September 18, 2008, 12:00 AM

Merchants should push for higher percentage of web sales, Gap exec says

Instead of worrying about web sales cannibalizing store sales, multi-channel retailers should push the relatively profitable and fast-growing online channel to a higher percentage of total sales, Toby Lenk, Gap’s top e-commerce executive, says.

Instead of worrying about web sales cannibalizing store sales, multi-channel retailers should push the relatively profitable and fast-growing online channel to a higher percentage of total sales, Toby Lenk, president of Gap Inc. Direct, the apparel retailer’s online retail division, said at the Shop.org Annual Summit this week.

Lenk noted that Gap’s web sales are on track to hit about $1 billion this year, up 11% from $903 million, or about 7% of total sales. Although 7% of sales is average for all e-retailers (including 5% for store chains and 13% for catalogers) Lenk said there’s no reason the web’s share of total sales should not be higher. “We should go for a 25% share,” he said.

Gap has taken several steps in recent years to build out its online channel, including the launch in 2006 of retail footwear and handbag site Piperlime.com and the ability of shoppers to shop across the company’s Gap, Old Navy, Banana Republic and Piperlime sites with a single shopping cart. The company has been on the leading edge of offering interactive shopping features like its QuickLook windows that provide extra product details without forcing shopper to leave a product category page and mouse-over zoom.

More retailers should look at the online channel as a source of relatively strong growth in sales and profits, without worrying about whether the web is taking sales away from stores or catalogs, Lenk said. “Online is the new real estate,” he said. Retailers should make it more valuable by enhancing the online customer experience, providing more compelling product offerings, he added. “The more we push innovations, the more we can drive growth.”

At the same time, however, Gap also emphasizes consistent marketing campaigns across online and offline channels. “We feel strong that our customers want to engage Gap as a brand” across channels, he said. He added that Gap’s loyalty programs for its each of separate brands and web sites, let customers redeem loyalty points across the multiple brands.

“Companies that push online really hard in a cross-channel way will beat the companies that don’t,” he said.

Gap is No. 24 in the Internet Retailer Top 500 Guide.

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