The Gap Win

A sales problem is always a customer understanding problem in disguise.

Gap acquired Athleta in 2008 for $150 Million. Athletic wear was growing. Women's fitness was booming, and Gap had the retail experience to scale a niche brand into a national powerhouse. But what Gap nearly missed was that Athleta had built its customer base on studying their loyal customers over the years and found they in fact wanted more from Athleta than leggings and sports bras. Its loyal buyers were serious female athletes: runners, yogis, climbers who trusted the brand precisely because it spoke directly to them. Technical performance, functional design, a community feel. These women weren't shopping at the mall. They were buying online, talking to each other, and fiercely loyal to a brand that treated them as athletes first.

Nevertheless, Gap pushed Athleta into its existing retail footprint and broaden the appeal. Mass distribution. Wider audience. Higher volume. The loyal core noticed immediately. The product started softening. The messaging got blurry. The brand that once said we understand you started sounding like everyone else.

To Gap's credit, unlike so many others, they started to listen to their loyal customers when they saw things falling apart and caught themselves. They pulled back. Recommitted to the core customer, kept Athleta largely separate from Gap's mainstream machinery, and let the brand speak to its audience on its own terms. The result of knowing your loyal, most profitable customer for the Gap was that Athleta grew into a Billion dollar brand.

Bottom line: the acquisition almost destroyed what made Athleta valuable in the first place. The turnaround came the moment Gap stopped trying to change the customer and started listening to her again. A sales problem very often is a customer understanding problem in disguise.

We find the breaks. Fix them. Then move on.