AP News, April 19th, 2007
Gap Inc. clothes will grace the cover of Vogue's May issue for the first time in over a decade to highlight the retailer's partnership with up-and-coming fashion designers.
Gap? And Vogue?
Sounds like a stretch, but industry watchers applaud the splashy debut for the San Francisco company's latest collection of women's bow-detailed blouses, trapeze mini-dresses and tie-neck shirts with puffed sleeves.
But some experts said the innovative launch won't solve the struggling retailer's fundamental problems: It has lost its core consumer and the move could be too little too late for a company that has been trying to turn around its business and reinvigorate sales.
Gap's Design Editions will launch this week in 100 stores and at Gap.com. Designers Doo.Ri, Rodarte and Thakoon are teaming up with Gap to put a new spin on the classic Gap clothes for prices well below the typical high-end department store and offer a dressier appeal to Gap's mostly casual merchandise mix.
"Bringing on new designers will buy the Gap some time so they can get their house back in order," said Patricia Pao, founder of New York-based retail consultancy The Pao Principle.
Pao expects Gap's new line will allow the company time to figure out "what sticks" with its clientele before making a long-term commitment. Most fashion-industry experts agree that any move toward exciting designs is vital for Gap, which itself has admitted that it's trying to pinpoint its core customer.
Most of Gap's core customers from its 1990s boom have grown up and moved on. Staid silhouettes and neutral-color palates failed to inspire consumers as saucy rivals flooded the marketplace with stylish casualwear that coaxed customers away from Gap's muted classics.
"They've totally lost that middle-ground customer _ she doesn't shop there anymore," said Roseanne Morrison, a fashion director at the trend-tracking-firm The Doneger Group.
Sales and profits at Gap stores have been on a slump since the second half of 2004, a far cry from the heyday of the early 1990s when its preppy cachet translated into robust sales. Gap shares slipped 7 cents to close at $18.64 Wednesday on the New York Stock Exchange.
Management issues and inability to attract and retain top design talent has factored into Gap's troubles along with a series of fashion "misses."
Rivals like Abercrombie & Fitch Co., American Eagle Outfitters Inc. and privately held lifestyle retailer Metropark grab the younger consumer for casual wears around the same price point.
Now three hip, young designers are teaming up with Gap and generating a buzz in the fashion media and blogging world. The "bargain" appeal of finding at Gap luxury designers whose wears mainly are found in the upper echelon of stores like Barneys New York and on the backs of movie stars and society types _ is expected to bring increased traffic back to the struggling retailer's stores.
For instance, a Doo.Ri sheer jersey tank dress at Bergdorf Goodman retails for around $1,000. But at Gap, Doo.Ri's flowing, belted white shirt dress under the Gap Design Editions label retails for $88, appealing to a wide range of consumers from fashionista to a working mom.
"Directionally, it makes sense," Wachovia analyst John D. Morris said of the new clothing line. "The Gap is going after the 20- to 30-year-old customer. They're now fine-tuning that," said Morris, who rates the stock at outperform and expects Gap to post sustained improvement in sales in 2008. Morris doesn't own any shares in the company.
Although the market for limited-edition sales is small, Gap's move comes amid heightened competition in the apparel market, which is tapping into the insatiable market demand for designer goods at accessible prices.
Gap's rivals _ H&M and Inditex SA's Zara chain _ have gained ground globally, duplicating designer ready-to-wear fashions for the U.S. mass market. H&M further boosted its image with limited-edition collections by Stella McCartney and Karl Lagerfeld. Also, Target Corp. _ which collaborates with Isaac Mizrahi and Mossimo Gianulli _ gained further fashion clout by offering a limited-edition line of New York design duo Proenza Schouler.
Gap tried to gain a foothold in the luxury-designer market last year by introducing a limited-edition collection by London fashion designer Roland Mouret in the U.K. However, Gap failed to translate that same type of up-and-coming designer frenzy when it brought the British collection to the United States.
Some industry experts say that Gap's major misstep with its past limited-edition campaign was that it didn't actively promote the offering in the U.S.
But this time around, "even if Gap doesn't sell all of the designers' wears it's offering it gets the consumer to look at Gap with a different set of eyes," said Marshal Cohen, chief industry analyst at NPD Group.
None of the designers have signed on for long-term contracts for designing for Gap, although a spokeswoman said Gap has signed a multiyear agreement with the Council of Fashion Designers of America and Vogue to feature other emerging designers over the next five years.
