4 ways Old Navy is beating Gap

Old Navy was once Gap's younger and less cool sibling. Now, the affordable family-friendly retailer is outperforming its parent company.

Old Navy is succeeding in many areas where Gap has not caught up yet.

1. It's faster.

AP Photo/Ed Betz

Shoppers wait in line to pay at an Old Navy store in Deer Park, N.Y.

Perhaps one of Gap's biggest flaws is that it takes new designs several months to hit store shelves. Speed is a problem that plagues traditional retailers as they race to catch up to fast fashion retailers like Zara and H&M.

Gap has acknowledged that this is an area with great room for improvement. In fact, it's a core tenet of Gap's valiant master plan to become cool again.

CEO Art Peck has openly disclosed that Old Navy has adapted to this crucial speed.

"Old Navy is farthest ahead in realizing this with the changes that have taken place, obviously, and the challenges in the business at Gap, changes in leadership, challenges in the business. Those two businesses lag. Banana is probably in the middle," Peck said in an earnings call earlier this year, referring to Banana Republic, "and Gap is farthest behind."

2. It's cheaper.

Reuters

A woman shops at an Old Navy store.

This is no fault of Gap's; the economy is a likely factor. 

Old Navy's prices are much lower than those at Gap or Banana Republic, the company's higher-end label. A pair of Gap men's jeans retails at $69.95, while the Old Navy version costs $29.94. 

American consumers are moving away from brand names in favor of value, a trend that is also hurting retailers like Macy's, JCPenney, and Target. Additionally, consumers are choosing to spend on money on electronics instead of apparel.


And with fast fashion increasingly on the rise, consumers are quicker to pick up something cheaper.

3. It's family friendly.

Old Navy knows its core customers: families.

Old Navy's wildly successfully "#Unlimited," released earlier this summer, and its predecessor from last year, "Unlimited," emphasized this, as both videos targeted both parents and kids with their back-to-school themes.

Proceeds from downloading the most recent song and purchasing #Unlimited shirts went to the Boys & Girls Clubs of America and Canada, thereby sending a philanthropic message that parents can easily endorse.

This sends a message that Old Navy is for the whole family. And it is - under one single roof, you can purchase items for parents, kids, and babies.

4. Old Navy is nailing marketing in the digital age.

Gap has tried to relate to consumers in the digital age, but two recent misfires - a marketing campaign on Tinder and the failed "Dress Normal" campaign - prove that it hasn't quite hit the mark yet.

But look no further than Old Navy's "#Unlimited" - which has amassed nearly 8 million views in just three weeks - and recent videos featuring Julia Louis-Dreyfus. Old Navy understands how to market content to the Internet generation.

"Successful marketing in today's world means creating content that people want to engage with rather than [content that they are] forced to engage with," Old Navy's CMO, Ivan Wicksteed, said to Business Insider when discussing #Unlimited's success.

This is part of Wicksteed's mission. "Where it's TV or Instagram or viral content like this, we're trying to present a new face of the brand that forces people to re asses what they think of us," he said.