How the new Gap owner intends to end years of decline
At the end of March, when he had been in difficulty for a long time already, Gap had to temporarily close all of his shops in North America due to the containment measures linked to the Pandemic of Covid-19.Overnight, the clothing company lost 70% of its turnover.
Four days later, Sonia Syngal, 50, took office as director general of the group.
The pandemic has put many companies on their knees, the situation of which was already fragile, particularly in the retail.J. Crew Group, Neiman Marcus Group and J.C. Penney have placed themselves under the protection of the bankruptcy law, and others have lost millions of dollars in turnover and profits.
Ms. Syngal's mission is to avoid this type of descent into hell, in particular by solving the problems of the GAP brand which, according to some analysts, is in difficulties as it is no longer worth anything.Terré in her house in the Baie de San Francisco, Ms. Syngal plunged into her work to the point that her children came to bring her meals to be sure that she did not forget to eat.
Ms. Syngal’s first initiative, as many of her counterparts at the head of American distribution companies, was to hunt for savings, before raising $ 2.25 billion in fresh money.In three years, the Gap brand, emblematic of American shopping centers, has left a large number of them.
Then, Ms. Syngal decided to reform the corporate culture of the San Francisco group, which she considered ankylosed and refractory to the risk.At a time when the group's shops were closed, the evidence appeared to him: the company Gap had a neglected treasure, the Gap brand.
While resources had been dedicated to other brands (Old Navy, Athleta, Banana Republic), Ms. Syngal saw an opportunity to refocus her efforts on the oldest brand in the group.The result of this strategy, which will be scrutinized closely, will show if a company in difficulty in a sector strongly affected by the pandemic can succeed in straightening in time.
"I understood that we had to go to the offensive under penalty of exposing ourselves to very dark days," explains Ms. Syngal, who has become the fourth person in eighteen years to lead the company after the departure of hispredecessor.
Parmi les défis qui l’attendent, il lui faudra trouver comment attirer de nouveau la clientèle de Gap qui, ces dernières années, s’est tournée vers d’autres enseignes telles que H&M, Uniqlo et Everlane.
The brand "has no clear positioning", said Ivan Wicksteed, who held the position of marketing director at Old Navy until 2015 and is now working for a health technology company."If you try to contact everyone at the same time, you end up talking to anyone anymore.»»
Les ventes nettes du groupe Gap ont chuté de 30 %, à 5,4 milliards de dollars, sur six mois au 1er août dernier, et les pertes ont atteint 994 millions de dollars, contre un bénéfice de 395 millions un an auparavant. Les ventes de la marque Gap à magasins comparables ont augmenté de 12 % – première évolution positive depuis 2017 – mais cette hausse est liée à la fermeture temporaire de boutiques, soulignent des analystes.
Vendredi, l’action Gap valait 21,42 dollars à la clôture des marché, soit près de quatre fois plus qu’en avril, où elle avait atteint un plus-bas en 25 ans à 5,50 dollars ; l’indice sectoriel S&P 500 Apparel Retail Sub Industry affiche pour sa part une progression de 36 % sur la même période.
Last year, the Gap brand represented a little more than a quarter of the $ 16.4 billion in annual sales of the company.
"Gap is the main question mark," observes Ms. Syngal.The brand has been under pressure for a long time.»»
Une marque pas comme les autres
Founded in 1969, Gap occupies a special place in the world of American fashion.His affordable clothes, representative of a cheerful and relaxed style, became such a cultural symbol that Sharon Stone had wore a gap shirt during the Oscar ceremony in 1996. Over the years, the group has added Old Navy and D 'other brands to its assets.
During the last decade, the GAP brand has sailed from one style to another.One year, former leaders tell the idea of attracting young clientele to the tight budget by competing with ephemeral fashion channels.The following year, GAP was addressed to affluent customers by offering leather jackets at 600 dollars.
Kim Hancher, who lives in San Rafael in California, was a client of Gap when she was twenty years old.Now 49 years old, the fashion advisor explains that she no longer frequents the GAP boutique because "the cuts have become wide and square, and the style is more pretty, nor current".
Even though its sales fell, the brand has continued to produce too many clothes over the past six years, indicate former employees including Trey Bachus, who was deputy responsible for a GAP store in Houston until 2018. The stores received goodMore articles than they could present, he adds.
The surplus accumulated in reserves overflowing with clothes, and it was necessary to carry out very important discounts to sell the stocks.
"We were delivered 300 peach color t-shirts, and this color did not sell," says Mr. Bachus, now manager of an Aéropostale store.Customers do not want to have to dig into huge stacks of clothes.»»
"This is a lesson to remember," notes Ms. Syngal.But we have appointed proven managers to these positions.»»
The other brands in the group are doing better.Athleta, a sportswear chain, is aimed at female clientele on the flourishing niche of "athleist" (sport and leisure).Old Navy has recorded growth in nine from the past ten years.Paul Lejuez, analyst at Citigroup, attributes a negative value to the Gap brand and its younger Banana Republic.
According to him, the Gap brand "has died for ten years".
Au début 2020, l’action Gap Inc. avait perdu plus de la moitié de sa valeur en cinq ans, tandis que l’indice S&P 500 Apparel Retail Sub Industry affichait une hausse de 36,8 %.
