The following commentary is a Supply Chain Matters guest posting contributed by Guy Courtin. Guy is a veteran and student of the supply chain and technology space, having held leadership roles at Progress Software, SmartOps and i2 Technologies.
North American consumers have gotten to know Old Navy as the “less expensive” alternative in the Gap/Banana Republic family. It is a wonderful store to get basics for the entire family at a very reasonable price. Case in point – a pair of basic khaki shorts there last year cost me $12. A very similar pair (probably came off the same assembly line) was priced at over $40 at Banana Republic! Old Navy has done a good job carving out its place in the market and fits well into the Gap universe.
Something else Old Navy does very well – Demand Shaping. While the Gap and Banana Republic do their fair share of promotions and attempts to shape demand, Old Navy has an uncanny ability to drive disproportionate traffic to their stores with what would seems to be minor promotions. Recently, Old Navy offered a one day in-store only, Solid Flip Flops for $1, (Limit 5 per customer).
One whole dollar…100 pennies…4 quarters….10 dimes, okay you get the point. And we are talking about flip flops, basically a pair of rubber with a plastic tube that fits between our toes…The amazing thing; this drives incredible demand for Old Navy. Just go to a store during one of these sales. It is the “lord of the flies.” Just read what some reactions are on the Old Navy Facebook page:
- What time do the stores open?
- is there a limit ??? and what time does it start
- I was going to get them for my wedding favors but it is limit 5.
- When does it start? As soon as the stores open? Or does it start earlier something like a Black Friday sale..?
- Old navy–is there still a 5 flops per transaction policy? Gotta make sure I have enough hands with me! 😉
- I will be there at 5 in day morning again! Yay! 🙂
And one of my favorite posts “they are $1 at the Dollar Store year round.” But, that is not the point. Old Navy has struck a nerve with their audience and they have found a way, for $1, to do some serious demand shaping. Even the fans of the Old Navy flip flops state that they know they are not as comfortable as other brands, but for $1, max out with 5 pair and once they are worn, get rid of them!
The beauty of Old Navy is that since they sell a large assortment of basics, there is always something you “need”, a new pair of khaki shorts and a $9 solid polo that looks good, oh it is only $9 with my $1 flip flops. See what I am getting at?
Old Navy will drive greater traffic to stores and cross sell/up-sell once the patrons are there. Time this with the July 4th week, where many will be with family and loved ones heading to barbeques and the beach (I will most likely be working…) and you have the perfect demand shaping opportunity.
Old Navy has found a way to elicit an emotion and behavior with something as banal as a flip flop that as one of the comments on the Old Navy Facebook page pointed out, are always a dollar at the Dollar Store! I am sure their in store sales during this $1 sale are very healthy. A Sale, cannot be over used, otherwise it will lose its appeal. If Old Navy started having these sales all the time – $1 flip flops – the appeal would wane. Timing and strategic use of Sales are right on.
As a business, think about what offerings you could make to illicit this reaction and ability to shape demand. This is not just for the B2C world either. It does not have to be a promotion, but it can be some event (and not simply a user conference type event) that is anticipated and drives attention.
Otherwise, I will see you at Old Navy. I have a $2 bill, 7 quarters, 8 dimes, 2 nickels and 35 pennies lying around. I “need” my flip flops!