GAP’S CHIEF: ROOM TO GROW

Byline: Kristin Young

Las Vegas — Gap Inc.’s retail brands seem like they’re on every urban corner in the country, and president and chief executive officer Mickey Drexler described the San Francisco-based brand’s awareness as “almost 100 percent.”
Nevertheless, Drexler believes the $12 billion retail giant has only captured a small share of the domestic apparel market — 6 percent — and he fully intends to be more aggressive this year toward achieving a goal of market domination.
Drexler is targeting inner-city pockets as well as remote areas for stores. He addressed over 5,000 retailers, real-estate developers and mall operators and suppliers at the International Council of Shopping Centers’ spring 2000 convention here on Tuesday.
“We are reworking our process by getting faster and more entrepreneurial,” Drexler said during his keynote luncheon speech. He added, “The availability of our products is not as vast as we would like it to be. We actually are quite a small company. I think of it (each Gap brand) as having one store. If I thought of the number of stores we have…it makes me very nervous.”
Drexler said that companies such as Nike and Coke command 30 percent market shares, and that the goal of Gap is to become a market-share leader of the magnitude of a Coke or a Disney.
The Gap has already begun to roll out to new territories. Drexler pointed to a store that opened in the Harlem neighborhood of New York a few months ago as well as units in small towns in states such as Mississippi as examples of the kinds of markets he feels are Gap-deprived. But he said Gap is also “looking at greater penetration in existing markets.”
That could often entail opening units of sister divisions such as Baby Gap next to existing Gap Kids stores, for example.
As far as divisions cannibalizing each other, Drexler said emphatically that has not and does not happen.
“That question has plagued us,” he said, but it is a nonissue. He mentioned that since the launch of Old Navy in 1993, the Gap brand has grown in earnings and market share every year.
“We want to give a sense of style and cover all demographics and price ranges, and we will be aggressive in doing that,” Drexler stated.
That includes rolling out Old Navy to Canada, beginning this year. He said he has been meeting with developers there.
He added the company is determined to be “obsessive about making shopping simple and easy,” and advised his developer-dense audience to do the same by offering ease of parking and providing other amenities such as coat checking.
“Little things like that are the kinds of things that stores get famous for. Little things mean big things to customers,” he said. “We want to see where we’re not, more than where we are.”
The company opened 299 Gaps, 56 Banana Republics and 117 Old Navy stores domestically in 1999. In 2000, the plan is to open 320 to 340 Gap stores, 40 to 60 Banana Republics and 120 to 130 Old Navy units domestically, as well 120 to 130 Gap units internationally.
Aside from big growth plans, Drexler’s other major theme was the advantages of the Internet and why he likes it.
He said he views the company’s online business as a tool that drives traffic into stores, not only enabling customers to research product but by promoting gift certificates and contests. Sales done in the stores themselves are the most profitable, as opposed to online or catalog sales, he said.
Drexler said most customers spend more in stores after visiting Gap Web sites, and that another Internet advantage is “e-mail customers always tell you what you are doing wrong.”
The company spends more than $500 million to drive people to its stores, and Gap attracts 750 million customers to its stores annually, Drexler said.
And in a statement guaranteed to delight advertising honchos, Drexler urged his audience to do the same.
“How many of your tenants do that?” he asked rhetorically.
Not only does the Gap want to open more stores, it wants bigger stores. Those, said Drexler are more profitable when successful and deliver a bigger return on investment.