Mickey Drexler left the helm of Gap in 2002, after he had guided it through almost two decades of meteoric growth from $480 million in revenues upon his arrival in 1983, to almost $14 billion in 2000 (including his launch of Old Navy and Banana Republic) — an amazing 2,400 percent increase. In contrast, its revenues over the last two decades have grown to a paltry $16.5 billion in 2019. And roughly $1 billion of that increase was generated by Old Navy under its CEO from 2016 to 2019, Sonya Syngal, which likely earned her the appointment to the CEO position of Gap Inc. in March of 2020. More on this later.
Too Much of a Good Thing
The first blow to the brand’s life (that alone could kill it over time) ironically came from the good news of meteoric growth under Drexler’s brilliance. That good news suddenly turned into bad news after he scaled the business, and it became ubiquitous (a Gap on every corner). And ubiquitous fashion is not only an oxymoron, “cool” becomes “uncool” very quickly, especially among emerging next gens who tenaciously create their own more personalized and customized world, including brands.
[callout]Over the last 18 years since Drexler’s departure and the Gap’s looming collapse, it has been slogging along on life support as a best-case scenario, shared equally among three successive CEOs: Paul Pressler, the first unsuccessful surgeon; Glen Murphy, the second MASH unit surgeon, and Art Peck, the third undertaker.[/callout]
But let’s say I’m wrong and it’s actually possible to reposition a once-cool but now-dying brand and bring it back to life. Well in my opinion, the crowning blow to the brand which assured its demise, were the three CEOs over the 18 years that followed Drexler’s departure. The point I want to make crystal clear is that once a hot brand turns cold and boring in a world of excessive overabundance of equally compelling brands, it’s finished.
Over the last 18 years since Drexler’s departure and the Gap’s looming collapse, it has been slogging along on life support as a best-case scenario, shared equally among three successive CEOs: Paul Pressler, the first unsuccessful surgeon; Glen Murphy, the second MASH unit surgeon, and Art Peck, the third undertaker. Metaphors are helpful visuals! So, what went wrong?
The Short Answer
Product, product, product, particularly for the next gen cohort that gave Drexler permission to pour rocket fuel into the zeitgeist he pretty much shaped at the time. Customer demand allowed him to literally open a store on every corner, to the point where it tipped into ubiquity, which in turn began to tip the brand into irrelevance.
Nevertheless, Drexler’s brilliant, almost instinctive understanding of the young consumer culture at the time, inspired him to create one successful line after another over two decades. Yes, with Drexler the merchant prince, it was all about product. And indeed, at the end of the day, it’s all about product among consumers as well.
However, while he was rolling out stores from one corner to the next, the danger of omnipresence was creeping up along with the competition of the explosion of new specialty chain brands, all chasing the same next gen consumers. It was all apparently under Drexler’s radar. The momentum of such powerful growth has to be an exhilarating driver, so much so that blinded by success, a looming wall could easily have been unseen or ignored. Mickey Drexler’s long drive ended, and it was time to leave.
The Long Answer
In retrospect, Gap’s selection of the next three CEOs could be considered the long answer as to why the Gap has been slogging along, barely growing for the 18 years post-Drexler. The metaphor I like to use is one that describes Gap as throwing three “Hail Mary” passes to turn the business around.
The first “Hail Mary” CEO was Paul Pressler (2002-2007), who passed his failing patient over to CEO Glenn Murphy, who was Gap’s second “Hail Mary,” who unsuccessfully slogged through 2007 to 2015. In 2015 “Hail Mary” pass number three was CEO and undertaker Art Peck and he seemed to put the final nail in Gap’s coffin as he presided over its impending death. During Peck’s tenure Gap continued to flatline with actual sales declines in both the Gap brand and Banana Republic. The only hint of a heartbeat was Old Navy.
