Boyden's Consumer & Retail Practice Expert, Doug Ehrenkranz shares his thoughts on Gap's next likely candidate
Written by Olivia Rockeman. This article was originally published by BNN Bloomberg. Click here to view the original article.
(Bloomberg) -- Gap Inc.’s next chapter is resting on the appointment of a new chief executive officer to revive the iconic retailer and bring about a turnaround plan that may finally stick.
The company, without a permanent CEO since the ouster of Sonia Syngal in July, is in need of a leader with merchandising expertise, a brand vision and a solid leadership reputation. And after three of its last four chiefs — including Syngal — were chosen from the inside, an external candidate may be the best person for the job, according to executive-search experts and former employees.
“I think it’s somebody who appreciates the potential of the brand, but has had experiences in addition to working in retail, and potentially in addition to working at the Gap,” said Brooke Travis, a former vice president of global brand marketing at the apparel seller, who now runs her own consulting firm. They will need to “make some big, comprehensive swings.”
The list of challenges is long for the San Francisco-based retailer, which last week announced 500 corporate job cuts. The company is contending with slowing sales at its typically strong Old Navy and Athleta brands, supply-chain snarls, rising costs and a potential US recession. It has struggled with strategy changes for years: Syngal, named to the job in early 2020, herself had replaced a CEO who left after his turnaround efforts failed to reignite sales growth.
The person who Gap chooses, whether it’s someone from a completely different industry or with a specific skill set, will “set the tone” for the next few years, said Neil Saunders, managing director of research firm GlobalData Plc.
'Rudderless’
“Gap is a bit rudderless without anyone at the helm,” Saunders said. “Who they do appoint will signal the intention of the company -- if it’s quite a radical appointment, it signals a sort of change in the company.”
Gap declined to comment for this story. Interim CEO and Chairman Bobby Martin said during an earnings call in August that the board is actively evaluating candidates and “working swiftly and thoughtfully” to find the next leader.
“We’re seeing plenty of interest, but again, we want to make sure we put the right leader in place,” Martin said. “Clearly we are looking for a leader that will move Gap Inc. in total from defense to offense, and position us back where we’re seeing meaningful share gains across our brands.”
The new CEO will be tasked with satisfying both shoppers and Wall Street. Gap shares have plunged 66% in the 12 months through Tuesday, compared with a 36% slump for the broader S&P apparel retail index.
That means its key for the person to be able to communicate how Gap will change its strategy to deliver longer-term success, said Cathy Logue, managing director at executive-search firm Stanton Chase, which doesn’t have Gap as a client. But they also should be able to get “the support from the board for the time and runway to really make meaningful change,” Travis said.
Gap is likely to seek a candidate from outside the apparel industry, and may even search outside of the US, said Doug Ehrenkranz, managing partner at Boyden Executive Search. He likened the search to that of Starbucks Corp., which earlier this month appointed Reckitt Benckiser Group Plc’s Laxman Narasimhan to take the reins from longtime leader Howard Schultz.
“Gap still has iconic brands, they have online and brick and mortar footprints, they’ve had success, and they’re still in business when many retailers aren’t even in business anymore,” Ehrenkranz said. “I think it’s a doable challenge. I think that, just like with Starbucks, there are folks out there that are up for this.”
Right Mix
A major piece of the company’s strategy should focus on delivering the right product mix, said Bob Holobinko, former vice president of global marketing for Gap’s namesake brand.
Hopes for boosted sales as a result of the Gap chain’s partnership with Kanye West faltered in mid-September when the rapper and designer, now known as Ye, said he would terminate what was set to be a 10-year relationship. And a plan for the Old Navy brand to offer more inclusive sizing was mismanaged, resulting in a glut of inventory of products that didn’t sell.
“There’s been such a haste over the years to kind of put a tourniquet on the business or really course-correct immediately to have some quick wins,” said Holobinko, who is now an independent executive marketing consultant. “But that shortsightedness has really held them back from a longer-range strategy that puts them in the position to win over the longer haul.”
The company’s internal struggles also come against the backdrop of turmoil in the global economy, rising interest rates, Covid-19 lockdowns in China and Russia’s ongoing war in Ukraine. Gap would benefit from a leader who has managed through a recessionary environment in the past, said Davia Temin, founder of New York-based crisis consultancy Temin & Co.
“They’re going to have to have a tough stomach,” Temin said. “This one is a toughie and it’s gonna take a lot of creativity to find the right fit.”
