Old Navy History Case Study- The History and Success

Old Navy History Case Study- The History and Success

Old Navy is one of the most famous American retail brands known for selling casual clothing and accessories. Its blue-and-white logo is easily recognizable across the United States as it has a presence in almost every city. It is one of the solid cornerstones of retail clothing in the country today and is famous for its out-of-the-box thinking. Old Navy offers active and casual menswear, womenswear, and for children. However, most people don’t know Old Navy history and how the brand came to be today. We’ll be talking about Old Navy’s origins and some of the fun facts only a few people know about the brand. Old Navy didn’t just pop out of thin air; keep reading to learn about the retail brand’s growth. 

Old Navy History Begins with the Gap

Old Navy’s story started in San Francisco way back in 1969. Donald Fisher was feeling frustrated at the difficulty of finding a decent pair of jeans. Therefore, he decided to start selling his own and opened The Gap store. The Gap became a popular store to purchase music records and low-priced jeans. The venture was so successful that Fisher started expanding his business quickly. By the mid-1970s, The Gap already had a presence in 20 states and had over 200 stores.

In 1980, Gap became a publicly-traded company and recorded over $300 million in sales. This led to the company opening 80 new stores annually. Fisher retired, and Millard Drexler took his place, keeping up the annual expansion. The company continued to expand and eventually bought Banana Republic, an upscale version of the Gap.

Although Gap’s story is successful, it didn’t go smoothly without a few failures. First, the company opened a sportswear chain called Hemisphere; that turned out to be a failure, and they sold it out. Additionally, the company acquired a furniture business called the Pottery Barn Retail Chain. However, that was also short-lived, and the company eventually sold.

Old Navy History as the First Gap Warehouse

After twenty years of successful sales, Gap began to face real competition. Dayton Hudson Corp is a rival company and the owner of Mervyn and Target. There were several rumors in the early 1990s that the company was planning to surpass Gap’s market share by creating a clothing store chain offering lower prices. When Drexler heard the rumors, he saw an opportunity to act first and took it.

First, Gap’s staff began to give out several discounts. They located many local retailers like J.C. Penney, Walmart, and Target and purchased all their accessories and clothes available in the $10 price range. When the staff returned with their purchases, Drexler examined them, and with his advisors, he decided it was time to open a new type of store. The company contacted many international clothing factories and requested new lines of clothes with inexpensive fabrics. In 1993, The Gap converted some of its stores into a discount-clothing chain, naming it Gap Warehouse. 

The Arrival of Old Navy

The new warehouse stores were a hit. After a few weeks of its opening, the executives at the Gap decided that the new chain needed an identity of its own. After days of consideration, Drexler settled for Old Navy, which was the name of a bar he came across while walking through the streets of Paris. The first Old Navy store opened in 1994 in California. There was a huge media event, and there were many giveaways at the event. The company got Cindy Crawford to show up and sign autographs for her fans. After just a year in business, Old Navy made $120 million in sales annually and had over 59 stores. In 1995, the company opened its flagship store in Manhattan and soon had 131 stores. The company also recorded $420 million in sales that year.

Old Navy history shows that its stores were double the size of Gap stores. Buyers could get jeans as low as $22, while T-shirts were available for as low as $7. The stores were industrial-styled stores that featured chrome fixtures and cement floors. Some of the store’s commercials featured retro celebrities like the Smothers Brothers and Morgan Fairchild. Old Navy was the first retail brand to make $1 billion in sales within four years of opening. Old Navy made this record in 1997.

How Old Navy Survived the Turn of the Century

In 1999, Old Navy decided to change its course when Jenny Ming took over as president of the company. Old Navy continued expanding and significantly dominating the retail clothing market with her leadership. At the beginning of the new century, Old Navy already had 513 stores. This retail chain owed most of its success because it reached beyond the target market. This allowed the company to get a higher spending set of customers than its target. An NDP Group survey revealed that over 70% of Old Navy sales came from households earning $50,000 or more.

The success of this brand began to stutter in 2000 due to its plan to expand internationally. In addition, the distribution problems of the company flood it with excess inventory. However, the company launched 12 new stores in 2001 in Ontario. All 12 stores opened simultaneously. The company, however, slowed down its expansion after a decade of constant growth. In 2004, Old Navy had 844 stores and boasted $16 billion in sales annually. The sales from this company represented 40% of Gap Inc’s revenue.

