Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

New Gap Strategy Cuts Lead Times, Positions Materials, Boosts Profits

LESS THAN ONE WEEK AWAY! Join Sourcing Journal & industry leaders at our SOURCING SUMMIT NY on October 19 to discuss the most pressing issues of the day. Your business cannot afford to miss this!

Gap has been satisfying more customers, faster, using a new strategy that improves its speed to market. This enables them to more variations over the life of a line, minimizing the risks on any given styling decision.

Sounds like fast fashion, but Gap is not a fast fashion company. Rather, the company is using a combination of planning, procurement, and relationships to leverage its preexisting advantages. It’s bearing fruit, in the form of a 61% increase in full year profit and a 5% increase in comp store sales.

CEO Glenn Murphy calls the new tactic a “risk reducing strategy,” and says the firm has been tightening up its assortments – reducing colorways, for example. “I think the team has recognized that in some cases, in categories that matter to us, less is more.”

Mark Burstein, President of Sales, Marketing, and R&D at enterprise solutions provider NGC, says, “Speed to market is about waiting until the last minute to decide what the bodies are that they’re going to put into work.”

Burstein also points to heightened visibility in the manufacturing process. Murphy says that Gap has been improving relationships with fabric providers and mills, expanding away from its vendor driven model. The company is securing fabric in advance, and likely booking capacity, but it is doing smaller initial runs and using feedback to determine how the rest of the run should look, rather than cutting, sewing, and shipping all at once.

“We’re actually seeing that in some of our customers. They’re positioning materials in the beginning of the season, then they’re deciding what are the bodies, what are the colors, and even in retail what are the sizes, and then they’re producing based on demand. It’s difficult, but that’s what the systems are all about,” says Burstein.

Burstein estimates the moves are probably reducing lead times on new products by about 40% – from 300 days down to around 180.

Murphy says that the shifts are allowing the company to restock faster and increase orders of popular items in season. Because the fabric is ready to go when they send it to the factories, all they need to do in many cases is add color and cut it.

Burstein says that this strategy is the best way to streamline a business. “The only other way to grow is by adding more people and more overhead and more paperwork. This makes everybody more efficient.”

Gap is able to run more products in a season, which is why Murphy describes it as “de-risking.” It means the company has less at stake on any given line, which gives them the freedom to make mistakes. That also increases the chances of a breakout hit which they’re able to capitalize on, and helps get American retailers back on a footing with their Asian and European counterparts.

Related Articles

More from our brands