Gap to test online ordering in stores

Apr 21, 2014

In June, The Gap Inc. will start trialing "order in-store" to capture customers who would otherwise leave the store after failing to find their size, style or color.

At its annual investor meeting last year, Gap officials noted that about 70 percent of shoppers across its three chains (Gap, Old Navy, Banana Republic) walk out of the store without buying anything. Across retail, the walkout rate among peers can range from slightly over 60 percent to as high as 80 percent.

"There is a huge amount of that traffic today that is walking out the door where we feel there is a really big conversion opportunity," said Art Peck, Gap Inc.’s president, growth, innovation and digital. "They’re in the store. They’re facing a sales associate. For us to be able to say, ‘Oops, we screwed up. We don’t have your size and style, but we will have it to your house later today or tomorrow,’ or whatever else it is, we feel that’s a big conversion opportunity."

Although the details were vague, the service is expected to be free. Although shoppers will have an easy way to tap the service themselves inside the store, it’s expected to be driven by associates.

Glenn Murphy, Gap’s chairman and CEO, said such a program is one of the reasons it announced in February plans to set $9 as the minimum hourly rate for its U.S. workforce this year, with plans to lift the minimum to $10 in 2015. Mr. Murphy said, "We’ve got to get better people in our store, because order in-store needs a high caliber individual in our stores to close the deal."

Also as part of its omni-channel push, its reserve-in-store, which enables online and mobile shoppers to reserve items for in-store pickup, as well as its ship-from-store efforts, are being expanded this year. But Mr. Murphy called order in-store a "marketing opportunity to change people’s psychological belief" that they’ll likely endure an out-of-stock.

"We have that product," said Mr. Murphy. "It’s in another store, which is our mistake. It’s in the distribution center. And any distribution center, because seamless inventory is any distribution center. It’s opening up our inventory to everybody."

How appealing will order in-store be to customers? What challenges, whether at the store or back-office level, will have to be overcome to drive the program’s success?

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19 Comments on "Gap to test online ordering in stores"

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Cathy Hotka

THIS is the promise of integrated commerce. In future years we’ll wonder why in the world we let customers who expressed interest in a product leave empty-handed.

Dr. Stephen Needel

Hasn’t Nordstrom’s been doing this forever? Kohl’s does this too. Assuming it’s worked for them, it could work for the Gap.

Bob Phibbs

Wrong question. If 70% of customers are walking out without buying anything, GAP has no compelling products. I read one time that a customer goes into at most 3 shops in an average visit to a mall. That means they are 30% inclined to buy.

if your store staff can’t close the deal, I highly doubt it is because customers are frustrated with out-of-stocks.

Heck, when I was in there recently, you’d think they were closing up shop with all the 30 and 40% off stickers. And if that’s the case, why would anyone pay full price if the clearance items will all be delivered the next day?

Struggling retailers: it’s not about the app, it’s not about the ship-to-store or other buzz words. You have to do a better job selling your merchandise that you have, in stock, in your stores, every day, at full price.

Until you fix that, the rest is so much rearranging chairs on the the Titantic.

Debbie Hauss

I think it’s definitely worth testing if there is a percentage of shoppers leaving the store because they can’t find their color or size. But it also may be important to take a step back and work on improving overall inventory allocation. Hopefully Gap executives are asking the question: Can we do a better job of stocking merchandise on a store-by-store basis?

One issue that may arise from order-in-store is an increase in returns if the shopper is not satisfied with the item once they receive it.

I also question whether a $1 per hour increase in wages is going to attract the type of quality associate Mr. Murphy is hoping for.

Max Goldberg

Does this mean that Gap will finally have the same price on items, whether in-store or online? Gap has been laughably late to the party when it comes to omni-channel. Hopefully the order in-store tactic will drive additional sales for the chain and address the issue of limited or out of stocks. Gap has all the pieces in place. Now it needs to meld them together.

Paula Rosenblum

This isn’t a new concept. It’s generally called “endless aisle” and on the surface it seems like a no-brainer.

What’s not a no-brainer is deciding where to actually fill the order from – a nearby store, distribution center, or a faraway store. The wrong decision can cause domino-like problems across the retailer’s chain. There is definitely technology out there to help solve for that dilemma, but retailers are wise to think this one through carefully. That doesn’t mean “don’t start.” By all means, get it going! It’s money walking out of the store. But continue to refine and hone the rules that determine where to fill from.

The other challenge is compensating the store. It’s not just about compensating the workers, it’s also about deciding which store/channel gets credit for the sale – the one that created demand, the one that fulfilled it or both. There is a labor scheduling aspect for some retailers as well. I don’t think Gap’s volume is high enough to create this worry.

These are the next-gen questions retailers are asking themselves, and overall it’s pretty cool.

Bill Davis

This is a no brainer and relatively easy to implement. Gap just needs to have a pc/laptop where consumers can browse their website and order with shipping to either their residence or to a store. The primary challenge revolves around shipping charges as if Gap makes them free for this, eventually the consumer might start to ask why they pay them when ordering online, but well worth it to not have a customer leave a store empty handed.

Jason Goldberg

Gap is behind in deploying a save-the-sale capability in their stores, but generally browse in-store order online is not a high volume activity. It turns out that ordering in-store is usually the least convenient location to place an online order.

If you’re not going to get the immediate gratification of walking out with your desired item, do you want to order in store where you’ll have to shout your address (usually 2-3 times) over the in-store music system to a sales clerk, or order it yourself from home, where your address is already stored? In most current save-the-sale/endless aisle implementations, the do-it-yourself from home experience is considerably better than the do it with the clerk experience in the store. It’s definitely a useful experience, but generally only for a small number of total transactions.

