Gap Inc Ends Piperlime And Makes Certain Leadership Changes
Towards the end of last month, apparel major Gap Inc (NYSE:GPS) announced that it will be discontinuing its smallest brand Piperlime, closing its website and the only store in New York. [1] The management stated that they are committed to executing their long-term strategy, one that is centered on a portfolio of five brands: Gap, Old Navy, Banana Republic, Athleta and Intermix. While setting a vision for its future business, the retailer could not find a place for Piperlime. Rather, it appears that Gap Inc did not feel the need for the brand.
Piperlime offered a variety of private label and branded apparel, accessories, shoes and handbags, especially for women. The brand had a unique and fresh mix of products, brands and price points, as well as favorite picks and tips from famous guest editors on how to wear a particular season’s trends.
Our price estimate for Gap Inc is at $50.51, implying a premium of about 20% to the market price.
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Launched in 2006, the company kept Piperlime online exclusive for almost six years, before it turned to its smaller brands for continued growth. In an investor meeting held in 2013, Gap Inc stated that it will focus on Athleta, Piperlime, Intermix, GapKids and babyGap going forward, to grow its business in North America. While the company had opened its first Piperlime store a year before this meeting, it was expected that it will continue the brand’s expansion in line with its growth strategy. However, Gap Inc never opened another Piperlime store, while Athleta was expanded rapidly. Considering this, it appears that the retailer was never too interested in Piperlime. The closure of the brand is unlikely to have any sort of impact on the company, given that it generated only around $100 million in annual revenues, accounting for less that 1% of Gap Inc’s net revenues.
Amid growing consumer spending uncertainty and rising competition from fast-fashion retailers such as Zara and Forever 21, Gap Inc has realized that it needs to get proactive on designs to avoid losing customers to its counterparts. However in a recent update, the company mentioned that it has eliminated the role of Creative Director, effective immediately, as a part of its long term leadership strategy. Although the departure of the Creative Director can hit Gap Inc’s design strategies to a certain extent, the company believes that its design team is strong enough to ensure a seamless transition. [2]
In addition, the company hired Gap Inc veteran Scott Key as senior vice president and general manager of Customer Experience, giving him the responsibilities of overseeing e-commerce and marketing operations and ensuring strong customer connection globally. During his time with the company, Scott Key had worked in several leadership positions in Growth, Innovation and Digital divisions. The company believes that Mr. Key will leverage his expertise in the aforementioned fields, which will eventually help Gap Inc get closer with its customers.
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Notes:- Gap Inc. to Close Smallest Brand, Piperlime, Gap Inc, Jan 23 2015 [↩]
- New Gap Brand President Restructures Marketing, Online And Product Leadership To Better Serve Today’s Customers, Gap Inc, Jan 29 2015 [↩]