In a retail environment that's being overrun by group-buying
sites and flash sales, the site appears to be yet another way to
engage with deal-hungry consumers. Chris Donnelly, an executive
partner in Accenture's retail practice, said the trend toward
alternative pricing models, popularized by the Groupons and Gilt
Groupes of the world, is only accelerating.
"There's all this focus on pricing," Mr. Donnelly said. "You get
to this space we're in right now where, even though the economy is
picking up, consumers still expect things to be on sale. That
leaves the retailer to come up with ways to give discounts without
completely eroding margins."
To that end, Gap's used-car sales approach is actually more
sophisticated than couponing. "[The site] is a better way of price
discrimination, because you're trying to tailor the price to each
individual," Mr. Donnelly continued. "A coupon is a very blunt
tool. If I give everyone a 30% off coupon, some would have bought
full price and some still won't buy."
Glenn Murphy, CEO of Gap Inc., said during the company's recent
fourth-quarter conference call that the retailer would become "much
more surgical" in its promotional activity this year. He said that
in 2008 and 2009 promotions were overly aggressive, as retailers
grappling with the recession attempted to drive traffic. In 2010,
he said, there was still room for improvement.
"In general, [2010 promotions] could have been done more
surgically. [There] could have been a little more thought and
innovation and creativity brought to it. And that's the expectation
of a company like ours," Mr. Murphy said. "Anybody can put an easel
outside a door that says take an extra 25% or 30% off. We've fallen
for that trick a few times, and that's not smart as far as I'm
concerned."
Gap has already been experimenting with different types of
promotions. It offered the first national Groupon deal last August. And
sibling brand Banana Republic dabbled in flash sales, with a
"three-hour lunch break" online sale last fall.
Gapmyprice.com is certainly creative and innovative, but it
remains to be seen whether it will be a hit with consumers. Gap did
not immediately return a call seeking comment. Early comments on
Gap's Facebook page were mixed. And Mr. Donnelly said it's only a
matter of time before consumers began sharing their strategies for
getting lower final offers.
"I suspect some people will really like it," Mr. Donnelly said.
"But it all depends on the execution in the long run and whether
people think they got a good deal."
