Old Navy, Inc.

views updated

Old Navy, Inc.

'70S RETRO TV CAMPAIGN
DESTINATION CAMPAIGN

2 Folsom St.
San Francisco, California 94105
USA
Telephone: (650) 952-4400
Fax: (415) 427-2553
Web site: www.oldnavy.com

'70S RETRO TV CAMPAIGN

OVERVIEW

The valued-focused Old Navy apparel brand was an immediate hit when it was introduced in 1994 by San Francisco parent company and national clothing retailer Gap, Inc. Old Navy made a name for itself with eccentric television commercials that featured an array of offbeat celebrities extolling the virtues of Old Navy products on campy artificial sets. The kitschy look and tongue-in-cheek humor, which remained a component of all the company's ad campaigns, reached a climax in 2002 with a series of spots parodying the 1970s TV shows The Brady Bunch and Green Acres.

Two similar commercials spoofing The Brady Bunch and titled "The Rugby Bunch" began airing in the summer of 2002. They showed an imitation Brady family wearing colorful Old Navy rugby shirts. To emphasize a cross-generational appeal, the spots recreated the nine-square divided screen that had become the iconic image from the opening credits of The Brady Bunch. The words "The Rugby Bunch" were superimposed over Brady-like actors of all ages. These commercials were followed in the fall by a spot that referenced the show Green Acres and highlighted painter pants. Both spots featured longtime Old Navy pitchwoman Morgan Fairchild, a distinctive blond television actress famous in the 1980s. The shows' theme songs were adapted with lyrics celebrating rugby shirts, painter pants, and Old Navy in general and were sung, sometimes quite badly, by the commercials' actors. The cost of these three spots was included in Old Navy's media budget of $133 million in 2002.

The spots aired from August until the end of October. They were the first in what would become for the next two years a recurring retro-television motif used by Old Navy Marketing, the company's in-house advertising unit. The impact of the '70s retro TV commercials was reflected in fiscal 2003 sales numbers, which revealed that Old Navy was responsible for $6.4 billon in sales, nearly 40 percent of the $15.8 billion taken in by Gap, Inc., that year.

HISTORICAL CONTEXT

Retail giant Gap, Inc., began in 1969 with one San Francisco store. Doris and Don Fisher wanted to make it easier for young customers to find a hugely popular clothing item: jeans. It eventually expanded into one of the world's largest apparel chains. The San Francisco-based company introduced a new brand to the retail world with the opening the first Old Navy store, in Colma, California, in 1994. The mission was, according to one of Old Navy's most successful past taglines, to make "shopping fun again" with low prices for trendy clothes. Old Navy quickly made money—and history—becoming the first retailer to achieve $1 billion in sales in fewer than four years.

From Old Navy's inception, advertising was an inside job. Its in-house ad agency, Old Navy Marketing, set about creating commercials that would stand out from the rest of the pack. It recruited 1970s–80s television vixen Morgan Fairchild to tout hip clothing to a generation that may not have even known who she was. The highly stylized Old Navy look continued in the fall of 1997 with commercials that featured a legendary fashion writer, Carrie Donovan, then in her late 60s. She was a figure certainly unfamiliar to the teen audience, but celebrity identification was not the objective. The spots were bright and campy, with a low-budget feel. The aforementioned celebrities were attention-getters because of their unforgettable and sometimes over-the-top looks. Donovan did not even wear Old Navy clothes. Her signature look was that of a midcentury New York professional woman. In the commercials she donned her usual black suit, white pearls, and thick, round-rimmed glasses and extolled the virtues of the latest Old Navy clothing or accessories. She became known as the "Old Navy Lady" and appeared in 42 spots, including one that featured her piloting an airplane with another frequent Old Navy commercial cast member, a dog named Magic. Other celebrities, including quirky actress Fran Drescher and rapper Lil' Kim, lined up through the years to help sell the hip but value-priced merchandise.

The often-wacky Old Navy commercials were either loved or hated by media watchers, but no one could deny their effectiveness. The in-house advertising team, helmed by creative director Dennis Leggett, was responsible for these memorable nostalgia-oriented campaigns until Leggett's retirement in 2004. That year Old Navy hired Deutsch Los Angeles, making it the first outside agency to handle the company's advertising.

TARGET MARKET

While it offered clothing for all ages and both sexes, Old Navy's most reliable consumers had always been girls ranging in age from 8 to 18. In a successful attempt to better serve the retail needs of the mothers of those core customers, the retailer expanded to offer baby, maternity, and plus sizes. The summer 2002 television push for the coming school year took into account a broader spectrum of potential customers—both kids and parents. The commercials spoofing 1970s television classics were meant to create good feelings on the part of adults, who would remember the shows from their childhoods. As an acknowledgement of the ever-present generation gap, the spots were also campy enough to provide a requisite mocking of the past, a quality that appealed to teens. These kids thus might be willing to shop at the same store as their parents, but for very different reasons.

