Old Navy Sees Smooth Sailing Ahead
Old Navy has international aspirations and the Gap Inc. division thinks its value-priced fashions, along with a new president recruited from H&M, has it positioned to navigate the competitive storms ahead.
Stefan Larsson will become the first global brand president for Old Navy when he joins the company in October. He has nearly 15 years learning fast-fashion the H&M way, most recently serving as head of global sales with responsibility for about 2,300 H&M stores around the world.
"Stefan is a rising star within apparel retail with proven experience in the value sector. He’s tackled some of the most complex challenges in our industry and has a deep appreciation for the need to balance great product and operational excellence," said Glenn Murphy, chairman and CEO of Gap Inc., in a statement. "Stefan understands Old Navy’s unique brand positioning and significant potential for future growth in North America and around the world."
Old Navy saw its North America same-store sales increase 11 percent in March.
Mr. Larsson said, "Success starts with having amazing product in the ideal stores in each market. Few brands capture the loyalty of consumers like Old Navy, and it’s incredibly exciting to have the opportunity to take this uniquely American and family-focused brand through its next phase of growth."
Gap Inc. and other American retailers have recently looked to incorporate some of the practices of fast-fashion merchants to better compete with the likes of H&M. In a recent RetailWire poll, 73 percent of respondents said fast-fashion chains represented a "big" competitive threat to chains that sourced apparel in the traditional manner.
Discussion Questions
Discussion Questions: What do you see as the opportunities and challenges ahead for Old Navy as it seeks to expand its operations outside of North America? What is your thinking on the hire of Stefan Larsson from H&M?
This is a big coup for Gap. Larsson has been very instrumental in the meteoric rise of H&M and will no doubt bring much needed global retail savvy to the struggling brand. Larsson has a keen understanding and vision of fast fashion and has been stomping all over all Gap brands from the helm of H&M the last several years.
He’s definitely going to shake things up! Hopefully, they will utilize his talent and not just kick him to the side when he doesn’t agree with the status quo.
H&M is one of the best around the globe in the “fast casual” segment, along with Zara and Forever 21. These firms effectively work at doing their homework, listen to and watch the consumer, and then take appropriate risk in embracing change.
Some of the past champions in this practice slipped a notch by “protecting the past” and overly thought about “what will the boss say.” The Gap fell into that category, along with some of their other American brethern.
Sounds like a smart move in bringing in a performer with the proven chops to take Old Navy to the next step — particularly as they look to expand overseas.
“Fast casual” is proving popular well-beyond the 16-24 year olds. Lifestyle and Demographic groups in the 25-49 set are happy to play the game in this arena, as well — for the fashion, value, and quality/comfort of the apparel.
It’s nice to see Gap departing from its insular past by snagging a real fast-fashion maven (let’s hope that he brings, not just the fast, but also the fashion). Gap had a window of opportunity when Uniqlo was playing wait-and-see. Hopefully it won’t be too little too late as Uniqlo puts pedal to the metal in the U.S. (with designs on world domination).
Gap (Inc)’s problem for some time has been overexpansion, or perhaps it was shrinking demand, but at any rate the result was the same: they had — and (probably) still have — too #$%^ many stores. I wish Mr. Larsson and his crew well, and everyone here seems impressed by his CV, but it’s easy to say “let’s go international, our brand is known worldwide, blah, blah….” Whether this is a clear, well thought-out plan, or simply “let’s try it” backed-up with happy talk, time will tell.
I believe Gap Inc. still has to prove that they can consistently produce and promote fashionable (emphasis on fashion) basics, for all of their customers. Otherwise, running into the likes of Zara, Forever 21, A&F, Uniqlo and H&M on a global basis will be a moot point.
Two fair seasons barely makes it a trend.
I think the new hire will bring some terrific outside perspective as Old Navy continues on its path to sales growth. Who better than him to help?
As to the question of whether Old Navy can compete outside the country, it will take some effective brand building.
This will be one to watch. Old Navy has a very clear proposition and it works well — casual fast fashion that is fun and affordable. This could translate very well. Hiring Larsson is smart, truly need a proven kickstarter to bring Gap into this new realm. Gap seemed to believe they were the “trend,” and lost a bit of edge as a trendy place to shop for younger consumers as other concepts moved ahead and flourished.
Old Navy and Gap Brands as a whole have had a rough time over the past few years for lots of reasons, notably leadership. This is a great move for them as they continue to get things in order and regain their leadership within specialty retail.
Old Navy’s format is okay for places like Australia and perhaps a number of other countries. But it’s big challenge is going to be producing stuff that people think is fashionable enough to wear. ON’s basic is way too basic for many people who currently would shop at the obvious alternatives (Target, H&M). So a good merchandiser will make a huge difference.
Regular Gap stores outside the US don’t have much of a future in my view. E.g., Gap opened a couple of stores in Australia to great fanfare but the novelty wore off in 60 seconds. No great differentiation in terms of format, price or merchandise. (1969 denim? Now that’s original.)
Opportunities — Leveraging the worldwide interest in brand GAP. Challenges — Competing with all the other fast fashion retailers focused on and going to Asia.
Mr. Larsson has a global perspective that will ensure they won’t hit the same bumps as Gap. His expertise and understanding of fast-fashion will change and successfully expand Old Navy.