Old Navy History and Learning from the Competition

By 2012, the growth of the Old Navy was slowing down significantly. Therefore, Gap executives decided that a change was necessary for Old Navy if it was ever going to resume its success streak. After assessing the market, they chose to access the competition, starting with H&M, their main competitor. The company also took it further by hiring Stephen Larsson to run the retail chain.

Larsson started by hiring new and young fashion designers from Coach, Nike, Reebok, and The North Face. These new designers worked on new clothing lines for the company. By 2015, the company’s revenue was back up, and they had over $6 billion in the US only. This success was why Larsson was hired, and afterward, he left to work for Ralph Lauren. Sonia Syngal took over as the new CEO and President of Old Navy.

Old Navy Today

Over the years, Old Navy continued to enjoy phenomenal growth. However, the sales reached their peak in 2018. Although sales were higher in 2017 than the previous year, they slipped in 2018 as there was no growth in the final quarter compared to the last quarter of 2017. Sales then declined in the first quarter of 2019, compared to the previous year, which wasn’t any better. In the second quarter of 2019, Old Navy’s sales slipped a further 5% in 2019’s second quarter.

The Gap announced in 2019 that it wanted to spin Old Navy into its own company. However, the company reversed its decision in 2020. At the same time, the company decided to appoint a new CEO. However, Sonia Syngal might be retaining her role in Old Navy for some time. 

Things You Don’t Know About Old Navy.

Old Navy history explores its growth and moments when sales took a dip. However, the store is still famous as the best spot to get affordable clothes and accessories. Unfortunately, most Old Navy customers don’t know much about the company, even those who know its history. Therefore, you’ll find some facts about Old Navy you don’t know below.

The Company was Designed to Function as a Grocery Store

Throughout Old Navy history, the store’s design was always metal shelving, checkout counters, and cement floors. This makes the stores quite similar to most of the grocery stores available. This fashion retail chain also offers shopping cars in their stores. This design wasn’t by chance, as the company had a reason. They believe that with such a setup, they could also arrange items near the checkout lines that could attract people as they waited in line to pay for their purchases. This strategy was quite brilliant and worked exceptionally. Bored shoppers would sometimes see an excellent item while waiting at checkout and add them to their cart. In addition, it worked to increase the company’s revenue.

Old Navy Loves to Experiment

A feature that was always present throughout Old Navy history is the brand’s love for experimentation. Their innovations are pretty popular as they experiment with new products and ideas to discover what customers want. For example, in 1995, the store tested by opening a coffee shop close to the San Francisco store. They also experimented with a kid’s line in Colorado in 1997. However, this experiment was unsuccessful, and they had to close it down within six months. 

Old Navy Used a Fictional Character When Rebranding

In 2011, the company decided to rebrand. They wanted to create a store that portrayed a family-oriented environment. Therefore, Old Navy history records show that the company made a fictional character representing the store. This character is known as Jenny, and she is a married woman with a child. She represented the typical Old Navy shopper, and the company used this character to draw attention to the clothing and accessories line available at the store for an entire family. To stay in line with their target customers’ preferences, the company gave its stores a makeover with enhanced lighting, vibrant colors, and improved stores layout for easy shopping. 

Old Navy has MarkDown Days

If you’re on the lookout for unique deals at any Old Navy store, you might be excited to know that there are two days weekly where the company offers markdowns of some items. These markdowns take place on Monday and Sunday. It is scheduled for someday but tends to occur more frequently on Monday. Most times, the staff are too busy to get around to all the divisions in the store. Therefore, you should note these two days down if you love a good bargain.

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The Online Store Offers Better Prices

Most people do not know that Old Navy’s online store offers more deals and coupons than brick-and-mortar stores. For budget-conscious shoppers looking for reasonable offers, the online store constantly offers visitors coupon codes that you can use to reduce the price of products significantly. The best part is that you can use multiple coupons simultaneously. So, if you have three coupon codes, you can apply them all to your shopping cart to cut down on costs. 

Final Thoughts

Old Navy is a great fashion retail brand that offers the best deals on clothes. Although the brand is a part of The Gap, it has grown in most ways than its parent company. This article also provides you some inside scoop on the brand, like how they learned from their competitors to become better, the best days to shop, and the best platform. With better insight into Old Navy history, you’re sure to understand the brand better. 

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Old Navy History Case Study- The History and Success Very few people today don’t know Old Navy's logo, but few know its history. Keep reading to learn about Old Navy history
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