. “This is a brand that is resonating. This is a brand that people care about and want to wear proudly across their chests.”
The company’s new integrated loyalty program is also driving better customer engagement, as it offers faster shipping formats, a new tier structure, on-demand points redemption and the ability to do good through points donation. Syngal explained that the program allows the company to “engage personally with noncredit card customers through experiences—not just discounting—to build lifetime value by migrating them up the value chain.”
The firm’s strategy to scale back on discounting is mirrored by other brands such as Guess, which addressed the concept of driving perceived value through increased marketing and less promotion.
“Our brands are using their unique voices, optimism, values and cultural relevance to connect with customers rather than relying on discounts to drive success,” said Syngal.