Gap calls on Burnett for strategic advice

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Signaling a shift away from its fashion roots and toward a more traditional consumer-marketing approach, retail chain Gap is in discussions about a strategic-positioning assignment with mainstream agency Leo Burnett USA, Chicago.

Until now, Gap has tended to work in-house with the assistance of smaller boutique shops. But with the appointment of Paul Pressler, new chairman-chief executive at parent Gap Inc., the retailer may be more receptive to a full-service agency. Mr. Pressler worked with Burnett in his previous position as chairman for Walt Disney Co.'s global theme park and resort division.

Gap Inc. spent $235 million in measured media last year for all its units including Old Navy and Banana Republic, according to Taylor Nelson Sofres' CMR.

Spokeswoman Rebecca Weill said the chain is discussing with Burnett "positioning work to supplement in-house strategic efforts," and said no contract has been signed. She added that Gap has also begun contacting a number of other agencies to discuss "creative resources, as we do periodically," though she declined to name them.

Ms. Weill stressed that the retailer continues with independent Laird & Partners, New York, and is "pleased with the work." Laird was not available for comment at press time and Burnett, a unit of Publicis Groupe, declined comment.

The Gap spokeswoman, however, said "There is no major change. We are always looking for the best and the brightest creative ideas."

Former CEO Millard S. "Mickey" Drexler stuck with Gap's founding philosophy based on vertically integrated control of all its operations including marketing, though in recent years Gap has begun to rely more 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. The Gap has been struggling with 29 consecutive months of declining sales at stores open for more than one year. In October, however, same-store sales rose 11%, the first increase since May 2000. Gap's Old Navy division posted a 24% same-store sales increase, while Banana Republic was up 6%. The core Gap stores' sales increased a scant 1%.

The Gap's spending on measured media for its three chains peaked at $278.6 million in 1999, according to CMR. For the first eight months of this year, spending reached $145.8 million.

The marketing moves come at a time when the Gap is yet to name a replacement as its exec VP-marketing, a position vacant since Peter Hempel left in May 2002.

chain reaction

Under Mr. Drexler, the Gap rose to prominence in the mall on the fashion savvy of a CEO known as the "prince of merchandising." He evolved the Banana Republic chain into the brand's up-market offering, and positioned Old Navy as its discount, family-fun brand.

"With Mickey gone, it's a whole new ballgame," said Tom Holliday, president, 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 room to promote differentiated offerings than when Mr. Drexler oversaw all merchandise design decisions, bringing a sameness and a cannibalization factor to the retailer.

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.

"No longer will fashion rule the day," said Ellis Verdi, president, DeVito/Verdi, New York. As the retailer transitions from a consumer-based operation to one requiring a more competitive-based brand formula, "it's no longer making a decision about who their target audience is. They have to go to a broader audience with a more competitive message."

As a result, he said, the Gap in the past may have done well by simply hiring shops to produce spots but now it will need more serious marketing help.

"The Gap's strategic problem is to come up with an offer that is totally unique and distinct from anything else and at the same time very appealing to the public," said Kurt Barnard, president, Barnard's Retail Trend Report. "Isn't this the season of miracles? So why shouldn't Gap enjoy a miracle, too?"

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