Gap is having a great summer. The retailer’s share price increased 20 percent in late May after its most recent quarterly earnings report, with all four of its brands (Gap, Old Navy, Athleta and Banana Republic) beating analysts’ sales projections.
If Old Navy is any indication, the retailer is well-positioned for the future. Old Navy, Gap’s bargain brand, over-indexes among consumers 44 years old and younger, according to a new study conducted by purchase data platform Attain. Old Navy is the only Gap brand that over-indexes among the coveted Zoomer demographic, a phenomenon that could translate into strong long-term sales for a brand that has long been overshadowed by Gap’s higher-end brands.
Old Navy’s Zoomer appeal is on full display on TikTok, where users love to post haul videos showing off the affordable fits they scored at the store.
“There's a subcurrent of Gen Z culture that loves the '90s and reviving fading 90's brands like Champion,” explains retail media analyst Andrew Lipsman. “Inexpensive and versatile apparel also plays into Gen Z's desire for ‘hacks’ to live better and get more for your money by surfacing good deals and underrated finds. This all plays well into TikTok's influencer culture, of course.”
Old Navy’s popularity on TikTok is all the more impressive considering that OldNavy’s own TikTok account has just 98,000 followers — fewer than the 108,000 individual #oldnavy posts that users have generated.
This is a welcomed development for Old Navy’s parent company, Gap, which is attempting a rebound under new CEO Richard Dickson, who took the position last August. The most recent earnings call was the first time in years that all four of its brands beat sales expectations, Dickson said.
Gap is doing more than just appealing to budget-conscious consumers, though; with Athleta, the most recent addition to the Gap roster, Gap has managed to broaden its appeal to customers on the higher end of the socioeconomic spectrum. Athleta, a purveyor of relatively affordable athleisure wear, has considerable brand equity among high income customers — Athleta’s customers are twice as likely to have an annual income of more than $100,000 relative to the average American consumer. It might be less expensive than competitors Lululemon and Alo, but it still appeals to affluent buyers.
Gap, Old Navy and Banana Republic all over-index among middle income ($50,000 to $100,000 year) consumers, meanwhile.
These are all positive signs for Gap, which is operating in a category, retail, that is facing macroeconomic headwinds, including shaky consumer confidence among stubborn inflation rates, high borrowing costs and the rise of ecommerce. One of the best defenses against change, though, is a strong brand, and Gap seems to be making strides in that regard across all its individual labels.
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