Painter pants, which first gained popularity in the 1970s, were the central product in the "Green Acres" commercial. This product was an ideal crossover from generation to generation. The aim of the spot was to make moms and dads take notice when the unmistakable melody of the Green Acres theme song began. The spot featured Old Navy mainstay Morgan Fairchild singing, "Old Navy you're the pants for me …" to the tune of the original song. The desired result was that parents would make the trip to Old Navy brimming with nostalgia for the pants they loved as teens—and of course bring their kids along as well. Once in the store the whole family would have plenty of fresh, trendy products to chose from.

COMPETITION

When Gap, Inc., created the value-oriented Old Navy brand, it may have also generated more competition than it bargained for. "Over the past 10 years, Old Navy's concept quickly became part of how America shops," said Old Navy president Jenny Ming in a 2004 PR Newswire press release. "We brought something to shoppers that didn't exist when we started—affordable fashion." Old Navy's successful strategy of emphasizing the look of low-cost clothes as more desirable than a designer label resulted in a glut of surprising competitors for the chain. Department stores Sears and J.C. Penney, as well as mass retailers such as Target, took advantage of a trend—largely attributed to Old Navy—that made discount shopping cool. These companies' ad campaigns began to focus on the teen market, specifically teenage girls, who had long been the core of Old Navy's customer base.

Old Navy had to hold its own against the growing popularity of the Kohl's chain, which by 2003 was reporting $10.2 billion in sales, according to Adweek. To attract the fashion-savvy consumer, chains such as Kohl's produced, under their own labels, affordable knock-offs of trendier, more expensive clothing lines. As the stigma of value shopping continued to fade through the end of the twentieth century, low-budget megastores K-Mart, Meijer, and Wal-Mart began to pursue a wider audience for their apparel departments. One common tactic that emerged was to make deals with reputable designer brands to manufacture a more value-conscious clothing line to be carried only in their stores. Target was successful in partnering with such designers as Isaac Mizrahi, Liz Lange, and Mossimo to increase sales. To keep consumer dollars away from competitors, Old Navy had to strengthen and constantly renew its brand presence in the national consciousness.

MARKETING STRATEGY

In 2002 Old Navy's answer to the increasing number of entrants into the cool-clothes-for-less territory it had once ruled was a new television campaign that sought to bring a wider variety of shoppers into the fold. Old Navy Marketing creative head Dennis Leggett shepherded in three parody commercials of retro television shows from the 1970s. The spots saturated the airwaves in the summer and fall of 2002. Hyper-glamorous blond actress Morgan Fairchild was once again front and center as the mom in the two spots titled "The Rugby Bunch," a Brady Bunch spoof. These were the first retro-TV-flavored commercials, which would become a running advertising device for the next two years. The 30-second spots, directed by Gap and Old Navy veteran Matthew Rolston, used a replica of the original show's set and a reworded theme song—"Here's the story of a shirt named rugby …,"—to bring the Brady Bunch's good natured naïveté into the service of selling striped shirts for the whole family.

Old Navy's take on Green Acres focused on painter pants (an updated version of the multipocket work pants once worn only in the painting trade), with Fairchild as a pseudo-replacement for the series' original female lead, Eva Gabor. This spot aired through the end of October 2002 on a wide variety of cable channels as well as during television-ratings giants such as Friends, Everybody Loves Raymond, and The West Wing. The comedy of Everybody Loves Raymond was firmly rooted in exploring parental and marital struggle. An hour-long political drama, The West Wing had a decidedly adult audience demographic. A commitment to the expensive advertising sponsorship of these two shows reflected how intent Old Navy was on capturing the interest of an older consumer.

OLD NAVY GETS A STYLISH NEW SISTER

Over the decades since it was founded, Gap, Inc., grew to include a stable of retail specialty stores that were among the world's most recognizable brands: Gap, Banana Republic, and Old Navy. In August 2005 a long-awaited Gap, Inc., expansion occurred with the introduction of a new chain, Forth & Towne. A women's store designed to combine department-store variety with the service and intimacy of a boutique, Forth & Towne made its debut in West Nyack, New York, and was the antithesis of Old Navy. Forth & Towne promised a figure-friendly fit in high-end clothes at more reasonable prices. Four more stores followed in the Chicago area that same year. The company hoped to entice women over the age of 35, a group responsible at the time for 39 percent of women's-apparel spending.

