Under New Management, Gap Must Fix a Faded Icon

Onetime Marketing Powerhouse Hasn't Been Able to Find Its Voice; Complicating Matters, Everyone Seems to Have an Opinion

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NEW YORK (AdAge.com) -- In 2007, Advertising Age published an article titled "How Would You Fix the Gap?" Kerry Feuerman, then a creative director at Fallon, Minneapolis, suggested creating an image that was above and beyond clothing. "They are missing some form of reason to believe in the brand beyond the faded jeans and the new hoodie of the month."

Four years later, Stifel Nicolaus analyst Richard Jaffe said pretty much the same thing. The company "will need to rekindle the Gap brand," he said. "This has been a challenge facing [the company] since 1998, the last time the Gap brand was hot."

Indeed, in 1997 Gap was named Advertising Age's Marketer of the Year, recognized for its successful integration of marketing and merchandising strategy. It had built a brand by returning to TV after a dozen years, added legendary Coca-Cola marketer Sergio Zyman to its board and focused on a message of comfortable, casual clothes and easy shopping.

Today you see a retail brand that has failed to evolve with consumers, with fashions that have missed the mark and marketing that has veered off course. Among the criticisms: Its target market, ranging from babies to men, pregnant women to teens, is much too broad; designs have been schizophrenic; its TV presence has waxed and waned; and an ill-advised logo change invoked consumer uproar.

It needs fresh marketing; appealing merchandising; a crystal-clear point of view and compelling vision; a refined target consumer; energy and excitement; a more strategic promotional cadence, fewer stores. In short, everything.

"Gap is way too big and broad in today's specialty retail business. Are we trying to sell to my wife or my teenage daughter or both? I don't think you can do both," said Jeff Jones, exec VP-marketing at the brand for two years in the 2000s and now president at McKinney. "The hard marketing decision, business decision is it needs to be really clear who it's for."

And everyone's got an opinion. Peter Hempel, Gap's exec VP-marketing in the early 2000s and current president-CEO of DDB, New York, recalls that when he told people where he worked, "they'd tell you how to fix Gap. Everyone wears Gap. Everyone has an opinion about Gap."

There have been glimmers of the old Gap. Its new 1969 denim collection flew off shelves, and the 2009 holiday campaign, from Crispin Porter & Bogusky, was popular. Gap was among the first retailers to launch an iPad app. And in five of the past 12 months, sales at stores open at least a year were flat or positive. But those have merely been bright spots, rather than indications of "consistent" performance that CEO Glenn Murphy has said he wants from the 1,130-stores-strong brand, which reported sales of $1.47 billion for the third quarter, flat against the comparable quarter.

Last week, Gap shook up its management team, marketing relationships and structure, moves that are widely being seen as positive. Marka Hansen, president of Gap North America, was replaced by Art Peck, previously president of Gap's outlet business. Ogilvy & Mather was named Gap's new agency, replacing longtime agency Laird & Partners. And Seth Farbman became the latest agency exec plucked for a top marketing role, something Gap has done several times over the years. The former worldwide managing director at Ogilvy will take on the role of Gap's first global chief marketing officer. The brand is now sold in 90 countries, up from 25 at the beginning of 2010.

The retailer also plans to shift its global marketing operation to New York, where it will set up a new "global creative center," centralizing public relations, design and production, to be led by Pam Wallack, current president of Gap Adult North America.

In his time at Ogilvy, Mr. Farbman worked on brands from Coca-Cola to Time Warner Cable and founded sustainability practice OgilvyEarth. He has a background in PR and journalism and isn't necessarily cut from the traditional retail form. In fact, someone who knows him suggested he will look outside tried-and-true retail people when recruiting new folks, possibly in other business or creative fields.

Added another person who knows Mr. Farbman: "Gap really needed to take a big risk. They've tried little things, like the logo, which was a disaster, and they needed to make a big change. [Mr. Murphy] was trying to make a real statement by cleaning house. He had interviewed several CMOs with fashion experience but none of those were a right fit. Seth is someone who has experience building brands ... and he's highly entrepreneurial."

He'll need it, to confront the massive challenges ahead.

"No one is making the hard decisions," Mr. Jones, the Gap veteran, said. "Gap brand has to shrink to regain relevance. On paper it still has several hundred too many locations." That creates the problem that anything too fashion-forward is unappealing, because everyone will be wearing it; meanwhile, people are shopping at Target for basics.

"You can't solve Gap's problems by making better commercials," Mr. Jones continued. "When I was leaving, my biggest concern was Gap, as a brand, being purchased at a deal. People want Gap, just not at full price. Changing that behavior is a fundamental marketing strategy, not advertising."

Gap timeline

A recap of the past 42 years

1969: First store opens. The name is a reference to the "generation gap."

1973: Gap debuts iconic jingle "Fall into the Gap."

1995: Gap spends $24 million on measured media.

APRIL 1996: Exec VP-Advertising Director Maggie Gross, the creative behind acclaimed "Individuals of Style" campaign, departs after 13 years.

AUGUST 1996: Michael McCadden joins Gap as exec VP-marketing. He will be responsible for Gap's first global campaign, the 1998 "Khakis Groove," "Khakis Swing" and "Khakis Rock" effort.

APRIL 1997: Gap makes renewed commitment to TV after shying away since the mid-1980s.

DECEMBER 1997: Advertising Age names Gap Marketer of the Year.

OCTOBER 2000: Boston-based Modernista brought on board.

MARCH 2001: Peter Hempel, former exec VP-general manager at Interpublic Group of Cos.' Lowe Lintas & Partners, New York, becomes exec VP-marketing.

MARCH 2002: Laird & Partners added to Gap agency roster.

DECEMBER 2002: Gap announces Leo Burnett will conduct consumer research with the goal of improving the retailer's long-term outlook.

JANUARY 2004: Jeff Jones, former president of Leo Burnett's LB Works, tapped as exec VP-marketing, filling vacancy left by Mr. Hempel's departure in July 2002.

JULY 2009: Gap taps Crispin Porter & Bogusky for its 2009 holiday campaign, which includes TV advertising for the first time in two years.

2009: Gap spends $100 million on measured media.

OCTOBER 2010: Gap briefly introduces a new logo, which is widely criticized.

JANUARY 2011: Gap North America reports an 8% decline in December sales at stores open at least a year.

Art Peck
Art Peck
FEBRUARY 2011: WPP's Ogilvy named global agency of record, replacing Laird & Partners. North American President Marka Hansen is replaced by Art Peck. Seth Farbman is plucked from Ogilvy as Gap's first global chief marketing officer. The retailer says it will shift its global marketing operation to New York.

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