At this point, Gap probably needs a more significant improvement to their digital in-store experience than just an online ordering kiosk. After you shop Gap’s competitors, who have equipped all their associates with full clienteling capabilities, 360 degree views of shoppers, add to wishlist from store, etc…are you going to be satisfied by a basic “special ordering” capability inside a Gap store?

Gene Detroyer

I echo Cathy’s comments. The retailer that doesn’t do this will be out of step. Shoppers will expect that if they go to a store and the store doesn’t have the right size or color that they will have it at home the next day.

Perhaps I am starting to sense that retailers are starting to understand that it doesn’t matter where or how the sale comes. It only matters that it comes.

I have to disagree with my other colleague, above. Its not “You have to do a better job selling your merchandise that you have, in stock, in your stores, every day, at full price.” It is my position that the retailer’s aim should be to provide the shopper with the product that they want. If they want a blue shirt and you only have red shirts, don’t try to sell them a red one, GET THEM A BLUE ONE, any way you can.

Shep Hyken

This is a very customer-focused decision. If we don’t have it here (but have it elsewhere), we’ll get it to you – FAST. No hassle, no extra cost, etc. This isn’t new to retail, although it sounds like it’s new to Gap. The challenge in making this a success is that the sales associate must have the ability to engage the customer and make the offer.

Ken Lonyai

Full disclosure: I’m a retail tech guy. That said, I think there’s some delusion looking at this problem as one to be solved via retail (consumer-side) tech.

If the crux of the problem is lost sales due to out-of-stocks or other logistical issues, this approach is misguided or at best a band-aid. In other words: focus on logistical issues and make them right (nemesis Amazon does) and this problem would go away. However, I doubt there’s that serious of an issue around merchandise availability if the competition also has a 60% – 80% walkout rate.

It seems like there may be much more of an issue with finding the right product/price mix, targeting the right audience, or the making the overall shopping experience exceptional. And another delusion is that $9-10/hour is going to get them staff that will make the shopping experience exceptional.

W. Frank Dell II

This appears to be a backhanded way to fix a problem of not putting the right product mix in the store to start with. Additionally, they do not appear to tracking closely what is selling so they can adjust. I have recommended allocating 80% to the store at the season start. Then flow in the remaining 20% based on sales. Apparel retailers have a higher walkout rate than food stores. The Gap will pick up some sales, but unlikely to get below other apparel retailers.

Stacey Silliman
Stacey Silliman
3 years 4 months ago

Why would I drive to a store when I have the option to purchase it online from the start? I agree that this helps a customer if they need something specific and the store is out of stock, but there is a reason why people physically travel to a store (touch of the fabric, size, look, fit, etc.) and it is very frustrating when you leave the store not finding what you want. Better inventory control is the key.

Also, will Gap issue free shipping and returns with these online purchases made in the stores? What would be worse for the customer is to not find the size jeans they want, order them in store, drive back, pick them up, only to find that the jeans still don’t fit. What does the Gap do to compensate for the customer’s time? This is just way too complicated for the busy family. Order online first and with a free shipping/returns policy (like Nordstrom), you don’t have many headaches at all.

Camille P. Schuster, PhD.

It is interesting that this article is about a solution to an assumed cause of a problem. There is some uncertainty about the number, but apparently 60-80% of consumers walk out of a store without buying anything. So having kiosks to order product in other sizes and colors is the solution.

What is the cause of the problem? There is an assumption that consumers leave because they cannot find what they want in their size or color but no data is presented. Maybe consumers are just browsing? Maybe they are comparing similar products and sizes at other stores? Maybe shopping is entertainment and they did not plan to buy anything? These are all alternative causes of the problem. Kiosks do not help any of these “causes.”

Lee Kent

In-store ordering is just one of those things every retailer should offer these days. It’s easy, reasonably inexpensive and most every sales person already knows how to operate the tablet and make a purchase.

The tricky part, that will need more thought, is where the items will ship from. Once they figure out what makes the most sense, it will then involve staffing levels, inventory management, etc. They are headed in the right direction, and that’s my 2 cents.

Craig Sundstrom

“We’ve got to get better people in our store, because order in-store needs a high caliber individual in our stores to close the deal.”

If GAP’s current employees are incapable of ordering something online – something I imagine the average third grader can do – then they have (serious) problems way beyond the out-of-stocks.

Kelly Tackett

Surprising that this made as much news as it did. Plus it reflects just how far behind the curve Gap (and most apparel specialty players in general) are compared with US department stores and UK/European counterparts.

Additionally, I’ve always preferred the high-touch model, with Nordstrom associates personally tracking down the merchandise I’m looking for and arranging the shipment/pickup rather than the Kohl’s model where I need to input the information into a kiosk. If it’s the latter, why wouldn’t I just use my own phone? (Unless of course, there’s a shipping discount!)

Christina Ellwood
Christina Ellwood
3 years 4 months ago

Order online/pick up in-store and order in-store/deliver to home is fast becoming the standard for all specialty retailers. Sales conversion is more complex than out-of-stocks, however. Our technology is used, along with POS transaction data, to provide sales conversion data and we see a wide range of conversion rates by type of retail; target customer; season; promotion and more. It’s a complex issue and The Gap is right to focus on converting more of their shoppers to buyers. There’s ground to gain and in-store analytics is critical to understanding what’s working/not working and to providing customer’s the service level they want.

Kenneth Leung

I think the key is how fast and easy it is for the customer to do the ordering in the store. If the checkout process for web order in store is as fast as a regular checkout, I think customers will be willing to do it. If it requires multiple steps and duplicate entries, customers will walk from the transaction.


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