Gap Mixes Brands Online, and It Works

(MoneyWatch)  If you've spent any time thinking about the online vs. storefront debate, take a look at the discussion with Gap.com CEO Toby Lenk at blog.shop.org, where they're blogging like crazy from Shop.org's 2008 Annual Summit.

His keynote focused on Gap Inc.'s decision to merge all four of its brands into a universal shopping site with a single checkout. Gap, Banana Republic, and Old Navy merchandise is shipped from one warehouse in one box. Throw in a pair of shoes or a handbag from Piperlime, the newest Gap brand, and shipping is free. Lenk said the legacy brands drive sales on Piperlime, but expects the reverse to be true very soon.

How in the world, blogger Linda Bustos asks, did Gap's brand managers allow this to happen? "The decision to universalize the shopping experience was customer driven. Focus group customers were asking them to do this. And Gap understands the best brand strategy is to do things that customers love, not what the brand marketers think customers want."

Gap trusted its brands to maintain their integrity online, even adding the brand-new, online-only, pure play brand, Piperlime. Although they forecast some trading down, figuring some Gap customers would wander into Old Navy looking for deals, the reverse has been the case. "The biggest winners have been Banana Republic and Piperlime," Lenk said during a Q&A.

"Customers are aspirational," he said. "They really like to think about trading up."