Gap’s Turnaround Strategy

Visualize the Banana Republic store. It has a few floors of merchandise. When you walk into this store, very little of this applies to you. You are a size 4 woman, dark haired, brown-eyed, olive-skinned. Your style is rather more professional and clean-cut, than much of the frills and laces that you look around and see, much to your dismay.

Frustrated, you go back to your desk, and power up your computer. Log into BananaRepublic.com. You can create your profile, and see a personalized store JUST FOR YOU. It showcases merchandise that fits your size, shape, style, hair color, eye color. It knows that you don’t like frills and laces, and cuts them out of the inventory presented for your consideration.

Instead of sifting through 5 floors of merchandise, you now look through 20 pieces a week, and make quick decisions on what you want to buy.

Now, imagine the backend of this system. It collects millions of profiles of shoppers, runs them through clustering algorithms to identify the priorities, trends, etc. and creates a merchandising plan – each season – that is scientific and precise, rather than the arm waving joke that takes place in buying offices at various fashion houses all over the world.

All of the above IS possible. And today, finally, online clothing as a category has reached critical mass, such that people’s fear of buying without trying is going away.

Gap, across its brands – Gap, Banana Republic, Old Navy – needs to introduce Personalization in a very big way. The benefits will pay off in scientifically managed inventory, and thus, limit the writeoffs.

My prediction: Fashion Merchandising will change dramatically in the next 10 years, as Web 3.0 gets leveraged. Not only do the retailers need to learn Search, Commerce and Personalization well, they also need to learn to leverage Content and Community to create, manage, and respond to trends.

But whoever learns the tricks of the trade well, will reap the benefits handsomely!