In a Fool on Call for Gap (NYSE:GPS) this past November, we learned about the strong customer response the company witnessed for (PRODUCT) RED-designed merchandise. That shoppers reacted favorably to the product comes as no surprise, considering that other partners who agreed to give a percentage of profits to the Global Fund to fight AIDS -- like Motorola (NYSE:MOT) and Apple (NASDAQ:AAPL) -- also reported similar feedback from customers. What did raise an eyebrow was the response to the edgier Gap (PRODUCT) RED merchandise, which led management to plan on using a similar premium look and feel in other apparel categories. A look through the apparel retailer's website indicates that the line of Gap (PRODUCT) RED merchandise has indeed expanded, but has the company gone far enough to communicate its "green" efforts to its target demographic?
Sales have taken a thumping lately at Gap North America, with May comparable same-store sales declining 7%, following a 14% whacking to April comps. Gap as a brand continues to struggle in its efforts to regain appeal among consumers. In light of the response to Gap (PRODUCT) RED last year, there appear to be at least two ways it can try to right this sinking ship. First, partner with other designers, learn from recent (PRODUCT) RED successes, and do whatever it takes to make the merchandise more cool and hip. Second, in addition to (PRODUCT) RED merchandise, use every sales opportunity as a means to get the word out to consumers that Gap's products are different in how its fabrics are sourced, how its garments are manufactured, and how profits are being used -- there is no such thing as being too greedy with being "green."
Following its last quarterly results, my colleague Alyce Lomax pointed out that the apparel retailer is moving away from the lower-20s demographic that is dominated by Abercrombie & Fitch (NYSE:ANF) and American Eagle Outfitters (NASDAQ:AEO). This, then, presents a perfect opportunity to really connect with the 24- to 34-year-olds; that demographic, perhaps more than any other, is compelled to buy a product because of its earth-friendly qualities or for its charitable nature or for the economically friendly way that it was manufactured.
Did you know that in 2004, Gap partnered with Delhi's government and two NGOs to help women who have been victims of domestic violence by employing them as garment makers? Project Swabhiman, as it was called, provided the women shelter, support services, job training, and a healthy environment to work in. Did you know that in February, the company began testing a more earth-friendly product made from 100% organic cotton? Were you aware that last summer, Banana Republic sold a skirt from an environmentally friendlier hemp/silk material? I wasn't aware of these and similar sustainability efforts until I did some digging. There is a good bet that Gap's target demographic is also in the dark on these and other "green" initiatives.
Can Gap seize this opportunity to translate its "green" efforts into green for its shareholders? It's time for Gap to get greedy about being green.
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Fool contributor Jeremy MacNealy has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.
