New Look Drives Comp Sales at Old Navy

Discussion
Jul 13, 2011
George Anderson

Frankly speaking, it’s expected that a store that undergoes a remodel will see increased sales. After all, if sales do not go up, what’s the point of the remodel?

Fortunately for Gap Inc., the company can report that remodels of Old Navy stores (300 and counting) have resulted in higher comparable unit sales.

"With almost a third of our fleet remodeled, we are well on our way to completing our vision of transforming Old Navy," said Tom Wyatt, president of Old Navy, in a press release. "These store designs more boldly reflect our personality; more clearly delineate our product categories and consistently outperform the rest of our fleet in sales, with higher customer experience scores in each new community driving her to spend $1-$2 extra per store visit."

The remodeled stores feature a rack track layout with wider aisles and lower fixtures to make it easier to shop the store. Dressing rooms have been moved from the back to the middle of the store and product categories are clearly delineated. Stores feature an interactive play area for kids to free up young moms to shop.

Old Navy has also remodeled its checkout area to, according to a Bloomberg News report, "stir nostalgia for the chain’s target customers, who grew up in the 1980s." Items at the checkout include freeze-dried ice cream, Mad Libs books, piggy banks, super hero lunch boxes and sodas from Jones Soda.

Edward Yruma, a retail analyst for KeyBanc Capital Markets, told Bloomberg, the remodels "Bring some of the excitement back to the store. The old concept was north of 14 years old and was looking very tired."

Discussion Questions: How important are remodels to improving top line performance at established retailers? Is Old Navy on the right track with its stores remodels?

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9 Comments on "New Look Drives Comp Sales at Old Navy"


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Ryan Mathews
Guest
9 years 9 months ago

Remodels are important, but I wonder in the case of Old Navy if its business has improved (as in become wildly profitable) or if the new results just reflect modest increases off a low base. It seems to me Gap has already made the mistake of trying to keep “new” stores comfortable environments for “older” customers once. Let’s hope they aren’t doing it twice.

Ian Percy
Guest
9 years 9 months ago
Let’s not forget the old Hawthorne effect from the fifties! Is it really the re-design that’s producing the results or that someone is measuring things and paying more attention to the new stores? The time to declare results is six months after no one is paying attention any more. For the most part we still think of our use of space, display and design as a mechanistic exercise. We could take it so much further if we’d open our minds to what we’ve learned about bio-energetics and the role of frequencies, etc. I once showed a picture of a ‘re-designed’ children’s store to a friend expert in this energetic stuff. His immediate response was that going into the store would be a frightening experience for a child. The stormy dark blue ceiling and walls, things swooping down out of the ceiling ready to snatch away little children. Of course for the designer this was exciting, animated, perfectly color coordinated and futuristic decor. From an energetic point of view, however, most frightening. So if you’re planning… Read more »
Paula Rosenblum
Guest
9 years 9 months ago

I feel like this is backwards thinking. If the store is getting decent traffic, it NEEDS a remodel every few years..far more often than a home. So as the store deteriorates, it becomes less attractive. As quoted in the article–it gets tired, and also worn.

A remodel offers two things 1) keeping the playing field level so that there’s a more attractive home for product and 2) potentially adding greener, more interesting technologies and fixtures.

Ed Rosenbaum
Guest
9 years 9 months ago

Remodels are important to the success of established retail businesses. Change is necessary to stimulate renewed interest in what could become stagnant interest. The Macy’s close to where I live is currently going through a semi remodel by changing the traffic patterns. Smart because it makes us look at new items as we learn our way around to what we came in for.

Roy White
Guest
Roy White
9 years 9 months ago
More than anything else, what is taking place at Old Navy is an interesting case of growth by remodel, and it has produced results. According to the Gap Inc.’s 2010 annual report, Old Navy operated 1,027 stores this past January, following the closure of 30 stores and opening of 18 during the year. That’s a less than 2 percent opening rate (compared to a 5-10 percent rate in many mass market chains) completely negated by the closings (a pattern pretty much reflected across all of Gap Inc.’s brands – Banana Republic and Gap as well as Old Navy). The remodels, in contrast, represent 30 percent of the Old Navy store establishment. The result has been a 2 percent increase in comparable store sales and a 1percent increase in total store sales (U.S & Canada) 2010 vs. 2009. One might scoff at these results, but they do represent solid, no-gimmick sales growth performance in apparel in an economy with 9.2 percent of the work force unemployed. And, there are other compensations, so to speak. Over the… Read more »
Marge Laney
Guest
9 years 9 months ago

Of course Old Navy is on the right course with these remodels. As it has been pointed out the stores haven’t had an overhaul in over a decade. It’s also been documented that remodels improve sales, at least in the short term. The problem comes when more than just the store design is tired and worn out, and a remodel is just putting lipstick on the same old pig.

Retailers today need to address the worn out or non-existent in-store experience in addition to design. Brand right store design is as fundamental as the right product offering but it doesn’t sell the merchandise. You must add a brand right and well executed customer service strategy to the mix to make the brand stand out in the minds of the customer. Otherwise, your offering gets lumped in the retail pile in the customers mind and nothing but a discount will attract them.

Miriam Gomberg
Guest
Miriam Gomberg
9 years 9 months ago

As a Gap Inc. employee, I believe that this is a brilliant move for Old Navy. Gap has done a fantastic job re-branding Old Navy and making them a relevant fun company to shop in and work for.

Craig Sundstrom
Guest
9 years 9 months ago

Is it important to turn on the lights? To wash the windows? I’m not suggesting that remodeling is quite as important as these things, but rather that it is something one should do automatically; indeed it IS something you should do “just for the sake of doing it” (because eventually no one will want to shop in a store that still sports burnt-umber tile from 1976).

But that having been said, remodeling does cost something–even in today’s (ultra) low interest rates; so if you’re spending $100 per square foot on a remodel, and picking up $3 per square foot in extra sales, it’s probably best not to crow too loudly about what a success it is.

Herb Sorensen
Guest
9 years 9 months ago
For the three types of purchases (chore/habituated; surprise/delight; frustrating/necessity), the chore/habituated purchase is often adversely affected by renovation, since at least some stuff always gets moved around–interrupting the shopper’s expectations of where things are. However, this is offset by enhancing surprise/delight purchases. The frustrating/necessity purchase can obviously go either way, since it may be either easier or more difficult to find. Those are just some of the factors impacting refreshment of the store. The reality is that shoppers are VERY resistant to substantial changes. For example, consider moving from the typical grid store design with a dominant perimeter, to the superior inverted perimeter, where the heavy traffic/fresh departments are in the center of the store, surrounded by long-tail aisles. This sort of change will meet with major shopper resistance initially, but after a year or more, performance will accelerate beyond the traditional design. As with most things in retail, shoppers believe that the way things are is the way THEY ARE SUPPOSED to be! Hence the foolishness of too much reliance on what shoppers think–rather… Read more »
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