Can Gap beat fast fashion chains at their own game?
Gap is testing a new way of purchasing goods to see if it can first, keep pace and then eventually pass the fast fashion chains that have been leaving it with a face full of dust in recent years.
In the company’s earnings announcement for the second quarter it named "a new product operating model to increase speed, predictability and responsiveness" among the initiatives it was undertaking to improve performance.
On a call with analysts, CEO Art Peck pointed to the success of Old Navy, which places small initial orders of new items before deciding whether to increase or cut future purchases, as a model for Gap’s business going forward.
"They are continuing to build out their response to supply chain capabilities, platforming fabric, becoming faster and faster in responding to consumer needs," said Mr. Peck (via SeekingAlpha).
The Gap Inc. CEO also expressed optimism that Gap was making progress on the fashion front based on a recent trip to New York to review the chain’s spring line for women.
Photo: aDressed, the official blog of Gap Inc.
"I saw terrific progress in terms of re-centering on what the brand equities are. On fit, on quality, on feminine way, on optimism, they are hallmarks of what Gap brands is all about," said Mr. Peck. "I’m not going to stand up at the plate and call which fence we’re going to hit it over, that’s not who I am, but I am confident that Gap will make significant progress in spring and very pleased with what I’ve seen in the women’s assortment and the turnaround in the women’s assortment."
Comparable store sales for Gap Inc. were down two percent during the second quarter, with Gap showing a six percent decline, Banana Republic falling four percent and Old Navy, the lone bright spot, up three percent.
- The Gap’s CEO Art Peck on Q2 2015 Results (Earnings Transcript) – SeekingAlpha
- Gap Inc. Reports Second Quarter Results – Gap Inc.
- Gap to Test ‘Fast Fashion’ Model in Select Stores – The Wall Street Journal (sub. required)
What do you see as the greatest challenges for the Gap brand going forward? Will moving to a faster fashion procurement model make the chain more competitive?