PLUS SIZE POWERS STRATEGY
Old Navy overhauls division in bid to win more of US$32B market
At the end of 2018, Old Navy's top executive, Sonia Syngal, told her merchandising team to rethink the brand's plus-size department. Almost nothing was off limits.
“I want you to figure out plus,” Alison Partridge Stickney, the retailer's head of women's merchandising, said in recounting her conversation with Syngal. “It made sense. The market data tells you there's this opportunity. Obviously, we were missing something.”
The cheap-chic retailer owned by Gap Inc. had sold plus-size clothes, which include size 16 and above, since 2004. But like most mass merchants, it existed as a separate category. Plus size had its own design team. It was housed in different areas of the online and physical stores. Old Navy also charged more because the clothes cost more to make — a strategy that sparked criticism, including a Change.org petition that called for ending the practice.
Now, three years after that request from Syngal, who was promoted to chief executive officer of Gap in March 2020, Old Navy has overhauled its plus-size strategy in an attempt to win more of the US$32-billion U.S. market.
The divisions that often made the category an afterthought are gone. There's one team creating all women's apparel. All designs will be available in plus sizes. And the plus-size departments are being removed to sell all women's fashion together. Plus size as an idea has essentially been removed.
“We knew this wasn't a quick fix,” Stickney said. “We couldn't fix this with a rack of clothes in stores or adding another few styles. It had to be a top-to-bottom change in the way we work.”
Old Navy's success is crucial to Syngal's growth strategy. It's the company's largest division and is still vibrant, with sales surging this year. That's why the brand spent several years researching the category, which included going on shopping trips with women. Executives are betting all that time and effort will pay off and play a critical role in helping the brand reach its goal of US$10 billion in sales by 2023 — up from US$7.5 billion in 2020.
There is good reason to make a mark in this segment. In the U.S., about 70 per cent of women wear an extended size, but the category currently represents about a fifth of the apparel market.
The plus-size women's market is expected to have an annual growth rate of four per cent to eight per cent through 2023, according to Brian Ehrig, partner in the retail practice of global strategy and management consulting at Kearney. Before the pandemic, it was gaining at a faster clip than the rest of the apparel market.
“Plus consumers are worth billions of dollars that companies were leaving on the table,” said Jess Weiner, CEO of Talk to Jess, a consultancy that specializes in helping brands become more inclusive and culturally fluent. “This is where the bias around body image comes into play and the undervaluing of a very valuable demographic of a plus consumer.”
While retailers like Target Corp. and Nordstrom Inc. have expanded their plus-size offerings, many chains have been hesitant to invest in the category. Higher costs are often cited as a hurdle, including the increased expense of making apparel with more fabric. At one point, Old Navy used the same reasoning.
In 2014, it defended its practice of charging higher prices for plus-size women's clothing after a shopper started a petition calling the retailer out for not doing the same for men's clothing. Plussize women's jeans cost US$12 to US$15 more.
At the time, Old Navy said it used certain stretch materials and design elements that weren't found in men's garments to justify the higher price point. Making matters worse is that the company only sold plussize women's apparel online. It returned to stores in 2018.
During the company's research, consumers said they were still upset at that pricing. In focus groups with women who wore extended sizing, one asked why she should pay more for the brand's judgment, said Emily Bibik, who is a merchant at Old Navy and helped launch an initiative dedicated to body positivity.
“That was such a cut-through moment for us,” Bibik said. “Nowhere in retail do you see someone charging a different price for an extra small compared to an extra large. So why would we charge more for an extra large versus a 3X? You cannot have true size inclusivity if you're charging a different price.”
Now Old Navy customers will all pay the same price. Other changes include using a wider variety of models on its website, including size 18. In stores, there will be a broader range of mannequins. The retailer is also educating store associates on how plus-size shoppers have often felt ostracized.
“It all comes back to listening to the customer,” Stickney said. “We heard it so loud and clear that she wanted to be included and be able to shop with her daughter and friends.”