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Gap Inc. Heading Into New Merchandise Territory With IMG

By David Moin on May 1, 2020

The $16.4 billion retailer has signed a licensing deal to extend assortments at Gap, Banana Republic and Janie and Jack.

Gap Inc. is moving beyond blue jeans and family apparel and accessories.

The San Francisco-based specialty retailer has signed a multiyear deal with IMG to extend the offerings of its Gap, Banana Republic and Janie and Jack brands to products and categories currently not sold but would be logical extensions of the existing assortments, WWD has learned.

Bedding, home textiles, home decor, furniture and baby equipment such as strollers and high chairs are among the merchandise being considered.

The new strategy is geared to generate “cross-category product extensions,” attract more consumers to Gap Inc.’s portfolio of brands, and open up new channels of distribution, including wholesaling.

Gap brand, in particular, for many years has been losing market share and closing stores. Rethinking the assortment by being less completely dependent on casual fashion and accessories could reverse the pattern. The corporation continues to make money but income was down last year. Gap brand made progress tightening inventory, expanding margin and reducing costs. But executives cited an inconsistent product point of view, and lack of brand clarity. Banana Republic last year had a “sub-optimal” mix, though the company has been aggressively making changes.

“We are excited to explore new market segments and complementary points of product distribution for Gap, Banana Republic, and Janie and Jack in an asset-light way that harnesses their individual strengths,” said Roy Hunt, head of Gap Inc. franchise and strategic partnerships. “This partnership with IMG presents a unique opportunity for us to bring our fashion and lifestyle brands to life in new ways for customers around the world.”

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As Bruno Maglione, president of licensing for IMG, noted, “Distribution channels and consumer purchasing habits have evolved significantly since Gap’s founding, and never more so than in the last few years. As one of the world’s leading fashion retailers, Gap Inc. recognizes this omnichannel opportunity and the power of its brands to attract existing and new consumers from more than one angle and via more than one format. We are proud to be partnering with them on this bold new strategic move, which we believe will highlight consumer affection for these brands while showcasing their relevance in everyday life.”

The $16.4 billion Gap Inc. also operates Old Navy, Athleta, Intermix and Hill City, though those brands are not part of the licensing arrangement. “At this time, we’re starting with the three brands. As for the other brands, Gap Inc. Is focused on expanding Old Navy and Athleta as growth brands in the portfolio, before considering licensing.,” said a Gap Inc. spokeswoman.  Gap is known for casual American style; Janie and Jack offers a “modern twist” on classics for kids and babies, and Banana Republic offers easy modern adult styles at prices higher than Gap.

IMG is an event and talent management company, owning and operating hundreds of live events in sports, fashion and other sectors. IMG, a subsidiary of Endeavor, which has been struggling financially during the pandemic, also produces and distributes sports and entertainment media, and is heavily involved in licensing.

Gap said it is too soon to say when products through the licensing deal will start to be sold. “We just signed the deal. We’re starting to work together,” a Gap spokeswoman said.

Asked if the new products will be sold online and in stores, she replied, “This agreement allows us to create licensed products and explore multiple sales channels — other retailers, as well as online and our own stores.…We’re excited because we can do product offerings beyond clothing and accessories like home decor, bedding or baby gear such as strollers.

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“We have an opportunity to grow our brands in an efficient, cost-effective way that harnesses the individual strengths of each: Gap, Banana Republic and Janie and Jack,” the spokeswoman said. “This unique partnership opportunity allows us to monetize our apparel and lifestyle brands —capitalizing on their strong brand health and global recognition.

With a potential influx of different types of products, Gap stores might have to be re-envisioned. Asked if there’s space for furniture and whether some fashion space would need to be downsized, the spokeswoman replied, “It’s too soon to share what we’ll explore first and where it will show up, but the flexibility allows us to react to where the customer is  and the categories they are interested in such as home.”

In years past, the corporation has done some “limited” licensing in fragrance with Banana Republic. The deal with IMG is the first cross-brand licensing partnership for Gap Inc. IMG will manage relationships with supply chain partners. Gap declined to comment on whether the brands would be designing the products or would that fall under the purview of IMG. Gap Inc. products will continue to be managed by the company.

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