In the latest Retail Apocalypse news, Gap Inc. just announced a split from Old Navy. Sourcing Journal Online shared that the conglomerate will split into two entities. Now, Old Navy will have an individual strategy and business model from Gap. This separation is just the newest attempt to reorganize a retail portfolio in this increasingly hostile climate for department stores.
What is the department store’s destiny?
This retail “divorce” has increased concerned over the fate of these legacy stores. This concern comes on the heels of the Sear’s bankruptcy in late 2018, in which the American icon for Chapter 11. Although despite the paperwork, the store is not looking to throw in the towel. But, it instead is preparing to reinvent itself for the modern American market. Even so, they still “closed hundreds of underperforming stores.” So, what does this mean for apparel? Are department stores doomed?
Speed-to-market and maintaining a digital presence
In short, the answer is not yet. That is as long as they keep up with new market demands. A new driving factor in the success of an apparel company is their speed-to-market. In fact, McKinsey’s 2019 State of Fashion Report lists speed-to-market nothing short of crucial. It turns out, fast fashion, along with social media, has destroyed the average consumer’s patience. Stores like Zara, Forever 21, and H&M release new merchandise every few weeks. In turn, it’s giving stores that adhere to the traditional production calendar a run for their money.
Maintaining a digital presence is the other requirement for doing business. Omnichannel and social media are at a heightened need. Moreover, Sear’s weak online presence in the new digital age of e-commerce is what led to its demise. Accordingly, Gap Inc. stated that the split would allocate more resources to both Gap and Old Navy to invest in more significant omnichannel experiences for guests and a digital presence, cites Sourcing Journal Online.
Ultimately, it seems that Gap Inc. took the Sear’s bankruptcy as a cautionary tale. Their personalized approach for both Old Navy and Gap is a wise business call. Also, their prioritization of omnichannel and digital will help them make it to the next round of the retail apocalypse.