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Bearing fruit

Banana Republic's rebranding efforts have turned the chain into a headquarters for casual Friday.

By Debra Hazel

When it comes to retail remakes, few have been as dramatic -- or as successful -- as Banana Republic. The adventure/safari-look headquarters of the 1980s has altered its merchandise and its store to become a modern casual lifestyle retailer in the 1990s.

Banana Republic's stores, which once resembled the set of an action/adventure film, now sport a clean, contemporary look.

The new Banana Republic is largely the result of the efforts of Jeanne Jackson, CEO of the 300-plus store chain. Jackson will be a keynote speaker at ICSC's Spring Convention in Las Vegas, offering her thoughts on "The Banana Republic Success Story" at 12:45 p.m. on Tuesday, May 25.

In the beginning

Founded in 1978 by Mel and Patricia Ziegler, Banana Republic was created to supply high-quality, natural fiber apparel in the era of disco polyester. Mel Ziegler had sought a replacement for a much-loved, and much worn, safari-style jacket. But in the "Saturday Night Fever" decade of white suits, natural fibers were hard to come by. Finally locating one in a Sydney, Australia, secondhand shop, the Zieglers founded their own store to provide quality cotton and wool attire.

To expand its brand and take advantage of an expertise in textiles, Banana Republic introduced tabletop products, including place mats, in the mid-1990s.

Within five years, the retailer had grown from one store in Mill Valley, Calif., to five stores in Southern California, with total sales of $10 million. The look of the stores, and of the merchandise, was distinctly a cross between the Australian outback and "Out of Africa." The company was perfectly positioned as khaki became the uniform for the decade.

In 1983, the chain was acquired by San Francisco-based Gap Inc., which began an aggressive expansion program. The chain had 100 stores by 1988, diversifying its wares into jewelry and dressier apparel.

Then in the early 1990s, the safari look crashed, nearly taking Banana Republic with it. A new niche was needed.

"Our safari experience in the store was powerful and fun. Then it just fell dead,'' Jackson said. So, "the company found a new path, going through fits and starts.''

One of the few women to head a major retail chain, Jackson joined Banana Republic as its president in 1994. She previously had served as executive vice president and general merchandise manager at Victoria's Secret, a division of The Limited, Columbus, Ohio.

The chain fills a need for what it calls "dress-casual" clothes, less structured than Brooks Bros. career attire, but more formal than The Gap's weekend wear.

Banana's corporate parent, The Gap, may be the ultimate in retail brands. Banana Republic sought the same fame, but in a different niche.

"When we did consumer research, we found a huge gap in the market, the 'dress-casual' zone. So it was a perfect place to play,'' she explained.

According to Jackson, during the past four or five years, Banana has developed a modern versatile wardrobe, "an appropriate uniform for casual Friday; you can dress it down or up.''

The look rests somewhere between Brooks Bros. formality and Gap weekend wear.

"We've institutionalized what makes a brand, how it's held in the hearts and minds of the consumer."

-- Jeanne Jackson,
CEO, Banana Republic

"They were looking for what to wear on casual Friday, and there wasn't any real credible competition. Brooks Bros. was doing dressy, Gap was doing very casual. There was a hole in the middle,'' she said.

Once the look was set, Jackson immediately began expanding Banana Republic's offerings beyond apparel to personal care items, shoes and tablewares to create a worldwide brand.

"I think Banana Republic was a brand. In the last few years, we've institutionalized what makes a brand, how it's held in the hearts and minds of the consumer. There have been many [operators] in the past who didn't understand. ... We staked our own place, declaring ourselves as the headquarters for 'dress-casual,' a modern versatile wardrobe," Jackson said.

The look of the stores also began to change, eliminating the adventure-oriented fixtures for a brighter, more spare look. Light woods replaced dark floors, and cleaner fixturing replaced the movie-set tables and racks.

Goods and services

The chain also began offering length alterations in its stores as an alternative to offering petite lines. "We decided that we could carry the inventory [that a separate petite line would require], or we could make a longer item, and offer length alterations,'' Jackson explained. "Gap Inc. has a deep-rooted corporate culture; think what the customer would want, and give it to them.''

In 1995, Banana began adding personal care items, housewares, gifts, jewelry, intimate apparel and shoes.

"The personal care products were a natural extension for us, as soon as we became a lifestyle brand,'' Jackson said.

Most recently, housewares such as place mats were added to the mix.

"The home collection came from two places. We had built an expertise in quality fabrications, and that could be put to good use. And also, people kept coming to us; we kept hearing phrases such as 'I don't want to shop at Banana Republic; I want to live there.'

"But our most important product extension is shoes. For our 'dress-casual' look, the right shoe was critical. We started it just four years ago, and is now in two-thirds of our doors.''

Locations

The chain's 1999 expansion will exceed that of 1998, when 30 new stores were opened. While looking for a unified image to present its brand, the chain has been opening a variety of store sizes, from typical mall units to 40,000-square-foot "flagship" stores in major cities such as San Francisco, Las Vegas, New York, Honolulu and Chicago. In addition, the chain has opened Banana Republic Men and Banana Republic Women's stores.

"In a big urban environment, you have the opportunity to express one aspect. In a small neighborhood, you don't want a 15,000-square-foot store. We now have nearly 300 stores. We've added a lot in the last year. We have almost one-third of our fleet in streetfront stores; it's where a lot of our customers live. However, that means that two-thirds of our stores are not streetfront units,'' Jackson said.

Promoted to CEO in February 1997, she assumed responsibility in November for the Gap Inc. Direct division, overseeing nonstore operations including Banana Republic Catalog and Gap Online.

The future

The remaking of Banana is complete. All stores have been converted from the Indiana Jones travel/adventure look of the 1980s to the clean modern look of the new chain.

"The last jeep is gone. It was in a store in Las Vegas, and is finally gone. However, we did take the last one and save it. We may have a retrospective,'' Jackson said with a laugh.

Now with 290 stores in the United States and Canada, Banana plans to open at least 45 stores in both those countries this year. And with parent Gap Inc. expanding its namesake units overseas, overseas growth is a possibility.

But there are no immediate plans to expand beyond North America, noted Jackson.

"We know we have great potential, once Gap has opened its stores. [Such growth] seems pretty obvious, once we did achieve equity in the brand. Banana Republic has always had a reputation for quality, and for being a worldly consumer," she said.

The brand seems to be working. Jackson believes there are companies now saying they want to do their own version of Banana Republic.

"I knew we had accomplished what we set out to do: we had defined a market," she said.

And the store look continues to adapt to its markets, Jackson noted.

"Part of the responsibility of having a reputation for 'modern' is that we have to keep modernizing. We will keep tweaking the look, and the size of the stores will keep evolving," she said.

That includes opening stores in a variety of locations, including malls and upscale strips as well as city streets, said Jackson.

"We have the ability to adapt to most leasing plans. We basically look at each market with a thorough analysis, strategically placing stores.''