At Gap, It's Babies, Brunch, and Service

To change the retailer's jeans and T-shirts image, Gary Muto woos tots, older women, and guys reluctant to shed their pants

Step into a Gap store these days and you'll see that the clothing retailer is trying to buff up not just what it sells, but how it sells. With a turnaround that began in late 2002 with improved behind-the-scenes logistics and inventory management, San Francisco-based Gap (GPS ) is now devoting more attention to areas visible to the customer, including marketing and store atmosphere.

With more than 1,300 Gap outlets in the U.S., implementing store-level changes is a hard task, one that doesn't always yield immediate results. In the most recent quarter ended Oct. 30, sales at Gap stores open at least a year, a key measure of sales performance, rose only a modest 2%.

BusinessWeek CorrespondentLouise Lee spoke with Gap's Gary Muto, who recently assumed a new position heading Gap's planned-store concept, which targets women over 35. Prior to this role, he was president of the Gap brand for two years. Edited excerpts of their conversation follow:

Q: What's the Gap brand's priority?


We need to shift the customer perception that we're just the weekend brand for wearing jeans and T-shirts to walk the dog. We want to be the casual-apparel retailer for a range of occasions. In our ads, we want to promote the idea of wearing Gap for occasions, like going to brunch, or a casual party, or to a casual workplace.

We talk about this internally, but we need to make sure the customer is connecting. You have to be consistent at this. You can't promote this idea for just one season and expect the customer to get it. It's hard to change perceptions.

Q: In the stores, how can Gap communicate the notion that its clothes can be used for varying occasions?


We could be cleverer on the occasions, with the propping in the stores and with how we style the mannequins. You won't see more mannequins, but you'll see changes in how we use them. We could show a range of options for an item, such as one coat worn three different ways.

Q: How is Gap changing the store environment in its GapKids stores?


Customers like our shopping environment, but we want to make it more dynamic for kids. Kids love the footprints painted on the floor to help them figure out their shoe size. You'll see us use the floor more, maybe more designs on the floor. You'll see us put signs lower, at kids' eye level.

Q: You've started to hold events in the BabyGap stores, like storybook readings. What's the idea behind that?


We make it more than just the product. Yes, events like the story readings are commercial, but it's a great way to interact. Moms bring their babies and get together with other moms. It's a great way to create a community.

Q: How is Gap improving the service customers get in the store?


We're a self-service environment, as we should be. But we're improving the service we offer in the fitting room. A man in the fitting room is taking his pants off only once, so we'd better make sure someone's there to help him when he's in there. In the past, we didn't spend a lot on training. But this year, we've increased spending fourfold on training, product knowledge, and selling techniques. Gone are the days of just having a great product.

Q: What are the challenges for the Gap brand outside the U.S.?


Internationally, the worst thing we can do now is to homogenize the product. In the 90s, people craved that. But now, tastes really vary by country. Each country is different. The brand means different things in each country. But in general, in Europe, men are more daring with clothes. Sizing is different because people are thinner there.

Q: What's been the response to the current advertising campaign starring actress Sarah Jessica Parker?


Feedback from consumers is favorable. Women respond well to her because she's not threatening. She's 39 in real life. She's a real person.

Q: What's the status of Gap's upcoming fourth concept for Baby Boomer women?


We'll all be in New York, every function from sourcing to real-estate planning to design. The best design talent lives in New York. They thrive in that urban environment. We're a startup all in one building, and being in New York, we can try new things. It would be more challenging [to do that here in San Francisco] with the established brands.

Edited by Beth Belton

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