In nothing short of a sea change, Old Navy wants to shed its amorphous family image, target the twentysomething crowd and share some "big fashion ideas."
The new strategy is centered on faster deliveries and wardrobe-building collections that change monthly, not to mention a new logo and, eventually, store renovations. There's also a new marketing campaign that focuses on creating a more fashionable image — so forget Carrie Donovan and Morgan Fairchild and think models-actors instead.
Old Navy's new monthly spring 2008 collections will be previewed to the press Wednesday at the Eyebeam Atelier on Manhattan's West Side. A new marketing campaign, described as an integrated package of television, print and online ads, direct mail and in-store visuals — as well as the new logo — also will be shown.
The retailer gave WWD a first taste of what's ahead in exclusive interviews with top officials last week.
"Spring is a pivotal point, but this is really just a beginning," said Old Navy president Dawn Robertson. The turnaround strategy is making progress and will continue to evolve, she added. "We are far from arrived."
And for her, Wednesday's event marks just "the first launch of some of the fashion big ideas" — a wave of collections as opposed to the retailer's traditional item orientation.
She described the first collection, for February, as an "urban safari look" encompassing African-inspired dresses, safari suiting, tank tops with touches of lace, khakis, city shorts and plenty of red and prints.
In March, it will be all about brights and whites inspired by Palm Beach, while April's collection will have a surf appeal. For May, there's a tropical, Hawaiian point of view, and for June, it's a glitzier grouping, reflecting Old Navy's sponsorship of the MTV Music Awards.
There's been a sense of urgency at Old Navy, a division of the still-struggling Gap Inc., for the last few years. Following an exodus of talent, the chain in October 2006 installed Robertson, a former Federated executive who most recently worked as managing director of the Myer department store chain in Australia. Subsequently, Michael Cape, formerly with J.C. Penney, was named executive vice president of marketing, and new design heads in women's, men's and children's wear were recruited.In a surprise, designer and reality TV personality Todd Oldham became creative director in September, to develop the merchandise direction and creative vision. The appointment raised new possibilities, such as Oldham creating a signature line to sell at Old Navy, or designing home goods for the retailer, which currently doesn't sell the category, or even becoming a celebrity spokesman. Oldham's influence on the collections will begin to be noticed in June-July, and fully felt by the August-September period, officials said.
Yet Old Navy's reengineering has gone well beyond restaffing. There is tighter inventory control and improved coordination between the design team and the marketing and merchandising teams, rather than operating in silos.
The product development cycle time has been halved in an attempt to be more trend-right and to speed deliveries so those monthly collections are ready to go. The accelerated delivery plan is not unlike what other fashion specialty chains, notably Zara and Hennes & Mauritz, have been doing for some time. Gap Inc.'s own Gap division remains on a less frequent seasonal delivery cycle, though windows change monthly to project different fashion themes.
While this week's presentation signals the launch of the turnaround strategy, Wall Street doesn't consider this a do-or-die season. Old Navy remains a well-recognized brand in the U.S. and Canada, generating a huge $6.8 billion in fiscal 2006 volume. The chain also continues to open more stores than it shutters, and by the end of this year will operate about 1,100 units, from the current 1,058.
However, retail experts contend the business has lost its soul and has long needed a new vision.
"Old Navy was a creative value business with very styled goods and a hip, quirky way that was fun. It's become a run-of-the-mill discount business with too many stores," said a source close to the chain.
The business has been battling negative sales trends and losing ground to competitors for several seasons, but its management says change has arrived and there will be more over time.
Producing key fashion items was a strategy that did work successfully for several years. However, in subsequent years, the ship started to list. "We weren't cohesive," Robertson said, noting that the retailer would produce the same key items for three or four quarters.Come February, Old Navy won't be quite so much about items. About half the store will be collection oriented, though items will still be integral to the mix.
Significantly, dresses and suits, which previously were barely visible in the assortment, will be played up. Robertson acknowledged that, with improved styling and a more tailored product, will come some higher prices, though, she stressed: "This is not about increasing prices. That is not part of our game plan." The "brand proposition" continues to revolve around "fashion and value."
