Yesterday, Globe and Mail in their investor’s section, gave a report about Gap Inc (owner of Gap, Banana Republic and Old Navy brands), indicating that analysts are nervous of its current performance. The feature was headed, “Gap Stores Trip on a Generation Gap“.
In between the information for stock analysts and a look at the company’s financials and strategy, there was a nugget of information which would make me want to buy their shares. They have realised that their three major brands have been targetting the upper income 20’s and 30’s, mainly women. For the past 20 years, this has been a great and unchanged demographic. They have two problems: firstly, this demographic doesn’t like their choice of fashions – and haven’t done so for the past few seasons (another way to see this: the buyers at Gap Inc don’t get this demographic group any more, and haven’t kept up with the changes); secondly, they have not had a strategy to connect with the 35+ women demographic – one that is increasingly important to retailers.
The Chicago-Sun Times reported on the launch of Gap Inc’s 4 new Forth & Towne stores, aimed at the ageing Baby Boomer market (click here to read it). “In the 1990s, retailers focused on selling to fashion-obsessed teens and twentysomethings, often overlooking women in their 30s, 40s and 50s. That has changed. The profitable Chico’s chain virtually pioneered the concept of clothing for older women and has continued to grow, last year launching a lingerie store for women over 35. J. Jill has been selling to women age 35 to 55, primarily through catalog, since 1994. And in the past year, others have jumped in: Target introduced a brand for older women, Linden Hill. Children’s clothier Gymboree launched Janeville for women 35 and older. OshKosh B’Gosh also is following suit.”
Generational theory explains what’s happening here very easily, and in fact, actually predicted it would happen. The Baby Boomers (born post-World War II and into the 1950s and 60s) are now ageing. But their value systems are staying the same. The same is true of the Gen Xers (born 1960s thru 1980s) – and their values are different from the Boomers. Retailers (and any other companies) that have kept a consistent market message for the same age grouping over the past ten years will have been experiencing a values shift from Boomers to Gen Xers in their customer base. They needed to change and adapt, or grow older with their customers (or both). Spin off brands are a very clever way of connecting with multiple generations – especially in highly brand sensitive industries.
I am firmly convinced that if Gap Inc manage this well, they have done something excellent. The Baby Boomer market is huge, and contains the richest, healthiest, “youngest” old people the world has ever known. It makes sense to target them.
Gap stores don’t “Mind the Gap”
