Why the Gap Needs Kanye West

Can Kanye West help the Gap dig itself out of deep hole?

Many retail analysts are asking this question in the wake of the Gap’s recently announced agreement to carry West’s Yeezy clothing line online and in stores. The agreement has already injected his own crazy brand of cool into a struggling brand. But the Yeezy Gap line won’t even hit Gap brick-and-mortar stores until 2021. As the COVID-19 pandemic rages on, the future of those stores remains in doubt. The Gap should partner with West now to aggressively co-brand online, where all the action is going to be for the foreseeable future. 

The Announcement

According to the June 26 announcement: 

• Under West’s creative direction, Yeezy Gap will develop clothing for men, women, and kids “at accessible price points” -- meaning that the Gap probably won’t be carrying the $200+ hoodies and $135 T shirts available on the Yeezy website.

• The Gap will not carry the Yeezy sneakers, which have been lucrative sellers.

• West will have a say in how Yeezy products are displayed in Gap stores and online.

On the day of the announcement, the Gap’s stock price surged as much as 42 percent.

The relationship fulfills a dream that the hip-hop artist and billionaire capitalist has harbored for years. In 2015, he said, “I’d like to be the Steve Jobs of Gap. I’m talking about full Hedi Slimane creative control of the Gap is what I would like to do.” Five years later, he’s setting out to do that by making his designs more accessible to a broader audience as Jobs did for personal computers, and if he does not have complete creative control over the merchandizing of Yeezy Gap, he’ll certainly have influence.

Bad News for the Gap

The Gap’s atrocious 2020 is a microcosm for the retail industry’s free-fall amid the coronavirus pandemic. COVID-19 forced the Gap to close 90 percent of its brick-and-mortar stores, including Athleta, its namesake stores, Banana Republic, and Old Navy. Since physical stores account for about 75 percent of the company’s revenue (source: Gap), mass store closures crushed the company’s revenue base. As a result, on June 4, the company reported that its sales had plunged 43 percent in the first quarter of 2020, resulting in a net loss of $932 million compared with a profit of $227 million a year ago.

On the positive side, the Gap reported that online sales had risen by 13 percent year-over-year for the quarter, and 100 percent growth for the month of May.

But the Gap was struggling long before COVID-19 hit. Over the years, the once-celebrated company lost its flare for tapping into mainstream fashion tastes, resulting in declining sales and store closures. By November 2019, journalists and analysts were talking of the Gap not as an American success story anymore but as a brand in decline. Just before COVID-19 hit, the Gap’s share price had dropped 60 percent year-over-year.

The New Music Mogul

Kanye West is headed in the opposite direction. In 2013, he launched a relationship with Adidas to license the Adidas Yeezy line of footwear. Since then, Adidas Yeezy has grown to generate an estimated $1.5 billion annually, according to Forbes. He has created a multi-billion dollar empire even as his music of late gains a mixed critical reception.

West is an example of how the model for music co-branding has changed. Musicians used to align themselves with non-music brands to gain more power, visibility, and wealth. But an elite group of musicians have become so powerful that they've inverted the model. And some have changed the model completely by creating non-music brands themselves. For example, Rihanna's Fenty beauty line is credited for compelling the beauty industry to create more inclusive products, a phenomenon known as the Fenty Effect. Arguably, Rihanna as a fashion and beauty brand has eclipsed Rihanna the musician, just as West’s clothing business has arguably made him more culturally relevant than his music has.

How Much Will the Gap Benefit from the Kanye Factor?

How much will the Gap benefit from the power of the Kanye West brand? Analysts estimate that Yeezy Gap would add $700 million in revenue annually, which may not be enough to make a significant difference given the Gap is accustomed to making $15 billion annually. Just the same, West is a brilliant and innovative salesman. He once released an album (The Life of Pablo) by streaming it during a fashion show to unveil Yeezy Season 3, and his popular Sunday Service events, before the pandemic hit, peddled both Yeezy clothing and his new gospel music.

He possesses an undeniable talent for creating conversation and getting attention, which is what the Gap needs badly. This is the man who turned a sleepy Fourth of July across the United States into a conversation about Kanye West when he announced a bid to run for president, a typically outrageous West stunt. The timing of the announcement, coming only days after the Gap deal, was certainly not a coincidence, as it kept his name, and the Gap’s, in circulation. Of course, co-branding with Kanye West creates its share of risks, like having him threaten to back out of the relationship amid a series of alarming tweets he posted on a wide range of topics recently. insightful Retail Dive article by Kaarin Vemba pointed out, “If you hitch your brand to a mercurial superstar you better be ready for the ride.” And, it must be noted, amid the controversial tweets, Kanye West was cleverly promoting Yeezy Gap, including a video clip of an apparent fitting for Yeezy Gap clothing. The Gap needs Kanye West and his idiosyncratic ways more than he needs the Gap.

But The Gap will need to accelerate its digital journey. With the COVID-19 pandemic still raging, brick-and-mortar retailing faces an uncertain future. The Gap has begun to re-open its storefronts, but for how long? With the coronavirus spiking again in different U.S. states, at least one major retailer, Apple, is closing stores that they had re-opened initially. On the other hand, eCommerce remains a bright spot across the retail sector in 2020. According to Adobe, which tracks eCommerce sales on a rolling basis, report, the pandemic has accelerated eCommerce growth by four to six years. eMarketer predicts that eCommerce sales will grow by 18 percent in 2020 as people continue to look for ways to avoid visiting physical stores – deemed a risk to personal health – and make purchases online. 

How might the Gap improve its own online sales? I think the answer, again, is Kanye West. Not only does he know how to create attention for a brand (including his own), but the forthcoming redesign of his Yeezy website is already gaining favorable attention for its inventive design and customer experience. Fast Company, granted advance access to the site, raved that “the design turns the rules of e-commerce” on its head and “turns shopping into art.” According to co-designer and creative partner Nick Knight, the site uses stunning 3D and incorporates surprising features such as humanizing the models who wear Yeezy clothing by providing biographical details about them. Digital is more than an eCommerce destination; it’s a customer experience playground for brands that get it right. And a great customer experience creates loyalty.

What if the Gap were to hire Kanye West and Nick Knight to transform the Gap’s flagship website into a more bold, adventurous experience, even before Yeezy Gap becomes a reality? Doing so would pave the way for Yeezy Gap to make its appearance online – and that day cannot come soon enough given the importance of eCommerce. Also, what if the Gap were also to collaborate with Kanye West to manage broader aspects of its digital brand, such as its social media presence? Partnering with someone as controversial as Kanye West creates risk, but the train left the station when the Gap announced its merchandizing partnership. 

The Gap and Kanye West is a long, long way from 2021. Difficult times call for innovative measures. The creation of a partnership was a bold step. But much more needs to be done. And done now.