* To aim for less clutter in stores, elegant shelving* Shares up 1 percentNEW YORK, Oct 13 (Reuters) - Gap Inc is looking to
simplify its clothing offerings, dab in more color, and
de-clutter its North American namesake stores to help boost its
languishing sales.The namesake chain strayed from what it was best known for
— high-quality jeans and casual clothes with an American
aesthetic — and must go back to what initially made it
successful, Art Peck, head of Gap North America, told Reuters in
an exclusive interview at the company’s Manhattan design center.”What’s expected of us is pretty clear,” Peck said on
Wednesday, the eve of the retailer’s investor day. “I think it’s
been us who’ve kind of wandered around.”Peck, 56, oversees the Gap stores in North America, but not
the company’s Old Navy and Banana Republic chains.He replaced Marka Hansen in February, when Chief Executive
Glenn Murphy shook up senior management because of disappointing
North American sales, particularly in womenswear.As far as plans outside of North America, the
company said on Thursday it will almost triple the number of Gap
stores in greater China from roughly 15 at the end of this year
to about 45 by the end of 2012, and will open Old Navy Stores in
Japan in the next 18 months.The company also backed its earnings expectations of $1.40-
$1.50 a share for the full year, more or less in line with Wall
Street estimates.Industry experts and analysts say that Gap North America has
confused shoppers in recent years by adding and pulling many
lines of clothing. As a result, consumers did not know what they
could find at the chain that they couldn’t get elsewhere.”They were not able to hold on to that unique space they
had,” said Wendy Liebmann, CEO of consultancy WSL Strategic
Retail.Peck intends to remedy that. Although he’s only been on the
job for a few months, Gap’s shelves have begun to reflect his
back-to-basics-with-a-twist approach, which will become even
more noticeable during the upcoming holiday season.He wants to build on the success of Gap’s 1969 brand of
high-end jeans, which have become a hit with analysts and
customers.For example, Gap has added more color to its denim jeans and
introduced skinny jean leggings with animal prints as well as
colored corduroy leggings, which Peck said have sold well so
far. There will also be more color in women’s jeans in its
spring line, he added.Gap’s more formal, sober clothes for women fell flat, Peck
said, proving that the chain should stick to what it does best.The Body Fit line of yoga and casual clothing for women,
introduced last year in a direct challenge to Lululemon
Athletica is doing well, he said.Gap shares were trading up 1 percent at $18.06 Thursday
morning on the New York Stock Exchange.CLEANER PRESENTATIONPeck isn’t crazy about how Gap displays clothes on the sales
floor. So another change he is implementing is to stack fewer
items on top of one another to reduce the clutter that makes
shelves look like discount bins and use more elegant shelving to
give the clothes a more sophisticated air.”We have far better product in our stores than we’re getting
paid for,” Peck said.An avid runner and cyclist, Peck was hired in 2005 from the
Boston Consulting Group. He oversaw corporate strategy before
being tapped three years later to head the outlet unit, which
operates stores under the Gap and Banana Republic brands.Gap’s sales in the United States and Canada have languished
for years, a decline from the chain’s heyday in the 1980s and
1990s as the go-to retailer for casual American style.Sales at North American stores open at least a year fell by
at least 5 percent in six of the last seven years and have kept
dropping this year. In September, they slipped 4 percent.The company has faced competition from specialty retailers
like Abercrombie & Fitch and new rival Uniqlo, owned by
Japan’s Fast Retailing . That chain intends to have
about 200 U.S. stores by 2020, up from three.Gap currently operates about 890 namesake stores in North
America, not including its outlet locations, but plans to lower
that to 700 by the end of 2013. Gap North America represents
about a quarter of the company’s sales.The chain frequently offers deep discounts and will continue
to do so this holiday season, but Peck said the focus needs to
shift away from price.”We need to start talking about the merits of the product
versus the merits of the deal,” he said.Having clothes that shoppers actually want is the best way
to reduce the need for the discounting that has dented Gap sales
and margins.”If you have compelling merchandise, people will buy it
whether it’s on sale or not,” said KeyBanc Capital Markets
analyst Edward Yruma.Peck said Gap must lure a younger generation of shoppers,
which means selling clothes that stay true to its image, but
aren’t just the same old clothes.”Predictability ultimately means you fade into the
background,” he said.
