Retailers shift their ad spending from TV, radio and print ads to digital ads.
“The web site has been profitable for some time but we are looking to take it to the next level with a three- to five-year strategy,” Gap executive Cornell Williams told the eTail confernece.
Talk about the multi-channel shopping experience. The Gap Inc. was one of the earliest apparel chains to understand the power of the web, but it wasn’t content just having customers shop on the web. Early on, it recognized the power of the web to do much more than take orders and ship products. “The web site has been profitable for some time but we are looking to take it to the next level with a three- to five-year strategy,” Cornell Williams, vice president-direct and chief technology officer for The Gap, told attendees during his opening remarks Tuesday at eTail 2003 East. “We are going to move fast to get where we want to be. We want to take electronic commerce at the Gap to the next level.”
Williams ticked off a series of initiatives that underscore the breadth and depth of The Gap’s web offerings and ambitions. For starters, The Gap previews its TV commercials on the web, allowing customers to view them a day before they air. That drives customers to the site to see the new products that The Gap will highlight in the commercials.
As part of that initiative, The Gap also makes some products available online before they hit the stores. “We want to get people to pre-shop on line, to use the web as a window shopping experience,” Williams said in his remarks that opened the conference, “Expert Strategies for Delivering a Branded, Personalized and Profitable Multi-Channel Experience,” held in Boston. “Our stores will remain our bread and butter. Our strategy is to leverage the online channel for the benefit of the stores.”
In addition, The Gap, a $13 billion company that operates the Gap, Old Navy and Banana Republic brands, uses its web sites to test new products. The cost of trying out new products in 4,200 stores is just too expensive, he said. “We want to use the web as an incubator to test the market rather than roll out products in all stores,” Williams said.
While those initiatives are aimed at piquing consumers’ interest in new products, The Gap also uses the web to broaden its store assortment, offering large or small sizes or offbeat colors and styles for which there is not enough demand to put products in stores, but enough demand to make them worth stocking. “We have fringe sizes online, but not in the stores,” Williams said. “Online leverages the basic brand but delivers items that the store can’t deliver.”
Whatever customers buy online, though, they can return to Gap stores. “It makes it easier to shop online knowing you can return what you buy at local stores,” Williams said, noting, “There are some problems. People sometimes buy three just to get them, then return two to store. But it’s a limited problem.” The Gap is also looking at the converse of return to the store: Pick up at the store. It won’t happen any time soon, though, Williams said. “We have to build capability for real-time inventory information and we’re looking at that,” he said.
In fact, implementing a consistent cross-channel strategy is not easy, he said. “It requires a lot of IT manpower to make changes across all channels and all systems and we are looking at a more flexible and agile IT architecture so changes can be made at one place and affect all channels,” he said.
The Gap is not, however, abandoning the web as a shopping channel for its general lines. Three years ago, the web accounted for less than 10% of revenues. While he wouldn’t reveal the proportion today, Williams noted that web revenue as a percent of total revenue has grown steadily and The Gap expects continued growth. “Our goal is to make our online channel a considerable part of our revenue,” he said.
Williams did, however, offer a less than enthusiastic endorsement of The Gap’s relationship with Amazon in selling apparel. “When I go to Amazon. I’m not looking for apparel,” he said. “And right now the Amazon relationship does not have a primary revenue impact. But it’s not something we are looking to abandon at this point.”