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In a recent regulatory filing, Gap Inc.—the parent company of not just the Gap but also Banana Republic, Old Navy, and Athleta—noted that it had not paid rent for its stores in April 2020. The move was a cost-saving measure, but it also foreshadowed the company’s expectation that it would need to close many stores to recover from the challenges associated with COVID-19. Yet even as it took these drastic steps to reduce its footprint, Gap Inc. announced other plans to expand, by establishing a broader, previously untested product assortment.

In particular, the Gap and Banana Republic brands will start selling textiles, furniture, and home décor. This market entry represents an attempt to leverage its reputation for appealing styles by getting people to consider the retailers’ offerings not just for their outfits but also for outfitting their homes. The licensing deal means that the companies will not produce the new products but rather will license their brands to appear on the offerings.

Furthermore, Gap Inc. indicated plans to expand the baby products available through BabyGap and a relatively recently acquired brand called Janie and Jack. These assortment expansions are likely to include baby care products, as well as furniture and equipment, so that new parents can outfit their children stylishly but also design their rooms with appealing looks.

The expansions may seem dramatic, but substantial change also seems necessary. Even before the detrimental effects of the pandemic, Gap Inc. had faced concerns across all its brands. The flagship Gap brand had grown stale and could not attract many shoppers; higher end Banana Republic was struggling to justify its pricing; and even the previously steady Old Navy brand had announced same-store sales declines compared with the previous year. With all its brands hurting, Gap Inc. was not particularly well positioned to deal with a global pandemic too. But it believes that moves to expand into new markets will be the key to surviving all these challenges.

Discussion Questions:

  1. Is expanding into new product categories likely to improve sales for the different Gap Inc. brands?
  2. Would you buy home decor from the Gap? Banana Republic? Janie and Jack? Do your answers differ for the different brands?

Source: Matthew Stern, “Gap Plans to Move into Non-Apparel Categories,” Retail Wire, May 8, 2020; Haley Chouinard, “Gap Inks Home Décor Deal,” Business of Home, May 5, 2020