"What's exciting is that we can bring this fashion to the market every month still at great values," Robertson said.
She agreed that Old Navy, in its new guise, could come off projecting a somewhat more expensive and less casual image. Fashion will be displayed right down the front of the stores, including safari suitings and printed dresses. "In the past, we wouldn't necessarily have done a lot of jackets," Robertson said. They are tough to do well in lower prices, but she maintained her organization spent a lot of time on construction and "making sure the quality is there as well as the price."
The intent is to bring a wardrobing element to a business that never really had that. "Most of our products go together. It's not specifically just career or casual. It's for multiple occasions" and day into evening. "We believe career versus casual is breaking down."
There's also a shift in the balance of fashion and basics. "Our business in fashion is moving toward half of our delivery. It is a big change in that it is one big idea," Robertson said. "It's really just evolving the brand into modern ideas. We continue to understand we [must] have basics," which generally revolve around denim, socks, fleece, knits, T-shirts and hoodies.
She added that the business remains "casually focused" and is "serving multiple purposes" for customers. Jackets are geared to be worn with pants, shorts or a skirt, making them appropriate for different occasions, Robertson said.
As far as the stores themselves, they're lacking the verve of earlier years. Aware of that, Robertson said a small percentage of the Old Navy fleet will be renovated this year. "We are beginning to test new ideas," to modernize them and create greater interest for young adults to shop, she said. She declined to specify how the stores are changing.She did say Old Navy will adopt "a real focus on localization throughout 2008" to better distribute products based on climates, urban-versus-rural locations and sizes. For example, there is an effort to make swimwear year-round in Florida stores, and minimize coats in warmer areas like Puerto Rico.
While focusing the collections and the marketing on the twentysomething crowd, a single target group, "people will understand what we are about. It's really about an attitude, not an age," she said. She expects Old Navy will continue to draw a wide age range.
"Dawn has done a good job identifying what the target customer is. Before, it seemed to be all over the place," said Mark Montagna, analyst with CL King & Associates.
She also has made work process changes, including speeding the decision making. "The analysis paralysis is gone. Before, everybody was afraid to sign off on a sweater design," he said.
Montagna pointed out that, while sales trends are still negative, they're not getting worse, and he believes the chain is operating more profitably. "She's bringing a lot of change. I think it's change for the positive. There was an aura to Old Navy. They lost that. She needs to get that back," he said.
Old Navy hopes to recapture at least some cachet with its upcoming marketing campaign, which Cape described as "fully integrated" with "a real common language across television, print, online, direct mail and in-store. We're being very consistent across all consumer touch points. The campaign is modern, fashionable and relevant. We're not doing campy campaigns that worked for Old Navy in the past. Our goal is to be modern, fashionable and relevant."
There will be 30- and 60-second television spots, one per month over the next four months. "We will be telling a real story, with an overarching story line," dealing with relationships, dating, road trips and shopping. "It's not sensational. It's more like a TV prime-time series. It's on the light side, it's fun, it's modern. Think of it like a miniseries where every commercial is an episode, with this common cast of twentysomething characters" played by "models-slash-actors."The campaign also will include a brand sitelet for an interactive brand experience, and longer, two-minute versions of the commercial, along with a preview of the upcoming ad, cast member profiles, a look book and music. Songs by up-and-coming singer Lights will be used in the ads. The sitelet links up to oldnavy.com for e-commerce.
The ads were shot in São Paulo and Buenos Aires. "The intent isn't for the TV spots to look like they were shot in Argentina — they want them to look like they could have been shot anywhere, such as New York [or] Milan," said Richard Christiansen, creative director of Chandelier NYC, the agency on the project. The filming was done in all moving images, with a mix of models from the U.S. and Brazil. "They are making brave, bold steps — providing content instead of just talking to people. It's going to be more relevant, on trend. This is just the beginning. We are really speaking to the Facebook generation," said Christiansen.
"With our total media mix and with the content that we are creating, we'll make ourselves very relevant to this customer, who spends a lot of time online. They are very connected," though television is still the cornerstone of the campaign, Cape said.
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