Will Walmart and Gap be good partners or strange bedfellows?

Discussion
Photo: Gap/Walmart
May 27, 2021

Gap and Walmart are teaming up. In a newly announced partnership, Walmart will sell Gap Home — a new brand of bedding, bath and other home essentials — beginning on June 24 on walmart.com. Plans are in place to eventually bring Gap Home to Walmart’s store shelves, as well.

The new line from Gap probably wasn’t what many of the company’s watchers had in mind last October when management announced a move away from mall-based stores and more of a focus on standalone locations and digital sales. It is in line, however, with a deal the company signed in May 2020 with IMG as part of an agreement for the licensing firm to sell Gap branded Home décor, furniture and textiles.

The Gap Home collection will kick off with more than 400 SKUs, priced from $15.88 to $64.98. The brand will drop seasonal and special collections as time goes on. The line includes items made with organic cotton and recycled materials.

Walmart executive vice president, home, Anthony Soohoo, said the retailer has focused on expanding its assortment in the category and that the exclusive deal with Gap is another example of how it is achieving its goals.

“We’re thrilled that Gap selected Walmart as the exclusive retailer to debut its home brand,” Mr. Soohoo said in a statement. “A hallmark of American fashion, Gap is the ideal partner to bring its timeless, signature style into the modern home to help customers design and decorate beautiful living spaces.”

Mark Breitbard, president and CEO of Gap brand, said that working with Walmart makes sense on a number of levels.

“Walmart is a global leader in the home space with extensive digital reach and distribution, and this partnership enables Gap to introduce a new category in a smart, scalable way,” he said.

Bringing Gap Home to Walmart, he added, will open “a new door for Gap as a lifestyle brand delivering timeless American style in all new ways. We are excited for this growth opportunity, enabling even more customers to fall in love with Gap.”

DISCUSSION QUESTIONS: What do you think the newly announced Gap Home deal will mean for the Gap and Walmart brands? Will the venture prove successful?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Walmart needs a big brand to infuse some excitement into their home assortment and Gap could fill that 'gap.'"
"I don’t see any of it happening. To me, Gap is a tarnished brand. Walmart is on a roll. Why do it?"
"Credit both companies for their effort to bring excitement to their brands. Advantage to Walmart since it gains a familiar brand..."

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27 Comments on "Will Walmart and Gap be good partners or strange bedfellows?"


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Mark Ryski
BrainTrust

It’s interesting. While Gap has brand value, Gap Home is new and doesn’t yet have the consumer recognition. This is probably a good move for Gap to get their Gap Home brand widely distributed/established, but I’m not sure this is a big win for Walmart. Success or failure will be determined by sell through – we’ll see.

Richard Hernandez
BrainTrust

Hi Mark,

While I agree with you, this is reminiscent of the recent collaboration between Levi’s and Target which was very successful — but with Gap being in a not so good place in regards to its relevance in the market. It almost seems like this is a spaghetti throw against the wall to see what sticks but I hope I am proven wrong.

Mark Ryski
BrainTrust

Thanks Richard. I agree, when two strong brands combine real synergies emerge and both brands benefit. But when this doesn’t exist, the benefit tends to favor one or the other brand (or neither).

Suresh Chaganti
BrainTrust

This had me scratching my head. Gap is not particularly renowned for home goods. It only started licensing some home furnishings last year. Walmart on the other hand must have plenty of home goods brands that it can get into exclusive deals with.

I am not seeing a compelling reason for Gap to get into home goods, or for Walmart to be particularly interested in the home goods category from Gap. Of course this is commenting from a distance. I will be sure to watch how it does.

Richard J. George, Ph.D.
BrainTrust

Given Gap’s mall-based format, this is a reasonable strategic alliance. For Walmart this represents an opportunity to partner with a well known mid-scale brand, which should extend Walmart’s market appeal. Plus, the continued emphasis in home improvement spawned by COVID-19 suggests continued growth in this market segment.

Dave Wendland
BrainTrust

As a strong advocate of “strange bedfellows” that bring unique value to shoppers, I think the Gap and Walmart brands align brilliantly.

Introducing an exclusive such as this gives both brands visibility: for Gap it is an impressive reach across the vast number of Walmart shoppers, for Walmart it expands their home essentials with the help of another iconic brand. This venture can prove successful if the quality and assortment satisfy shoppers. It also paves the way forward for other such mash-ups in the future.

Liza Amlani
BrainTrust

I am a big fan of this partnership and this is a great move for Gap They have been losing customers as they keep missing the mark on what the customer is looking for. They lacked newness and excitement.

A partnership with Walmart will not only give them valuable customer insights from online data to inform product decisions but will also give them a new customer segment to market to and engage with at an opening price point.

