Gap's Top 4 Investments Tackle Omnichannel

Gap placed strong third quarter investments in its growth plan, including introducing omnichannel, getting the company ready next year for responsive supply chain and beginning its seamless inventory for 2015.
There are several investments and strategic plans that the company will continue to stick with because they're part of the long-range plan. In that bucket are investments such as China, Old Navy International, Athleta growth, recent growth with Intermix, and the global outlet. Earlier this year the retailer decided to focus on seamless inventory in addition to its growth initiatives. Although that initiative is just taking off now, the retailer is ramping up now to make the appropriate investments in 2014 to get the full benefit of seamless inventory operating model in 2015, becoming fully omnichannel.
"It would have been easy to delay Reserve in Store, but we'd never do that because that comes with an investment. It's a very important part," said Gap CEO Glenn Murphy on a recent call with analysts. "And of all the omnichannel plays we have, the roadmap is in place, and we're really excited about some of the ideas for 2014. The last one is what we call responsive supply chain."
Responsive supply chains don't require significant investments, rather a process change. From that perspective, the retailer continues to push forward, making progress. "I would really like to see us go faster on that front, but the team is moving at a pace they're comfortable with," noted Murphy. While some benefits may be seen in the early part of 2014, the majority of the responsive supply chain model that the retailer will be operating will be in the back half of 2014.
With a responsive supply chain in place, decisions and assortment strategy can be made much later in the process. For example, in terms of the assortment strategy and missed opportunity, thinking of denim in August and September of this year, if Gap had an operating model in place based on VMI, test and respond, and rapid response, the retailer could have made adjustments to the assortment strategy in early to mid-spring to adjust slightly.
"We could have made those with a responsive supply chain," said Murphy. "There's a long, long list of all the benefits we're going to get, but number one is getting closer to the market, secondly is dealing directly with mills as opposed to vendors by having private platforming, and being able to make decisions later in the process. We are all set up to get some initial benefit from that in the back half of 2014. It's not a onetime win. It's something that just continues to evolve and we continue to get better at."
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