Org Changes Help Gap Get Back on Track

In a keynote presentation at eTail West in Palm Springs, Calif., earlier this week, Noam Paransky, senior vice president, digital, Gap Inc., detailed how the retailer has transformed its organization to better position itself to serve today’s omnichannel consumers.

Gap was one of the first mall-based retailers to have an e-commerce site, launching in 1997. The apparel retailer was also one of the first brands to incorporate a product management team into its organization, doing so in 2002. Gap introduced a unified shopping cart early in its e-commerce days, and by all accounts was a leader in the online commerce space.

However, that early success online quickly stagnated. The struggles came to a head and were exposed on March 8, 2016, when the San Francisco Chronicle, Gap’s hometown newspaper, ran an article titled: “E-Commerce is Booming. Someone Tell Gap.” That sobering headline quickly sprung Gap into action. And within two years of that article, Gap Inc. is reporting e-commerce growth in the high teens, according to Paransky.

How did Gap turn things around?

A Belief in its Brands

“Brands still matter,” said Paransky. “As digital professionals, it's our job to amplify the power of our brands.”

For Gap Inc., its brands’ identities (Gap, Banana Republic, Old Navy, Athleta, Intermix, Weddington Way) are closely tied to their brick-and-mortar locations. And despite much of the chatter of the death of the retail store, Paransky, a digital guy, believes that extensive physical store presence is an advantage for Gap Inc.

“Retail has undoubtedly changed, but the vast majority of transactions still take place in-store,” Paransky noted. “Stores aren't going away. Digital and physical need to connect to unlock huge advantage. It’s our job to create a seamless experience connecting the online and offline worlds. We have to radically improve the omnichannel customer experience. The time to do that is now.”

Understanding its Customers

The first step in improving the omnichannel customer experience is getting to know your customers. What are their wants and needs? What problems are they trying to solve? Only after you have the answers to these questions can you begin to create the seamless and exceptional experiences that customers have come to expect.

Gap has done a couple of things to get to know its customers better. First, it’s asked them what they want. Then we asked them again, Paransky joked. In addition, Gap has revamped its web analytics platform to better understand its online shoppers explicit behaviors. Lastly, Gap has adapted a test-and-learn mentality, efficiently rolling out tests to either validate or debunk hypotheses.

“The customer is telling us that they yearn for confidence,” Paransky said. “If you know what the customer wants, how do you deliver on that?”

What Gap found was that their goals were sometimes in conflict with each other across channels. For example, the company’s in-store sales managers often believed they were in competition with its brands’ websites.

“Our job was to change those metrics,” Paransky said. “The customer lifetime value of omnichannel shoppers was even greater than we knew.”

According to Paransky, Gap’s omnichannel customers within a given year are 10 times more valuable to the organization than its single-channel customers. And if you extend that to customer lifetime value, they are 20 times more valuable.

Org Changes Drive Growth

“Organizations need to evolve based on their mission,” said Paransky. “Balance needs across the enterprise.”

In 2012, Gap Inc. changed its operating model to focus more on its global brands. The brands were able to create distinct identities. The byproduct of this decision was that Gap Inc. didn't have a digital leader overseeing all of its brands’ websites (each brand had its own digital leader). The move ultimately led to a lack of cohesion and balance across the organization.

So in 2017, Gap Inc. launched a hybrid approach for its digital properties. Each brand team now reports into Paransky and the organization’s center of excellence. In addition, Gap Inc. has consolidated its product management team and integrated it across online and offline channels.

“Balance has been key to achieving our agenda,” said Paransky.

That said, Paransky admitted that Gap still has issues it needs to work through as it looks to optimize its organizational structure. During the reorganization process, he’s learned some lessons.

“Don't force something inside of something else,” advised Paransky. “Teams like to have direction. Look to create cross-functional teams that work on a common goal through the use of disparate skill sets. Shared goals to solidify the operating model.”

Gap has launched a business operations center, which internally is referred to as “mission control.” In that room is a mix of employees from different departments and brands, all monitoring 14 big-screen TVs that are displaying real-time clickstream analytics. Having that data enables the different brands to make real-time decisions that can have a positive impact on the business.

“It has changed the way we work,” Paransky said.

A Shift in Mind-Set

Gap used to build in-house nearly all of its technology systems. However, that proved time consuming, in some cases costly, and the retail organization often lacked the expertise in-house to build the systems required. That philosophy has changed.

“We’re now working with best-of-breed partners to stitch together optimal capabilities,” said Paransky. “We look for technology where we don't have an in-house expertise capability.”