From a merchant perspective, this is a win-win for both retailers. Walmart needs a big brand to infuse some excitement into their home assortment and Gap could fill that “gap.”

Jeff Sward
BrainTrust

Ouch. My jaw hurts. It just bounced off the floor. I can’t make up my mind if this is the craziest or most brilliant idea that I have seen in a long while. I’m leaning toward craziest. Being reminded that this is a licensing deal explains a lot. The math probably looks amazing. But the branding looks to be somewhere between awkward and — well, crazy. So now the Gap brand will extend from Walmart to the mall to Yeezy. That’s quite a spectrum. I love the fact that Gap is disrupting itself, but there is a difference between earthquake tremors and a Richter event north of 8.0.

Paula Rosenblum
BrainTrust

Like Suresh, I just don’t get it. Maybe Walmart hopes it will lure more upscale customers. Maybe. Maybe Gap figures it will get incremental revenue and profits in exchange for cost of goods.

But I don’t see any of it happening. To me, Gap is a tarnished brand. Walmart is on a roll. Why do it?

Bob Amster
BrainTrust

To the extent that the Gap line is exclusive to Walmart for the moment, it is a good trial partnership. Gap can introduce a line in the Walmart price points that they never sold before and Walmart can be a great outlet for Gap. This is another wait and see.

DeAnn Campbell
BrainTrust

We are watching an iconic American brand reduce themselves to Walmart vendor status. I don’t see them coming back from this as anything other than an apparel wholesaler, but perhaps that was their plan. Michael Kors did reasonably well as the white label supplier for discounters like Stein Mart and TJX. With closing stores, they distanced their brand from their customers. Now they are giving up all control over their customer connection and any hope of regaining their former glory. I’m sad, but times are tough and competition is tougher, so maybe this is a necessary move for them.

George Anderson
Staff

Target went with a limited-edition approach on a somewhat similar deal with Levi Strauss (https://www.retailwire.com/discussion/is-targets-limited-edition-collab-with-levis-a-sign-of-bigger-things-to-come/) while Walmart is going all-in with Gap. It appears as though Walmart, Bed Bath & Beyond and others are trying to more like Target these days. Is there only one Target or can this approach work for others, as well?

DeAnn Campbell
BrainTrust

The limited edition Levi’s deal made sense to me because literally everyone wears jeans, regardless of income level. But Gap was typically targeted to a higher price point and different customer than Walmart. And because they no longer have their own branded stores to counteract Walmart’s “save money, live better” low price perception, Gap is painting themselves as a budget brand in the eyes of today’s consumers. Conversely, Bed Bath & Beyond is taking a different approach – positioning themselves more as the Best Buy of home goods without the focus on lowest pricing.

Jeff Sward
BrainTrust

Love the comparison of BBB and BB!

Bob Phibbs
BrainTrust

Gap is now essentially a discount retailer. Boomers who watched Friends will remember their heyday. Younger generations? I think they’ll remember the endless 40 percent off signs at their stores and expect them at Walmart. And is there a demand for white sheets with a Gap logo on them? #doubtful #headscratcher

Jeff Weidauer
BrainTrust

A good partnership will be additive on both sides by bringing something new to each. Walmart selling Gap only undermines Gap’s already declining brand, and provides
Walmart with another conquest in its own space.

Georganne Bender
BrainTrust

The positive is that there will be more eyeballs on the new Gap Home line at Walmart than there would in its own stores, but is this the same customer who typically shops at Gap?

I worked for The Gap early in my career when the stores were strong and stood out. In recent years they just seem lost. Who is the customer? The stores are messy and my email box is full of “50% + Bonus” and “You’re getting HALF OFF” offers. Selling at Walmart only adds to the bargain image. Judging only on perception Target would have been a better fit.

Lisa Goller
BrainTrust

Consumers win most by gaining more value and variety.

Both companies will make gains. Partnering with Walmart helps Gap expand in the booming home category. Gap gains national reach from the world’s biggest retailer, which can reinvigorate its brand and help to grow beyond malls.

Walmart spices up its home assortment with a well-known brand and a pricing strategy that aligns with Walmart’s low-cost leadership. Gap is a good fit as Walmart champions American products. Also, Walmart could win digital traffic among young, urban consumers by offering affordable product choices.

One drawback is the temporary omnichannel gap (sorry), as this new line is only available online for now.

Chuck Ehredt
BrainTrust

This is another good example of retail extending to create marketplaces where consumers can find more of what they want in one place. Gap may be new in home fashion, but the “comfortableness” and “value” associated with the Gap brands is highly relevant and will gain scale with Walmart’s distribution. We will see much more of this (it has been happening online for a decade and now it is extending to physical retail).

