Gap's marketing strategy may be a mistake

March 14, 2012

Gap, which successfully marketed to young adults in the 1990s with classic khakis and swing-dancing ads, is hoping that demographic will again buy into its brand. That may be a mistake, according to Bloomberg, which pointed out that the 18-to-34 population is weighed down by higher-than-average unemployment, student loan debt and concerns about the economy. Most importantly, they're increasingly reluctant to shop, according to researcher WSL Strategic Retail.

That reluctance is also undermining sales at other chains, including Urban Outfitters Inc. and Aeropostale Inc. The problem may even end up depriving higher-end retailers such as Nordstrom Inc. of new customers looking to upgrade.

"There is a notion among retailers that young shoppers are more resilient and will come back sooner," WSL Chief Executive Officer Wendy Liebmann said in a telephone interview. "The reality is that they don't have money to spend, and retailers aren't paying enough attention to this."

Gap has recently released ads depicting real residents in young, hip areas and started a collaboration with popular fashion blogs in which bloggers display the retailers' colored jeans and striped sweaters as examples of fashionable looks. However, analysts think it will take more than clever ads to get the hipsters to spend their money.

"The age group Gap is marketing to, 18- to 34-year-olds, is only drawn in by sales and promotions," said Eric Beder, an analyst at Brean Murray Carret & Co. in New York. "Maybe they want to be wired and fashion-driven, but they're not willing to pay for it."

Read more about consumer behavior.

Topics: Consumer Behavior , Marketing

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