Brand Keys CEO: Gap’s Soft Comp Store Sales Indicative Of Wider Branding, Cross-Channel Failures

By John Gaffney, Senior Analyst

Gap Inc. posting an 11% same store sales drop for the month of July wasn’t a huge shock to retail industry watchers, but one analyst in particularly has been extremely vocal that the dip points to much larger problems for the chain.

“The chain, which has been in a death-spiral of same-store sales for as long as we can remember, is opting to leverage a trend we identified quite some time ago: customization,” says Robert Passikoff, CEO of Brand Keys. “The Gap has fallen into this version of customization that should be presented more in-store through the product and the experience, but it’s not,” he says. “They’re giving us dramatic photos of actors we don’t know and expecting to reach sophisticated customers that way. And this is supposed to be the fashion attempt of the year. They have the same stuff with better photography. That’s all.”

Who is Robert Passikoff and why is he saying all these nasty things about Gap? No he’s not a disgruntled customer or bitter blogger. Passikoff is a market research expert, author, and CEO of branding consultancy Brand Keys. He has found in Gap a consistent problem that he believes pervades most retailers today as they work to embrace the cross-channel customer. Offline brands have failed to differentiate, he says, and cross-channel brands have failed to innovate. Both will be necessary to profit over the next year, according to Passikoff.

Passikoff’s provocations are based in data. The Gap ranked last among apparel specialty retailers Brand Keys’ Customer Engagement Index released earlier this year, behind Victoria’s Secret, American Apparel, J. Crew and others. The Gap is just Passikoff’s current poster child for ineffective branding. He has taken Microsoft, GM, and T-Mobile to task in the past. His current retail favorites are Victoria’s Secret, Nike, and Adidas.

“They deliver a seamless sense of what the brand stands for online and offline,” he says. “They allow customers to connect their own personalities to the product. They differentiate themselves and still they resonate with some value. All this combined with some buzz makes an effective cross-channel retail brand.”

After following retail brands as well as other verticals for three decades, Passikoff is surprised by the current comeback of the focus on the in-store shopping experience and in-store merchandising. Just a year ago he believed the online experience would become more important. It still is important to the brand, he says, but in-store is where customer expectations and satisfaction are bred.

Back to Gap, which has cut costs and tried to move the focus online. Passikoff says it’s not enough. He admits the retailer has done some good work to become more cross-channel focused, but same store sales are unfortunately a dominant metric. “It would be great if we could all focus on cross-channel results but it’s simply not what Wall St. looks at,” he says. “Until we find a new way to keep score, same store results will dominate.”