To promote new products, Old Navy used mass-mail flyers and print inserts, but concentrating on television spots for greatest exposure had been an Old Navy tactic from the outset, and thus the lion's share of the advertising budget went toward TV spots. Old Navy's media spending in the period between January and November 2002 was reported to be $133 million by TNS Intelligence/CMR, a leading provider of marketing and advertising information. Parodies of The Love Boat and The Dating Game continued through the company's 10th-anniversary commercial, as did the use of 1970s TV actors, including Sherman Hemsely of The Jeffersons. Dennis Leggett reflected on the retro TV campaigns in a March 2003 issue of Brandweek, saying, "The challenge is to create something memorable that drives customers to the stores." He added, "We're doing that."

OUTCOME

The result of the 2002 retro TV campaign was a sales increase in fiscal 2003. Old Navy was responsible for generating $6.4 billion in sales in 2003, leading a rebound for parent company Gap, Inc., which boasted a second-quarter profit in 2003 of more than three times that of the previous year. The Old Navy retro TV commercials in particular were credited with spurring an 11 percent increase overall for Gap, Inc., in same-store sales, which took into account store openings and closings. The TV-spoof spots also appeared consistently in high positions on the Ad Age/IAG Top Spots list. This top-10 list, assembled by Intermedia Advertising Group and Advertising Age magazine, measured viewer recall and thus the success of new ad campaigns. Other companies even followed suit. Chevy, ING, and American Express Blue all launched commercials using retro TV show themes or parodies to sell their own products. In the 10 years since its first store opened in 1994, Old Navy played a significant role in the success of Gap, Inc., contributing to revenues listed in 2004 as $16.3 billion.

DESTINATION CAMPAIGN

OVERVIEW

In only its second year of national television advertising and its fourth year in existence, Old Navy clearly announced its arrival as a major marketer by securing a spot on the final episode of the decade-defining sitcom Seinfeld. The 30-second spot, entitled "Woof," featured some of the many stars experiencing career revivals thanks to Old Navy, including Joan Collins and Morgan Fairchild, as well as Old Navy ad staples Magic the Dog, the company's mascot, and Carrie Donovan, the 70-year-old former New York Times fashion editor who donned her signature oversized black-rimmed glasses and classic Chanel cuffs. The departure of Seinfeld from prime time on May 14, 1998, amounted to a Super Bowl of advertising, as NBC charged $1.7 million per 30-second slot, surpassing the NFL Super Bowl with its airtime rates of $1.3 million per 30-second slot. The campy atmosphere of Old Navy advertising dovetailed well with the quirkiness of the sitcom. "The retro-ness and Dada-esque quality of the commercials has an off-the-wall camp component, one 'that maybe a fifth of the audience may understand as camp,'" said Old Navy public relations director Joe Enos in Cynthia Robins's 1998 San Francisco Examiner article. "But like the brand, these spots are approachable, fun and friendly," Enos continued.

"Woof" was one of a trilogy of ads in Old Navy's "Destination" campaign, which set all three spots on a vintage 1970s-era airplane. The Seinfeld slot represented a departure from the norm, as Old Navy concentrated the majority of its media buy on cable television, a scheme that allowed the company to marry its commercials to complimentary programming. In fact Old Navy, which produced the spots not through an ad agency but rather in-house, tied into programming that it sponsored and placed its products on personalities appearing on shows during which Old Navy ads ran. Strategies such as these created a brand image that remained consistent across the board, as explained by advertising critic Barbara Lippert in her Adweek column: "The tone of the ads, the look of the store, the merchandising and design of the clothing, even the shopping experience itself is consistent with the whole."

HISTORICAL CONTEXT

Donald G. and Doris F. Fisher founded Old Navy's parent company, the Gap, in 1969, naming the store after the generational schism prevalent at the time. They sold discount records and tapes to woo in customers to buy the uniform of the counterculture, Levi's jeans. At the time Levi Strauss did not allow discounting of its products, so the Gap's profit margins soared until 1976, when the Federal Trade Commission ruled against this monopolizing practice, forcing the Gap to discount Levi's and shift to private-label apparel. In 1983 Don Fisher hired Mickey Drexler to vertically integrate the Gap, and Drexler promptly whittled down the private labels to one—the Gap. Drexler repositioned the Gap from a chain store into a brand, and in the 1990s Drexler further revamped the Gap formula to mimic the ubiquitous success of Coca-Cola. It was Drexler's vision to dominate consumers' wardrobes by simplifying the shopping experience.

