Now, the Gap heads into the crucial fall season uncertain who its next leader will be. Mr. Drexler, who owns 3% of Gap stock, said he will continue his roles as head of Gap, Inc., and of Gap stores until a successor is found. The Gap, Inc., role is expected to go to a player who has experience in both merchandising and marketing. Among those said to be under consideration: Jeanne Jackson, former CEO of the Gap's Banana Republic division; and Alan Questrom, who turned around Federated Department Stores and Barney's and is credited with putting J.C. Penney Co. on the right track.
Moreover, Gap goes into fall without a chief marketing officer following the departure of Peter Hempel, exec VP-global marketing in charge of Gap stores' in-house advertising agency, who left this month and has not been replaced. Gap's new work, assigned by Mr. Hempel, breaks in August from Laird & Partners, New York.
While Gap has its unique problems, it's not alone in facing an issue common to retailers: How to get America's Gapped-out shoppers back into malls this fall.
It's a question key to marketers reliant on classic casual-wear staples, such as struggling San Francisco clothing manufacturer, Levi Strauss & Co. Levi Strauss is putting its back-to-school efforts into the hands of the New York office of its long time British ad agency, Bartle Bogle Hegarty, which is partly owned by Bcom3 Group. The new U.S. campaign, set to break July 29, will be designed specifically for the American audience. Levi Strauss' Dockers' division, meanwhile, through Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, San Francisco, will push a new line of khakis made of stain resistant fabric. Levi's declined to comment.
One of Levi Strauss' best customers, Sears, Roebuck & Co., will try to fix its softer side by the winter holiday season by introducing its soon-to-be-acquired Lands' End product line, adding yet another wave of denim, khakis and a rainbow of mock turtle necks to mall store shelves.
"Gap died on khakis," said Howard Davidowitz, chairman of retail consultant Davidowitz & Associates, who gives the $1.9 billion Lands' End acquisition a 50/50 chance of being successful. He called Lands' End a brand based on "quality, service and fulfillment," which easily can be diluted, and noted that many Lands' End customers don't like to shop at malls. Nevertheless, Mr. Davidowitz cautioned, "If [Sears executives] don't do something, they'll be like Kmart 10 years from now."
A Sears spokeswoman said the company would not comment on the Lands' End acquisition until the deal closed. The spokeswoman said that Sears had over $41 billion in revenue in 2001 and is a "profitable, successful company."
Retailers are finding a number of tried-and-true merchandising and marketing initiatives don't have the clout they once did, in part because of Mr. Drexler's 1980's innovations at the Gap, when he turned commodity underwear such as cotton t-shirts into higher-priced fashion items. Now, his successor has to decide whether to "compete with Wal-Mart or the Limited," said Kurt Barnard, president, Barnard's Retail Trend Report, adding the Gap "can't be turned around."
Still, Mr. Drexler remains bullish on the Gap's merchandising formula, telling investors, "I don't look at our business as a commodity." He said each of the company's chain divisions will be run as independent, distinct brands which in turn will develop their own branded items. Banana Republic, the "grown up" brand, he said, will focus on its Martin pant. Old Navy, the "embellished brand" with more embroidery and other flourishes on its clothing, will target a fun seeking audience.
Old Navy this fall will make a big push for Performance Fleece, while Gap will focus on denim. "We are developing branded items within the brand," said Mr. Drexler. The effort will be handled in-house.
"If you have a point of view, stick with it, but keep evolving it. That's why we've always been successful and that's where we're going," said Mr. Drexler.