Mohamed Amer
BrainTrust

Not so much a head-scratcher, more like I didn’t see this coming!

Gap built its brand on sophisticated segment differentiation in the 1970s with high-quality casual wear moderately priced. The past decade has not been kind to the company, and over the next two years, there will be far fewer physical stores in the U.S. and an emphasis on partnerships and franchise models in Europe. In their Power Plan 2023, Old Navy and Athleta will dominate the physical store count, with an off-mall bias.

In search of new growth opportunities, Gap has identified an attractive category and believes it can extend its timeless lifestyle brand to the home. As a new entrant playing catch-up in the high-growth home space requires bold moves and the exclusive deal with Walmart provides that for the Gap. For Walmart, they can add immediate lifestyle fashion credibility and exclusively to their home assortment.

Gene Detroyer
BrainTrust

This is a nice deal for Gap. There is no downside. All they do is sit back and collect fees.

All the risks and rewards, which will likely be high, will be for Walmart. They will control everything from manufacturing to sales. (Perhaps Gap will have some say in style.)

While the Gap brand has suffered in the apparel marketplace, the brand is a step up for Walmart and projects well to value for Walmart products.

Ananda Chakravarty
BrainTrust

This is a win-win and actually a pretty simple deal compared to most. Gap has huge advantage here, limited brand risk as they’re launching a new line in an adjacent market (home) and they will access Walmart’s immense universe to restore flagging online sales.

Suresh brings up the point of “why do it” from Walmart – and my take is that Walmart’s internal home product lines are lagging and not meeting up to target selling opportunities. The deal diversifies the Walmart assortment and adds a reasonably well branded product set to their portfolio. If Gap just began selling as a third party supplier on the Walmart marketplace, the launch and marketing value of the line wouldn’t be there. Good move, but relatively small in the larger scheme of retail.

Brent Biddulph
BrainTrust

Good fit in that Gap and Walmart share a similar core customer base – Boomers. If it succeeds, or has any chance of generating excitement, will all come down to Walmart execution – meaning a dedicated store-within-a-store approach.

Carlos Arambula
BrainTrust

Credit both companies for their effort to bring excitement to their brands. Advantage to Walmart since it gains a familiar brand (even if it’s in the form of tangential category brand extension. However it feels as if Gap is throwing in the towel in attempting to regain their former brand standing. While I feel Gap Home being offered at Gap stores would draw former customers back in the store, I’m not certain there will be any brand benefit to Gap by being in any mass merchandiser’s aisles.

Carol Spieckerman
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
3 months 20 days ago

The overlooked element here is that Gap isn’t making existing Gap products available to Walmart. Therefore, this isn’t a question of whether Gap should be providing products to Walmart, it’s a question of whether Gap should be venturing into the licensing business (the way the deal is actually going down).

Licensing can provide easy volume but also can be a slippery slope. This first “line extension” is easy to rationalize, but what comes next? Does Gap have control over IMG’s licensing decisions for the brand or does IMG have free rein in certain categories? Have other categories been licensed out to IMG or others (or will they be in the future)? Who is manufacturing the goods? Arguably, Walmart should have partnered with an established home brand but perhaps the licensing terms made for easy entry.

Craig Sundstrom
Guest

Experiment and you will find successes. And a lot of misses: partnerships work when each brings something the other wants (but can’t readily obtain), so I could see Walmart partnering with some small, but successful home furnisher that’s looking to ramp up rapidly. Is that GapHome? I’m rather pessimistic about it.

But as with any carefully controlled experiment, there’s not much harm in trying it.

William Passodelis
Guest
I find this interesting and a little difficult. As far as I see it, this is a home line from a supplier with a nice and well known name. It gives Walmart the chance to gain a little panache as it puts this merch on its shelves. For GAP this is tricky. They have to be just right with price, which I am sure Walmart has taken care of — Walmart IS price — but this is GAP, so anyone who buys this is going to expect a certain amount of “nicety” in the merch. GAP needs to be attentive to “fit and fashion,” the offerings have to be a little fine and well made. If not, this will be a short-term occupier of shelving at Walmart, and Walmart will simply move on to the next thing. GAP could end up with embarrassment. Also, when they announced this last year, I thought GAP was going to introduce the Home line to their stores to drive interest. Anyway, I don’t think this is going to work.… Read more »
wpDiscuz
Braintrust
"Walmart needs a big brand to infuse some excitement into their home assortment and Gap could fill that 'gap.'"
"I don’t see any of it happening. To me, Gap is a tarnished brand. Walmart is on a roll. Why do it?"
"Credit both companies for their effort to bring excitement to their brands. Advantage to Walmart since it gains a familiar brand..."

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