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Warning: This includes my opinion on product marketing.

It's rare that I will give a personal opinion on a company's web site or product marketing strategy -- particularly given the lack of impactful investment significance derived from one man's opinion. But Gap's '4 for 1' strategy, whereby a consumer can shop all of its sites at once, seems ridiculous to me.

I went to the Banana site and was bowled over by the picture below. Yes, convenient that I could buy shorts from Banana and match up shoes from Piperlime, and graphic Ts from Old Navy. But management is missing the big picture.

I go directly to Banana - Gap's highest end brand - and see cross-selling with Old Navy and Gap Stores? It's bad enough that Father's Day is approaching and the only pictures on the page are women. But GPS is violating the cardinal rule of muti-brand retail. It is letting the consumer know that a corporate umbrella even exists. Does the Club Monaco customer know that it is owned by Polo Ralph Lauren? Same for Converse/Nike. Arrow shirts/Calvin Klein (PVH). The North Face and Wrangler/VF Corp. No, No, No, and No. There is ZERO benefit to a Banana customer knowing that the brand shares the same parent as Old Navy. Why? Because such affiliations do not change the allure of the lower end brand, but they (sometimes permanently) cheapen the allure of the high-end brand.

I still think that Gap's biggest problem is that it has done a tremendous job on the cost side in recent years. But that was when there was meaningful sourcing optimization opportunity in an extremely 'easy money' environment for this industry. Also, SG&A stories in this business DO NOT WORK. It takes investment in talent and best-in-class capital allocation to grow consistently. Now SG&A structure remains quite low, but GPS can't rely on industry tailwinds to soften the impact of its past missteps. Getting efficient with web-selling is not the answer. The only answer is for GPS to rely on brand strength. Guess what -- -strengthening a brand takes capital, and we're not seeing that commitment at GPS yet. The bottom line is that I think that margins need to go down before they can go up again.


PS: Thanks to my colleague Andrew Barber for his role in this post. He showed up today in jeans and Chuck Taylors. I went to Banana to find an image to forward him to gently remind him of our dress code at Research Edge. I guess I need to go to Polo.com....