Paul Pressler, Gap's new president-CEO, said in a statement that Burnett, part of Publicis Groupe, would conduct consumer research and other activities with the goal of improving the retailer's long-term outlook. Mr. Pressler worked with Burnett during his tenure as chairman for Walt Disney Co.'s global theme park and resort division.
Until now, Gap has tended to work in-house with the assistance of smaller boutique shops, but the retailer has begun to move away from its fashion roots and toward a more traditional consumer-marketing approach. The chain is still without an executive vice president for marketing, a position vacant since Peter Hempel left in May 2002.
The Gap may be in need of serious
Ad spending down
The Gap's advertising spending on measured media for its three chains peaked at $278.6 million in 1999 and declined to $235.2 million in 2001, according to Taylor Nelson Sofres' CMR. For the first eight months of this year, spending reached $145.8 million.
During his 19-year tenure, former CEO Millard "Mickey" Drexler stuck with Gap's founding philosophy based on vertically integrated control of all its operations, from clothing design and manufacturing to store displays and marketing, though in recent years the Gap has begun to rely on agency assistance. In October 2000, Gap handed creative assignments to Modernista, Boston, then in March 2002, Gap announced Laird & Partners would "work closely" with its in-house agency in handling advertising, direct mail and in-store marketing for Gap, Baby Gap and GapKids worldwide. Subsequently, Laird added duties for GapBody. Advertising for Old Navy and Banana Republic remain in-house.
A spokeswoman for Gap said the retailer has begun contacting a number of other agencies to discuss "creative resources, as we do periodically," though she declined to name them. She stressed the retailer is "pleased with the work" from Laird, though it is "always looking for the best and brightest creative ideas."
Trey Laird, president of Laird & Partners, referred calls to the Gap.
'Whole new ballgame'
"With Mickey gone, it's a whole new ballgame," said Tom Holliday, president of the National Retail Federation's Retail Advertising and Marketing Association. Mr. Pressler, he said, "knows how to deliver entertainment to the consumer."
Mr. Holliday also noted that the three individual Gap chains may now have more fashion freedom than they did in the years when Mr. Drexler oversaw all merchandise design decisions, bringing a sameness and a cannibalization factor to the retailer. For the 1999 holiday season, for example, both Gap and its lower-priced Old Navy chain featured vests.
With Gap's once-unique basic lifestyle products now copied extensively by its mall neighbors and even in sections of Wal-Mart Stores, strategy development is a key component of the retailer's challenges going forward.
But hiring an agency for strategic advice hasn't always worked for retailers. In 1998, Nordstrom's hired Publicis' Fallon, Minneapolis, to help it out of its problems with an aging customer. That assignment resulted in a brief 1999 campaign centered on the store's footwear offerings and a second 2000 branding effort tagged "Reinvent yourself." Many of Nordstrom's business issues remain, however, and the relationship with the agency is dormant.
Conflict of interest?
Another worry for Gap is that Burnett also handles advertising for toy and clothing retailer Toys R Us, which has extensive private label offerings of children's apparel via its 701 toy stores and 184 Kids R Us and 165 Babies R Us stores. Gap competes for a share of the children's apparel segment through its Baby Gap and GapKids stores. Banana Republic also has an upscale children's apparel line.
Warren Kornblum, chief marketing officer for Toys R Us, said Burnett's assignment will focus on adult Gap and Banana Republic brands and not on children's clothing lines.
"I have every degree of confidence in Burnett's discretion," he said. "I have a great degree of trust in them and consider them a partner."
Gap also sells children's clothing at its Old Navy stores, which compete more directly with Toys R Us' offerings, but Burnett has not signed up to work on that brand.