I can see reason for the argument that Gap's (NYSE:GPS) new concept, Forth & Towne, might become a good catalyst for the retailer; trying for a new, lucrative demographic is indeed exciting stuff. Given Gap's recent struggles, Wednesday's word that Gap plans more Forth & Towne stores comes at an apropos time. I have to admit, it should certainly be an interesting development to watch, although I still have concerns about Gap.
Gap said it will open stores in Atlanta, Houston, Los Angeles, San Jose, and Seattle -- all major markets. That's good news, considering that the pilot stores weren't well dispersed over many different markets, with a New York store, and stores in Illinois, Illinois, Illinois, and yes, Illinois. (The cities are apparently suburbs of Chicago.) Such a dense concentration seems a little odd to me, and if the concepts have been successful, I'd argue that it hasn't exactly been proven out over a vast number of regions. It looks like now investors may soon get a better idea of how the concept can perform in more diverse markets, and that'll be a much better indicator.
Investors might also find the news heartening, given recent word that the top merchandising executive for the concept had gone on personal leave for an unspecified period, amid a string of upper-management defections.
As I said when Gap first announced the Forth & Towne concept, the more mature female shopper, older than 35 -- with deeper pockets than many of her younger counterparts -- is one many retailers want to court. It does make sense for Gap to try to expand into this demographic, but the truth is, there's tough competition from retailers that seem to have the formula down, like Chico's (NASDAQ:CHS) and Coldwater Creek (NASDAQ:CWTR), as well as other standbys like Talbots (NASDAQ:TLB) and Ann Taylor (NYSE:ANN).
Gap certainly needs a shot in the arm these days; its recent quarter didn't give investors much comfort. Meanwhile, with Gap's troubles exciting customers with its core brands, some have wondered whether Forth & Towne will prove to be different enough. Given the fact that this concept may be the right strategy, but is still in its infancy and has yet to prove whether it can deliver, it will be a while before investors know for sure whether the news is good or not.
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Alyce Lomax does not own shares of any of the companies mentioned.
