Successful brand partnerships are made when it’s a win-win for both brands. That is what the just announced Gap partnership with Kanye West’s Yeezy brand promises.
The Gap brand desperately needs a turnaround plan, with global sales falling from $5.3 billion in 2017 to $4.6 billion in 2019. After trying so hard and failing so badly to make Gap brand relevant and cool again, it has finally struck a deal with Kanye West that could be a game changer for the future of Gap.
“We are excited to welcome Kanye back to the Gap family as a creative visionary, building on the aesthetic and success of his YEEZY brand and together defining a next-level retail partnership,” said Mark Breitbard, Global Head of Gap Brand, in a statement, noting that West worked in a Chicago Gap store in his teens.
Yeezy Gap will put Gap back on the map
“Yeezy brings ‘street cred’ to Gap,” says Mickey Alam Kahn, editor of Luxury Daily. “Yeezy is a reason for excitement for Gap, a brand which lost its way, being neither preppy, hip, or athleisure in perception.”
It’s a lifeline to the next generation future for the Gap with West’s Yeezy lending “strong cultural and lifestyle brand relevance in music, footwear, fashion, and architecture,” says Oliver Chen, Cowen’s senior equity analyst covering retail and luxury.
Gap needs “the younger customer who cares about streetwear [and] who loves fashion. This is a luxury brand getting more accessible with a lot of market demand,” Chen believes.
He also notes Gap stock added $700 million in market cap immediately after the announcement and forecasts it will bring $1 billion in revenues in time. That is reasonable to assume, given that Yeezy’s footwear partnership with Adidas has grown to a $1.5 billion business.
Of course, lots may change for the Gap between now and Fall 2021 when the first Yeezy Gap products are expected to hit the stores.
Reopening its over 1,000 Gap stores after the coronavirus closures will be problematic, as it faces the potential for extended weak mall traffic where most of its Gap stores are located.
Through the first quarter 2020 ending May 2, Gap Global sales were down 50%, including store sales off 64% and online sales dragging 5%. This may necessitate an even greater number of permanent store closures on top of the ~170 previously announced.
On the other hand, Yeezy Gap will enjoy tailwinds from the fashion casualization trend with its promised take on “modern, elevated basics for men, women, and kids at accessible price points.”
Even before the pandemic, West argued, “The hoodie is arguably the most important piece of apparel of the last decade.”
How much more important will it become as a statement piece over the next decade when athleisurewear is elevated to the new normal business attire?
Gap gives Kanye what he craves: access to the fashion masses
West long has rebelled against being forced to sell his Yeezy fashion at luxury prices. In a 2013 interview he said prices for luxury brands like Louis Vuitton are “just too extreme.”
“And I don’t want to use my message to have kids saving up that much, you know, to be part of what the ideas are,” he continued. “That’s the problem to me with luxury. I don’t agree with everything that H&M and Zara does, but one thing that’s good is they were able to break that idea that creativity and things you want have to cost, like, a million dollars.”
However, market reality dictated Yeezy’s flagship fashion line to be priced in Louis Vuitton’s league. He explained to SHOWstudio in 2015 that to achieve his ultimate vision he required a design team of the caliber of LVMH’s Céline, fused with Nike innovation to produce fashion at the scale and price of Zara or H&M.
“I’m not H&M. I don’t have giant factories. How can I get the price point to where I need it to be?” he said.
Even as Yeezy was forced into the luxury market, he pushed back against one of the defining characteristics of that market: exclusivity.
“People buy into these luxury brands to differentiate themselves from others – ‘I have this, and you don’t’ type of behavior or ‘you can’t sit with us,” said Andrea Rinker, fashion advisor for Next Wave Management and founder of Studio Rhea. “Now it looks like Kanye is making it possible for his fans to sit wherever they like.”
Kanye West has always been about democratic fashion that is accessible to all who want to participate.
“Exclusivity is the new n-word. Because nothing should be exclusive. Everyone should have an opportunity to drink from the same fountain,” he said in a 2015 BBC1 interview. “It was a futile argument for me to say, ‘Hey, everyone, get behind me so I can make another $5,000 dollar jacket that you can’t afford.’ It’s insane.”
Regarding the prospects for the premium flagship Yeezy brand, which was valued at $2.9 billion and is sold on luxury fashion marketplace Farfetch, I wonder how important it will be for West or his customers after the Yeezy Gap products fill the pipeline.
The Kanye West brand extends so much further than just fashion and thanks to the popularity of Yeezy footwear, first with Nike then with Adidas, the Yeezy brand is indelibly part of the Kanye West brand.
As a result, the long term success of the Yeezy Gap partnership doesn’t require the lift from the luxury side of his empire.
And this ten-year partnership is unlike the typical short-term collaborations that have become commonplace between luxury and mass brands, like H&M with Karl Lagerfeld, Balmain, and Versace or Supreme with Louis Vuitton.
Kanye could do even more for Gap than Martha Stewart did for Kmart
Rather it is much more like the partnership of Martha Stewart and Kmart, which launched Martha Stewart Everyday line of home furnishings in 1997 that ended in 2010.
At its peak, Martha Stewart Everyday was reported by the New York Times to have generated more than $1 billion a year in sales for Kmart.
“Martha Stewart is the foundation for Kmart’s success,” said Britt Beemer, founder of America’s Research Group, back in 2002 when Kmart was facing one of its multiple bankruptcy filings.
The strength of the Martha Stewart Everyday brand at Kmart led Stewart to exclaim in an Associated Press interview 2015, “We thought about buying it, but we didn’t do it, and we should have. That could have been our store — KMartha!”
Kanye West’s Yeezy may just prove to be Gap’s savior as Martha Stewart Everyday was for Kmart back in the day. Kanye West’s brand extends even further than Martha Stewart’s at her zenith, and his ambition, business acumen, and boldness does too.
“I believe that Yeezy is the McDonald’s and the Apple of apparel,” West said in an interview with WSJ Magazine. “In order to make the Apple of apparel the next Gap, it has to be a new invention.” Now he gets to invent the next Gap.