New Retail: Notes about on Gap
We were all stunned with the recent events. From the spin off of Old Navy and plans to close of over 200 stores in the next two years, Gap Inc. has quite a bit to do before 2020.
By 2020, Gap Inc. is expected to reduce its' fleet size to 41% of its total fleet and the the brans will be divided into Old Navy and NewCo (which will house brands like Gap, Athleta, Banana Republic, Intermix and Hill City.)
I applaud this bold decision.
For a company thats' over 50 years old, it is an impressive and bold corporate strategy.
Focus, focus, focus
With less stores and one less brand to worry about, the next 24 months present a rare opportunity for the sleeping giant to experiment with new modes of retail and possibly remove bureaucratic sludge from their engine.
According to List-Stoll, the retailer expects the Gap brand’s online channel to evolve to more than 40% of its business as it restructures.
Brick and Mortar isn't dead. (Malls might be)
A decade ago, the common value proposition for malls were that they could draw crowds into the building and in exchange, their tenants would have to pay to tap onto the foot traffic.
Today, it seems that retailers have caught up to the fact that malls haven't been able to live up to their side of the bargain.
With falling foot traffic and rising rents, "sales per square foot" has been replaced by newer metrics such as "cost-per-click" or "cost-per-conversion" that encompasses both online and offline efforts.
With this increased focused on the ratio between cost and financial rewards, malls will need to work much harder to justify their rents beyond the (top of the funnel) foot traffic.