Drexler, president of Gap Inc. since 1987 and CEO since 1997, happened upon the name "Old Navy" on the marquee of a bar in Paris in the early 1980s. A decade later he was on the verge of opening a new venture under the name Gap Warehouse when he remembered passing that bar in Paris. Just before the 1994 opening of the new enterprise, Gap lawyers bought the rights to the name from the French bar owner. Old Navy would fill out the Gap's portfolio of retail apparel stores, with Banana Republic, purchased in 1983, catering to high-end consumers, the Gap appealing to mid-level shoppers, and Old Navy representing the bottom rung, reaching the mainstream, mass market through discounting. Drexler, however, could not afford to jeopardize the Gap's reputation for quality by replicating the formula of most discounters selling cheap goods at a cheap price. He and his colleagues sought to distinguish Old Navy.

"When we started Old Navy, we sat around and we talked about what we didn't like about discount stores—poor quality, colors that are always just a hair off. We really thought, 'What do we not want to be?' and just took it from there," recalled Jenny Ming, Old Navy's executive vice president for merchandising, in Nina Munk's Fortune magazine article. By maintaining quality standards and injecting whimsy into the discount shopping experience, Old Navy managed to grow extremely quickly. The company boasted that it was the first apparel retailer to reach sales of $1 billion in just four years, with about 300 stores. "This is a feat that's unmatched in the history of specialty apparel retailing," said analyst Marcia Aaron of BT Alex. Brown Inc. in Michael J. Pachuta's Investor's Business Daily article.

At first Old Navy relied on advertising in newspapers, magazines, and spot television and radio. Old Navy commenced its national television advertising in 1997, spending the majority of its $160 million advertising budget, which represented 2.5 percent of sales, on cable television. That year's fall back-to-school campaign demonstrated the potential success of Old Navy's marketing techniques. Advertising in support of a sale on cargo pants was scheduled to run three weeks, but near "the end of the second week, we were asked to turn off national cable, because cargo pants were no longer available in stores," recounted Pam Marcus, vice president and director of national broadcast at Deutsch Inc., which executed the campaign alongside the Old Navy's internal production company. "We effectively sold out their merchandise," Marcus continued in the 1998 Brandweek article.

TARGET MARKET

Old Navy's success stemmed in part from its broad appeal. In a narrow sense it targeted middle-income families, but its appeal eclipsed this categorization. The timing of Old Navy's inception coincided with a pervasive trend back to bargain shopping and away from the ostentation of the 1980s. "There was a time, not so long ago, when people who shopped at department stores wouldn't shop at Wal-Mart—that was declass," said Kurt Barnard of Barnard's Retail Trend Report in Munk's 1998 Fortune magazine article. "Then it became chic to shop downscale, to shop for a bargain. People used to pay $10 and they said they paid $20. Now they pay $20 and say they paid $10." Munk then continued, "Old Navy captures this trend brilliantly. It's discount shopping with an edge, discount shopping that appeals to people who can afford Gucci."

Old Navy bridged the gap between bargain and brand shopping by creating a trustworthy brand backed by the reputation of the Gap. As with its parent company, Old Navy appealed to consumers transgeneration-ally. Low prices particularly appealed to parents, while their kids appreciated the fashionable styling of Old Navy clothes. The challenge for Old Navy advertising consisted of reaching these diverse demographic segments. Old Navy solved this problem by concentrating its media buys on cable television, where the brand could deliver its message to different constituents on different networks that targeted specific segments. "The beauty of cable TV was that we could get younger target prospects to find us on MTV, males on Comedy Central and moms on Lifetime," said Walter Coyle, vice president and associate media director at Deutsch Inc., in a 1998 Brandweek article.

COMPETITION

Whereas the Fishers founded the Gap on sales of Levi's, after the 1976 FTC intervention led to private labeling the Gap competed fiercely against the company it previously supported. The inception of Old Navy opened up another front to attack the original American outfitter, from below in terms of price. Old Navy benefited from the vertical integration of the Gap Inc., which controlled every aspect of the business, from production to distribution to inventory to retail sales. Levi's, on the other hand, was primarily a manufacturer. It entered the retail business on the coattails of the Gap but could not translate the success of the Gap's cohesive retail execution. Nevertheless, Levi Strauss sales soared throughout the 1990s, mostly on the strength of the cool image it promoted as the quintessential jean.

