Despite the flagging economy, Gap Inc. Direct expects to top $1 billion in online sales this year at its four e-commerce sites: Gap.com, BananaRepublic.com, OldNavy.com and Piperlime.com. 2008 e-commerce sales growth would be about 10.7% if sales move up from $903 million in 2007 to an even $1 billion. That would be a significant drop from sales growth of 23.7% for 2007.
The clothing retailer’s web sales division is targeting Canada and the UK for online expansion in 2009 and added a fifth e-commerce business in September with the acquisition of Athleta, a retailer of women’s active apparel, for about $150 million in cash.
Athleta brings the Gap Inc. Direct new access to a potential $31 billion women’s athletic clothing market, division president Toby Lenk said during a webcast from Gap’s recent investor meeting. In addition to standing on their own with double-digit growth, the online businesses also serve a marketing function in funneling shoppers into stores, Lenk said, which is a model the company plans to exploit next year and beyond.
Athleta soon will occupy a tab atop the individual e-commerce sites that tap into Gap Inc. Direct’s Universality shopping platform, which rolled out in June. The platform lets shoppers browse and buy from all of Gap’s retail sites—Gap, shoe store Piperlime, higher-end clothing retailer Banana Republic and lower-cost apparel merchant Old Navy—with one cart and for one shipping fee.
“We pushed the envelope,” Lenk told investors. “Brands usually don’t like to live with other brands—it’s sort of unnatural.” But Gap.com’s look and feel is the same as before it was “universalized,” he said. The concept is rooted in customer feedback, particularly from focus groups. And many of the retailer’s online shoppers are multibrand customers, he added. That dovetails with “one of our core principles as we grow, which is to be customer-driven,” Lenk said.
Even in the current fractured economy, Gap Inc. Direct expects to reap the benefits of the continued shift away from retail stores to Internet sales, Lenk said. He cited Forrester Research projections that U.S. retail store sales will grow at a compound annual rate of 2% from 2008 through 2012, while e-commerce grows at 14%.
Gap Inc. Direct, No. 24 in the Internet Retailer Top 500 Guide, has been experimenting with cross-selling and testing products, such as handbags on its shoe-based Piperlime web site. In the fourth quarter of 2008, Gap will dip into the social networking waters by introducing customer reviews, Lenk said.
Back...
