Gap Inc. unveils 4 lab stores at San Francisco headquarters

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Dive Brief:

  • Gap Inc. on Wednesday unveiled four retail spaces at its Folsom Street headquarters in San Francisco that will serve as labs to “test new store technologies, consumer experiences and product innovations.”

  • The spaces for Old Navy, Gap, Banana Republic and Athleta add nearly 18,000 square feet of retail space on the city’s Embarcadero waterfront near the ferry terminal, in the emerging East Cut neighborhood, the company said in a blog post.

  • Two years ago the conglomerate’s namesake Gap brand announced the closure of its Embarcadero Center store and its Market Street flagship.

Dive Insight:

The executives seen at the ribbon-cutting ceremony for these test stores are under intense pressure to turn things around at Gap, Banana Republic and even Old Navy, and get fast-growing Athleta to reach its full potential.

A recent upgrade from Morgan Stanley was less a vote of confidence and more a proclamation that the company’s performance can’t get much worse. Meanwhile some analysts want it to contemplate spinning off Athleta.

The turmoil of late is seen not just at Gap and Banana Republic, but also Old Navy, which usually buttresses the company’s overall results. In the most recent quarter, net sales at Old Navy fell 19%, with comps down 22%. In April, brand chief Nancy Green abruptly left.

Macroeconomic pressures like supply chain woes and inflation are only making matters worse. Overall Gap Inc. Q1 net sales fell 13% year over year to $3.5 billion and comps fell 14%. E-commerce (39% of the business) fell 17%, with store sales down 10%. Gross margin contracted by 930 basis points year over year to 31.5%, and merchandise margins shrank by 760 basis points.

The company has drastically shrunk its brick-and-mortar fleet in recent years, with a focus on closing mall locations. Now it’s turning to innovation. Visitors to the spaces unveiled this week will get a first look at the new technology, customer experiences and products that will be floated by the company’s “artists and designers, data scientists and technologists, sourcing and logistics experts, customer evangelists, and futurists,” according to a statement from Gap Inc. CEO Sonia Syngal.

Visitors are also invited to watch the goings-on in the headquarters’ ground floor “Co-Lab” maker studio, per the blog post. The company declined to say whether Gap’s space will feature drops from the brand’s much-touted Yeezy Gap collection.

“Our customers are central to every business decision we make, and we’re excited to welcome our hometown community and visitors alike to experience our four iconic brands inside our redesigned San Francisco hub,” Syngal said.

Editor’s note: This story has been updated to include a statement from Gap Inc.

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