Levi sales plummeted 13 percent in 1998, however, down to $6 billion. Peter Arnell, chairman and executive creative director of Arnell Group Brand Consulting, ascribed this decrease to Levi's redirection away from brand building on the strength of its own heritage, as Levi's positioned itself in contrast to its competition. "The moment they start trying to compete with other brands, they don't do very well," Arnell commented in Miles Socha's WWD 1999 article on Levi's. 1998 Levi's campaigns included the tag lines "Tommy Wore Them," "Ralph Wore Them," and "Calvin Wore Them," referring to designers Hilfiger, Lauren, and Klein respectively, as well as the tag line "Our Models Can Beat Up Their Models," featuring Marilyn Monroe and James Dean in Levi's. Besides referring to the competition, these ads copied the Gap's successful "Who Wore Khakis?" campaign that featured famous personalities such as Dizzy Gillespie, Miles Davis, Ernest Hemingway, and Pablo Picasso in everyday, Gap-like clothes.

Gap Inc. risked competing with itself in opening Old Navy, though surprisingly little cannibalization of sales occurred, according to a report on the World Wide Web site "The Motley Fool." Old Navy proved to be the tier with the broadest appeal, however, as evidenced by fourth quarter comparable-store sales, which increased more than 30 percent at Old Navy while increasing more than 20 percent at Banana Republic. The Gap experienced an increase in the high single-digit percentage and GapKids in the low single-digit percentage. Old Navy grew by shifting sales away from discount department stores such as JC Penney, Target, and Kmart, which could not match the hip styling and atmosphere of Old Navy.

MARKETING STRATEGY

By focusing on campaigns around specific items such as cargo pants, drawstring pants, and fleece jackets, Old Navy advertising created demand, as these very items became hip in the youth culture. Old Navy created and then supported these trends by enlisting television personalities to wear Old Navy clothing during programming that featured Old Navy advertising. MTV's Mike Davis appeared on "Winter Lodge" dressed in Old Navy clothing, and MTV devoted a segment called "Magic Moments" to the musical taste of Old Navy's mascot, Magic. Fashion model Markus Schenkenburg, outfitted in Old Navy garb, hosted MTV Jam, which segued into an Old Navy commercial featuring Schenkenburg at a mock fashion show presided over by Magic and Donovan and featuring a shunned Jerry Hall, the fashion model.

"In each case the program acted as a wrap-around for the ads," said Walter Coyle, vice president and associate media director at Deutsch Inc., in a 1998 Brandweek article. "There is tremendous value in having regular commercials subtly supported by visual and verbal in-program reminders. You simply won't—or can't afford to—match that degree of flexibility on conventional network television," Coyle continued. Old Navy also made itself visible as a sponsor of program blocks on Comedy Central, a top 10 countdown on VH1, and a Christmas party on Nick-at-Nite, as well as making an appearance during a fashion segment on E! Entertainment TV.

I'D BE AWFULLY GOOD ON TV

In 1994 Old Navy hired fashion doyenne Carrie Donovan to write a 45-word mock columnette that appeared every Friday on page A-4 of the New York Times, the newspaper from which she retired in 1990 as fashion editor. The ad appeared to be a memo from Donovan reporting on the "merch," as she called it, or merchandise about to hit the shelves at Old Navy stores. When Donovan still worked for the Times, she appeared on Good Morning America, the Today Show, and CBS This Morning. Tom Brokaw once commented that she was a natural for television, and years later, when Donovan was talking with Old Navy executives, she joked, "Oh, I'd be awfully good on TV." Old Navy took the joke seriously and began featuring her in its television commercials. They did not take her too seriously, though, as her gogglelike glasses lent levity to the spots.

Besides outfitting personalities familiar to the youth culture, Old Navy revived the careers of stars from the 1960s, '70s, and '80s. Old Navy commercials featured the likes of the Smothers Brothers, Dr. Joyce Brothers, and Isabelle Sanford and Sherman Helmsley from the television show The Jeffersons. These appearances generated the retro feeling that Old Navy supported in-store with vintage 1952 navy Chevy pickups parked in the middle of the warehouse retail space and utilized as product displays. These appeals to a glorious past both generated and drove the retro trend.

OUTCOME

Adweek advertising critic Lippert noted the extremity of Old Navy advertising, pointing out that "anything that extreme is polarizing—people tend to love it or hate it." In a Los Angeles Times survey of viewers' reactions to commercials, Courtney Evans stated that the spots "actually made me swear never to buy the product." Critical response in the advertising community, however, was much more positive. "Gap and sister company Old Navy have been responsible for some of the most innovative retail advertising to come down the aisle in recent years," said Holly Haber and Sharon Edelson in their WWD article. Lippert echoed this admiration for Gap Inc. advertising of its three chains. She singled out Old Navy advertising as particularly noteworthy and effective with her interpretation of how it functioned: "Old Navy advertising imposes a superstructure of hip superiority—graphically riotous, in-the-know fun—that overrides any residual feelings of being a loser at a bargain basement."