At its summit in 2001, the group had 1850 GAP stores around the world and was present in most shopping centers in the United States.At the start of confinement in March, the GAP shops were 1170. The group holds around 3,800 points of sale in total in the world if we include Old Navy, Athleta, Banana Republic and the franchise stores.
Le mariage de l’art et de la science
Born in India, Ms. Syngal grew up in Montreal, where her aunts taught her to sew.She made her own clothes as well as her friends' evening dresses."I believe in art and science," she says in reference to the association of the creative process and data.Both are inherent in the fashion industry.»»
Training engineer, Ms. Syngal was responsible for products at Ford Motor and worked for ten years at Sun Microsystems before joining Gap Inc. in 2004 as vice-president in charge of supply strategy.In 2016, she resumed the reins of Old Navy, whose attendance in North America and Mexico increased, and developed e-commerce capacities.Before she leaves her, the brand had started to see her sales decrease.
In early November 2019, the GAP group announced the departure of Art Peck, which has been at its head since 2015 and had established a plan for a few months earlier to separate the group into two companies with the split of Old Navy.On the same date, the group had indicated that it would register mediocre quarterly sales and had lowered its procurement forecasts for the year.Mr. Peck could not be contacted to provide a comment.
In January, the Gap group, in search of a new boss, abandoned its Old Navy split project.In March, like other non -essential products distributors, he had to close his stores, and promoted Ms. Syngal to the post of Director General.
She declares that she realized that, to ensure the success of the company in the post-Cavid era, it was necessary to be "totally clear" on what each brand represented.Old Navy and Athleta were best placed.Old Navy, which sells relaxed and affordable clothing in external commercial galleries, benefited from the attendance of a clientele anxious to avoid closed shopping centers, explains Ms. Syngal.At the same time, the emancipation message of women and young girls carried by Athleta hits the bull's eye, she adds.
Last Thursday, the GAP group announced development projects for both brands, believing that by 2023, Old Navy and Athleta would represent two of the group's net sales, against a little more than half today'Hui.
Banana Republic was in a more precarious situation.Before the pandemic, it was a "pretty brand, in good health", recalls Ms. Syngal.But the advent of teleworking has weighed on clothing sales intended for professional customers.Ms. Syngal's team has decided to redirect the brand to more informal articles, such as polar wool sweaters and long vests.
The Gap brand was the most fragile, but also had an opportunity to seize because the clientele concerned about the pandemic was looking for relaxed clothing, a category in which Gap had been a pioneer, underlines Ms. Syngal.It was first necessary to reduce the sail by closing the shops most in difficulty.
On Thursday, the company announced that it was intended to close 350 Gap and Banana Republic stores in North America by 2023. At that date, 80% of its sales are located outside of closed shopping centers.The group will also study the situation of its stores in Europe.
The GAP brand intends to reduce the number of items on sale by a fifth, try to attract a younger clientele by establishing new partnerships and betting on styles that are on the rise, said Ms. Syngal and Mark Breitbard, thebrand manager.
Cutting into Gap's sprawling offer is one of the axes of the recovery strategy implemented by Ms. Syngal.Breitbard, who has held various functions in the company for almost ten years, is working to reduce the number of dresses and styles offered in other brand categories."We have to reach a more refined approach and make it easier for customers to navigate in our shops and on the website," he explains."I cannot speak for all the branches of the company, but we have been obsessed with quality for a certain number of years and that is no longer up to date.»»
The brand is also betting on fashionable styles, such as high -waisted jeans for female customers.She thus abandons her previous strategy, which consisted in offering styles for all types of customers."If we do well, we will reinvent the classics," says Breitbard.
Bennett Heyn, a 20-year-old student at the Ohio State University, says he recently bought a gap t-shirt and have found him such good quality that he returned to buy a second."They are thicker than most t-shirts," he says.
Ms. Syngal declares to push her executives to take risks by establishing partnerships and reducing marketing times.The speed with which Gap launched a line for adolescents in the spring is a sense of urgency.The leaders had raised the idea in January, and once appointed head of the group, Ms. Syngal rushed to carry out the project.The first models, intended for girls, were released in April and met with such success that a boys line was quickly created.
"We haven't spent a lot of time discussing," notes Ms. Syngal.The launch of a line for adolescents had been mentioned repeatedly in the past, the leaders being aware that it was missing an offer between the Gap Kids collection and adult clothes, but no one had taken action,she observes.
Mr. Breitbard and his team did not hesitate for a long time before concluding an agreement in June with Yeezy, the fashion brand of the musician Kanye West, in order to launch a GAP collection in early 2021. If the partnership targets young customers, it also leads to the brand in the uncertain world of celebrities and politics.
In September, Mr. West had hinted on Twitter that he should sit on the Gap board of directors."The presence of blacks in the boards of directors counts," he wrote in the Black Lives Matter movement.Some customers have called to boycott the brand due to the support provided by Mr. West to President Trump.Adrienne O’Hara, spokesperson for the Gap group, did not wish to comment on the question of the headquarters to the board of directors, declaring that "this partnership was not a political matter".A spokesperson for Mr. West did not respond to a comment request.
The company's action appreciated 24% within three days of the agreement.
"We may have found it risky in the past," observes Ms. Syngal about the partnership with Mr. West.There would have been a million reasons to say no.»»