Here’s what the Gap learned from the first “Hail Mary” CEO. Paul Pressler was an alumni of Disney’s store chain with strengths in operations and supply chain, but he knew little of the nuances of fashion. Gap’s business accelerated into decline, and the brand’s relevance, positioning, image, consumer base and business continued to unravel. So, by 2005, the brand suffered from inexperience at best, and what would turn out to be a total lack of merchandising skills at worst. Between June 2004 and December 2006 (eight months before Pressler would be replaced), comp-store sales declined in every month but three.
Pressler stepped down in 2007. Does it surprise anyone that Gap’s publicly stated qualifications for its next CEO at the time read: “…with deep retailing and merchandising experience, ideally in apparel, and who understands the creative process?” Someone finally woke up to Gap’s real problem. But even more astounding, the search firm that served up the next CEO apparently did not read those qualifications. Because the next two “Hail Mary” CEOs recruited to turn the business around, were equally the opposite of the profile and experience level the Gap said they wanted: Glenn Murphy, previously CEO of Shoppers Drug Mart in Canada and Art Peck whose career had been primarily as a consultant with the Boston Consulting Group.
Is Sonia Syngal Gap’s Fourth “Hail Mary?”
I ask this question because even though her short three-year tenure as CEO of Old Navy (2016-2019) was spectacular, her major career positions and educational experience do not sync with merchandise and branding skills for retailing. Since she joined Gap in 2004, she was EVP of Global Supply Chain and Product Operations and redefined a best-in-class product-to-market model for Gap’s portfolio of brands. She also served in key leadership and general management roles including Managing Director for the company\’s European business, and Senior Vice President for Gap Inc.’s International division and International Outlet division. Prior to Gap, Sonia had a successful career in Fortune 500 companies, including 10 years at Sun Microsystems and six years at Ford Motor Co. She holds an MA in Manufacturing Systems Engineering from Stanford University and a BS in Mechanical Engineering from Kettering University.
This is a track record of a very successful businessperson, arguably awesome. However, does it match the profile of an executive “…with deep retailing and merchandising experience, ideally in apparel, and who understands the creative process”?
Of course, as CEO, Sonia can hire another Mickey Drexler if she can find one. Currently, he is CEO of specialty retailer Alex Mill. And I bring his name back into this mix because of a decision Syngal made in signing a 10-year apparel deal with Kanye West in June 2020 based on his Yeezy line of sneakers that essentially saved Adidas.
Here’s what Mickey had to say about this move, as reported in Yahoo Finance. “I probably shouldn\’t say this, but I told him he (Kanye West) shouldn\’t do the deal because it doesn\’t make any sense in my opinion. I have a lot of friends at Gap still, but it doesn\’t work for someone like Kanye. He is not a corporate person and Gap is a big corporation. So, I know the jacket sold out. They did $7 million on the jacket overnight. He is a smart guy, but he shouldn\’t have done it. And I don\’t think they should have done it, either.\”
To give some credence to Mickey’s opinion, as if he needs any credibility, as it turns out Yeezy is not exactly working out. As reported in Retail Dive, “In August, Gap Inc. CEO Sonia Syngal and Chief Financial Officer Katrina O\’Connell took turns assuring analysts that there are good reasons for the slow-moving drops from, and their minimal communication about, their Yeezy x Gap partnership.”
Closer to home, The Robin Report’s expert contributor on all things next gen (she is one herself) Jasmine Glasheen wrote there are five reasons why the partnership won’t succeed. It’s a great article and I totally agree with it. It is a must read if you want a thorough understanding about what Mickey said about this is a bad partnership.
If the Kanye West deal turns out to be a mistake, it’s not going to be a total disaster. But if it was a “Hail Mary” move, that might be a problem. Sonia Syngal is just starting her tenure and I am rooting for her. She is amazing and her career has been impressive. And as everyone knows we need more female CEO’s, especially in an industry that gets 70 percent of its revenues from women. Let’s hope she moves Gap from a “Hail Mary” track record to a consistent winning game play strategy.