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How Old Navy is Getting Its Groove Back

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old_navy_super_cute_jennieGap Inc.'s Old Navy chain has undergone a bit of a transformation in recent years, most notably by following in the footsteps of other big-box operators with shrinking square footage.

That hasn't been the only change at the stores, however. Old Navy executives point out that they've been able to get customers to spend $1 to $2 more per shopping trip by focusing more sharply on who the chain's customer actually is and trying to gear the stores toward that person.

To that end, in 2008, Old Navy came up with a fictional "Jenny," a young, busy middle-class mother. At first, Jenny was used as an internal tool to create a clear image of the chain's customer. By now, she has become an official marketing tool, appearing in new TV ads.

Unlike the younger customers that Old Navy went after in the mid-2000s with its up-to-the-moment fashions, Jenny wants to be able to buy classic casual wear, like capri pants and t-shirts. She is looking to buy clothes for her family at affordable prices.

Jenny also wants to get in and out of the store quickly, so Old Navy's recent remodels have involved creating a race-track layout for the stores, where Jenny could see the merchandise from the entrance to the back of the building.

And in an effort to take advantage of Jenny's nostalgia for her 1980s childhood, Old Navy started using the check-out line as a way to hawk various 1980's-inspired knick-knacks, like freeze-dried astronaut's ice cream. The strategy is similar to what supermarket chains have been doing for years, by displaying tabloid magazines and candy near the cash register, so the customer buys those items on impulse while waiting in line.

So far, the new layout has proved successful enough that Gap Inc. has decided to revamp most of its Old Navy fleet to fit the new model. From 2008 through the end of 2010, the company completed remodels at about a third of its more than 1,000 Old Navy stores. This year, it will remodel another 100.

In fact, focusing on who their core customer is might be a good way for other retailers to make themselves more relevant. In recent past, many chains, including Gap, have tried to be all things to all people--a trend that many retail experts warned would lead to trouble. But differentiation might be what works best in a world saturated with retail options.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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