Old Navy tries to make itself hip

Posted Mar 2nd 2009 1:40PM by Zac Bissonnette
Filed under: Competitive Strategy, Marketing and Advertising, Gap Inc (GPS)

Gap Inc. (NYSE: GPS) is trying to revive its increasingly irrelevant Old Navy with a new ad campaign unveiled last Thursday.

Gap reported poor results on the same day, and Fortune reported that "Particularly galling for the Gap executives is the poor performance of Old Navy, whose prices should be a solid draw in this recessionary environment. In hopes of getting shoppers back into the store, even though Murphy admits that the chain's product revamp is not yet complete."

Part of the problem for Old Navy may be that higher-quality, more-respected companies are discounting their prices aggressively in the slow retail environment. If stores like Aeropostale (NYSE: ARO) and American Eagle (NYSE: AEO) are bringing their prices down to where Old Navy's used to be, consumers will go there instead. Old Navy's only option is to discount more aggressively, but with the margins on a low-end brand, that isn't so easy.

So they're trying the new ad campaign to try to generate buzz, featuring "Super Modelquins" talking about their "bodacious booties." But retail analyst Richard Jaffe told Fortune that "I don't know who that's supposed to appeal to but it certainly didn't work for anyone I know. What have we accomplished here?"

Uh-oh. With a brand as tired as Old Navy in a market as tough as this one, the company's management really has no margin for error when it comes to marketing.

Tags: Gap Stores, GPS, Old Navy, Richard Jaffe

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Reader Comments (Page 1 of 1)

3-02-2009 @ 5:21PM

John said...

They haven't been doing well for a while. Gap needs to kill Old Navy and focus on their Gap and Banana brands more. It makes more sense to have two brands that are doing well than two brands that are barely surviving and a another that is hemorrhaging money.