Old Navy is becoming its own entity. The brand, which was once considered Gap’s younger sibling, is moving forward on their own. The reason behind the move is to capitalize on a divide and conquer approach. Old Navy hit the market strong when they first came onto the retail scene but hit a slump in the early to mid 2000s. With declining sales, Gap decided to take action. They hired an impressive team of marketing, design, and apparel leaders to shake up the Old Navy brand. The team came up with a simple and effective strategy, keep the product affordable, yet fashionable. This resulted in a huge turnaround for the company in 2015 which can still be seen today.
In keeping with the momentum of this shift in focus, Old Navy has become a hub for savings minded shoppers who also enjoy style. For example, a new arrival maternity dress may run you $37 at Old Navy, while at the Gap, you’re more likely to pay $60. For those on a tighter budget, that $23 in savings can go a long way. Furthermore, Old Navy’s clothes while cheaper, don’t sacrifice on trending styles. Compared to the rest of the Gap family of brands, Old Navy clearly has a different business model and clientele. Old Navy alone hits about $8 billion in annual revenue, while the rest of the Gap brands account for $9 billion in annual revenue.
As of now, Gap anticipates the separation to be completed by 2020 but that is dependent upon a number of factors that need to align properly, including the Board of Directors approval. Gap even acknowledges that the 2020 target is ambitious, which is why they preface the announcement as a forward-thinking statement. The timing of all of this may turn out differently than anticipated due to a lot of moving parts.
As for the remaining Gap brands that include The Gap, Banana Republic, Athleta, Intermix, and Hill City, they will become part of the “NewCo” enterprise. The focus of these brands is to maintain and improve visibility in the specialty brands arena. To discover what makes each of them unique, visit Gap’s brand page for further insight.
While this announcement was made in February, there have been no status updates since then. But with shopping season just around the corner, one has to wonder how NewCo and Old Navy will handle their gift card business.
In particular, an Old Navy gift card is a popular gift option year-round. According to a survey of over 2,500 consumers on Gift Card Granny, Old Navy is one of the top 5 retail destinations for Back to School shopping. Additionally, Old Navy made WalletHub Best Gift Cards list in 2018. “WalletHub compared the cards affiliated with the country’s 100 largest retailers in five categories that speak to their appeal and overall value”, Old Navy came in at #46, up 13 spots from 2017.
How Will the Separation Affect Redeeming Your Gift Cards?
One thing that many consumers enjoy about Old Navy and Gap gift cards in general is how easy they are to redeem across brands. While you might prefer one store over the other, it doesn’t exclude you from using your gift card towards a purchase. At the time of writing this article, Gap, Old Navy, Athleta, Banana Republic, and Hill City all advertise that you can buy a traditional or eGift card and use it online or in-store at any one of their brands.
The flexibility of these gift cards is something that is incredibly beneficial to the public. According to Gap, nothing will change in the way of customer experience online or in-store until the separation occurs. However, this gift card detail raises some questions regarding the consumer experience.
Case in point, you receive a Banana Republic gift card for your birthday. Although it is a Banana Republic card, you can get new wardrobe pieces at any of the Gap brands. Purchase activewear at Athleta or new jeans at Gap using the Banana Republic gift card. All you have to do is apply the gift card balance online or hand your gift card to the cashier at the store. However, after the separation is completed, what will happen to your gift card? Will Gap honor the cards issued before a certain date or will there be a timeframe where you can trade it in to the store you much rather prefer?
It appears as though that question has yet to be raised or answered really. Little information was gleamed when reaching out at the retail level. One Old Navy store associate in Pittsburgh just said, “Use your gift card before 2020.” But let’s face it, sometimes you forget you even have one. In an article by Kiplinger’s there are approximately $1 billion worth of sold-but-unredeemed gift cards still floating around. Considering the popularity of Gap Inc’s brands, there are bound to be quite a few gift cards in the sold but not used category.
One would hope that Gap (whether they’re one company or two), has considered how much people enjoy using their gift cards at more than one specific store. This allows consumers to help identify and develop their personal style. Until more details are made available from Gap, as the old saying goes, no news is good news.