Gap is taking steps to deliver “one global design vision” across its business

Gap is taking steps to deliver “one global design vision” across its business

After seeing same-store sales fall in seven of the past 10 months - culminating in a drop of 8% in December - it's perhaps not surprising that the boss of US clothing retailer Gap Inc today lamented: "I expect more from our Gap business in North America."

Indeed, chief executive officer Glenn Murphy has long made no secret of his frustrations at sliding domestic sales. Back in August he said he was "disappointed" that revenues were running below par, and in October he again admitted he was "not happy" with the chain's performance.

But now he's doing something about it.

A shake-up of the Gap brand's management will see outlet executive Art Peck take over as the new president of Gap North America following the departure of Marka Hansen, who is leaving later this month after 24 years at the company.

While two other changes - a Global Creative Center in New York and the merger of its Outlet division with the Gap and Banana Republic brands - are "driven by how we want to come to market strategically," Murphy said on a call earlier today (2 February).

Essentially this means the retailer is taking steps to uphold the continuity of its brands around the world, ensuring it delivers "one global design vision" across its business in North America, Asia and Europe.

The Global Creative Center will be a central hub for all creative resources, including design, marketing, fashion public relations, and production of items for stores around the world. "And that's a big change for us," Murphy explains.

"Having the centre in New York city, the most cosmopolitan city in the world, will make sure that we have all the right ideas that ultimately end up in amazing product in our stores marketed at a global level.

"There's still going to be the need for local input and local injection when it comes to our merchants and local marketing, but from my perspective this is a pretty significant shift and indicates the direction the business sees itself going in the year to come."

The other major change announced by the company will see its outlet and branded businesses merge, so Gap Outlet will become part of Gap brand and Banana Republic factory stores will be brought together with Banana Republic.

"We believe there's great strength for Banana Republic as a total brand and Gap as a total brand coming to market with a single voice to the consumer. Today...they are separate channels in our business.

"By bringing them together we believe we can compete more effectively, it gives us a better chance in North America to gain market share and over time get some efficiencies by this change."

Aiming for growth
Since joining San Francisco-based Gap Inc nearly four years ago, Murphy has embarked on a number of initiatives in a bid to halt sliding domestic sales at the core Gap brand and position the unit for sustainable global growth.

These have included the launch of the revamped 1969 denim range, and putting Patrick Robinson in charge of total global Gap design, with an international design team based in New York and trend managers on the ground, who between them assemble the global range.

The retailer has also expanded online and internationally, with new stores in China and Italy helping triple its distribution to more than 90 countries. And product development has been sped up from concept to the back door of the store.

But progress has remained slow. A strong performance at its Old Navy unit contributed to a 12% lift in Gap Inc earnings for the year to February 2009 to US$1.1bn. But sales slipped 2.3% to $14.20bn and same-store sales decreased 3%. In its most recent third-quarter, earnings were down 1% to $303m.

"A lot of companies go through changes," Murphy explained today. "These are absolutely necessary for us, at the right time, [and] there's a lot of great foundational pieces that are strong inside of Gap brand.

He added that Art is tasked to "come in and strengthen those foundational pieces that are right and identify new opportunities and hit the pavement running day one to get Gap brand in North America performing at the consistent level that I expect."