Old Navy’s response to slumping sales: More pockets

Apr 6, 2023, 3:26 PM



(CNN) — Old Navy, known for its low-priced basic and trendy seasonal clothing, has adopted an interesting sartorial tactic amid sinking sales. In order to get customers excited to shop again at its stores, it is adding pockets to more dresses.

Old Navy, owned by Gap Inc., said it is doubling the number of new spring dresses with pockets this season because that’s what shoppers want.

This insight, according to the retailer, came from a survey conducted in February of more than 500 women (aged 18 and older), of whom more than half said their favorite dresses have pockets. The reasons why they prefer pockets ranged from keeping hands warm to pockets being convenient for holding small items, thus allowing women to forgo handbags. Some cited pockets as safe havens for hands in awkward social situations.

The new dress styles with pockets rolled out into Old Navy stores this month and the retailer said it will also increase the number of summer dresses with pockets.

But whether it’s more pockets, fewer buttons, softer fabric, simple prints or more basics, Old Navy desperately needs something that connects with its budget-conscious shoppers.

“Dresses without pockets have long been an issue for consumers and it is something many women find frustrating. As such, it is a good move for Old Navy to add them,” said Neil Saunders, retail industry analyst and managing director of GlobalData.

“That said, a lot of other things — such as the range, styles and price points — need to be right to get the consumer to buy. This is where Old Navy is currently struggling. Adding pockets to dresses doesn’t solve any of those longstanding issues.”

Old Navy’s fourth-quarter sales fell 6% over the previous year, while sales at its stores open at least a year fell 7%. But the sales slump came amid declining sales in the same period for all of Gap Inc. divisions, including its namesake Gap brand, Banana Republic and Athleta.

Overall sales during the quarter for Gap Inc. tumbled 6% from a year ago.

Still, Old Navy historically has been the star of the group, accounting for a majority of Gap Inc.’s revenue.

Last year, the 54-year-old company said economic uncertainty was fueling a change in consumer spending patterns and impacting its business. Specifically, Old Navy and Gap brands both said shoppers were pulling back their spending on babies’ and kids’ items.

Gap Inc. said in its most recent quarterly results that Old Navy was continuing to see softer demand from lower-income consumers for kids and baby items but noted that women’s clothing was performing well.

Marshal Cohen, chief industry adviser for market research firm NPD said dress brands typically have avoided adding pockets in order to keep production costs down.

“Wanting pockets is a comment many women make about dresses. Pockets cost about $2 a garment. So adding that cost to the dress will make an impact,” said Cohen. “That $2 multiplies up to about $8 at retail and is one reason why value-centric retailers kept pockets out of the equation.”

“But in this time of inflation, where even low prices are creeping up, pockets and frankly anything to get the consumer excited about ‘newness’ is key,” he said.

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Old Navy’s response to slumping sales: More pockets