Consumers expect fashion retailers to meet their preferences as they evolve, Gap noted on its latest earnings call, with the rise of eCommerce speeding up the trend cycle and demanding that brands become more agile.
On a call with analysts Thursday (May 30) discussing Gap Inc.’s first-quarter fiscal 2024 financial results, CEO Richard Dickson said that, across brands, the firm saw positive results from its push to respond to these trends.
“We’re executing against our brands with renewed strength around their identities and purpose,” Dickson said. “We’ve been developing more trend-right product assortments. These product assortments have a clear point of view.”
As an example, Dickson highlighted Gap’s “Linen Moves,” which drove double-digit growth in linen sales. This campaign capitalized on a seasonal fabric trend, coupling it with in-store and digital brand storytelling. This boost came in a quarter when Gap brand comparable sales overall were up only 3% year over year.
In order to be able to respond to evolving trends, the retailer has found that it has to be more agile with its inventory, keeping lower stock levels to be able to act more quickly.
“We’re back to really having just the rigor in the business to ensure that we have stock-to-sales ratios that ensure that our inventory levels continue to be below sales,” Katrina O’Connell, the retailer’s executive vice president and chief financial officer said, “which gives us the opportunity to continue to chase trends and allow ourselves to be more responsive to our consumer, and so that principle will remain.”
Gap Brands on Trend
The company has seen its other retail brands similarly find success with their efforts to cater to emerging trends. Old Navy’s focus on family-oriented fashion and activewear resonated well, marking the brand’s third consecutive quarter of share gains in the activewear category. These efforts align with a larger consumer shift towards multifunctional clothing that fits both casual and active lifestyles.
Athleta, Gap’s brand focused on women’s athletic wear, also saw the benefits of honing on evolving trends in consumers’ fashion preferences. The brand’s 5% increase in comparable sales reflected a consumer shift towards performance-oriented apparel that supports active lifestyles. Recent product innovations and limited-edition drops have captured consumer interest, demonstrating a growing market for specialized and high-quality athletic wear.
The emergence of eCommerce and social media has significantly accelerated the fashion trend cycle, transforming how retailers and consumers interact with fashion. Online shopping platforms have made it easier for consumers to access the latest styles from around the world, increasing the speed at which trends are adopted and discarded. Social media, particularly via platforms like Instagram, TikTok and Pinterest, has amplified this effect by providing a constant stream of fashion inspiration and instant feedback on new looks.
By responding to these trends, Gap was able to drive sales growth even at a time when consumers are generally being more cautious in how they spend, with many pulling back on retail purchases. PYMNTS Intelligence research finds that 60% of consumers have reduced their spending on nonessential items in response to inflation.