Gap, Inc.–the $15.9 billion parent company of Old Navy, Banana Republic, Athleta, and Gap–is betting that athleisure isn’t just a passing trend.
The company is launching Hill City, its first new brand in more than a decade. It’s a men’s brand that will make high-performance, technical clothing that is designed to get a man from his workout to the office to hanging out with his kids over the weekend. It’s the menswear equivalent of what brands like Lululemon have been doing for decades: Creating versatile clothing that allows the wearer to move in and out of rigorous physical activity. Gap Inc.’s own activewear brand for women, Athleta, has been performing well over the past few years–even as its flagship Gap brand has faltered–so it makes sense that the company would create a version of it for men. But will Hill City be enough to buoy Gap Inc.’s sales, and keep shareholders happy?
A year ago, Gap Inc. brought in Noah Palmer, an 11-year Gap Inc. veteran who formerly ran men’s merchandizing at Old Navy, to work on this new brand concept. “We’re treating this as a kind of startup within Gap,” Palmer says. “But having the support of the company means that we don’t have to focus on the difficult–and frankly, less interesting–issues with launching a brand, like logistics and warehousing. We can throw more of our energy into things like product and design.”
Like many of the direct-to-consumer fashion startups hitting the market these days, Hill City will launch online in October, and will not have any brick-and-mortar stores. Select pieces from the brand will be available at 50 Athleta stores, to give customers a chance to try on products. But given that Athleta is currently a women’s-only brand, it might be hard to get male customers to visit the stores. For the time being, there are no plans to open Hill City-specific retail locations, but Palmer says the brand will play it by ear. By taking a digitally native approach, Hill City is following in the footsteps of direct-to-consumer fashion labels like Everlane, Bonobos, and MM.Lafleur that are able to be nimbler with their retail strategy and inventory compared with older brands like Gap.
As for Hill City’s design: Palmer says that the focus will be on creating a clean, minimalistic aesthetic, with few visible logos. Since the looks are all based on classic silhouettes, they are meant to appeal to men of all ages, rather than just hip urbanites, who are often the target audience of athleisure brands. Palmers says the Hill City team gathered insight and feedback from a small, diverse group of men who served as a focus group and wear testers. The Hill City design team used this data to understand how men would actually use the various garments, and what they wanted the garments to do. (Starting today, Hill City is inviting consumers to become wear testers though its Facebook and Twitter channels, to help shape future collections.)
The brand’s first collection, which will drop in October, is a direct outcome of this data. It includes pieces like a $158 jacket with a lightweight thermal lining, a $98 pair of trousers that are stretchy and moisture-wicking, and a $248 hooded jacket that would work well for a hike but also looks appropriate to wear to the office. These prices are on par with Banana Republic, Gap Inc.’s premium brand, in addition to many other technical clothing brands, like Ministry of Supply and Outdoor Voices. “Since each piece can be worn in so many contexts, the idea is to allow men to pare down their wardrobes,” Palmer says. “Consumers today want to own less.”
While some activewear brands, like Lululemon and Outdoor Voices, work with mills to create new fabrics from scratch, Hill City selects from existing materials on the market. Palmer says many of the fabrics in the collection are commonly used in activewear, but the design team didn’t want the pieces to look or feel overly synthetic. Instead, they picked materials that feel, to the touch, like they are made from natural materials. “When people think of performance clothing, they think of slick, polyester-heavy fabrics,” he says. “But we want our clothes to feel soft and comfortable. In many cases we’re using natural fibers that are blended with fabrics that have technical features.”
Gap Inc. also says it wants Hill City’s supply chain and manufacturing to be ethical. Hill City will be the first and only brand within the Gap stable to launch as a B Corp, a third-party certification that ensures the products are made using the highest standards when it comes to sustainability and employee welfare. The brand uses renewable, recycled fibers in its performance fabrics, and it will ensure that workers in factories are paid a living wage. This is an important move for Gap Inc., which has been accused over the years of using low-wage factories in developing countries that sometimes mistreat workers.
The launch of Hill City comes at a time when Gap Inc. has been struggling. Since 2011, Gap Inc.’s sales have been on a downward spiral. There are many reasons for the decline, including a drop in foot traffic at the company’s large network of retail stores, customer complaints about the poor quality of products, and customers losing interest in buying products from the flagship Gap brand. In 2015, the company’s CEO, Art Peck, said that he was working on a turnaround plan to make its manufacturing more efficient and reduce discounting. In 2017 and 2018, the company’s sales improved, but this past May, it posted disappointing earnings, which sent its stock tumbling again.
With Hill City, Gap Inc. is clearly trying to respond to the needs of today’s customer by building a new brand from scratch. It’s clear that the company is pitching a millennial customer with the aesthetic of the clothing, the value system it is telegraphing through its ethical manufacturing initiative, and its digitally native retail strategy. But it’s unclear whether this will be enough to buoy Gap Inc.
And in the past, Gap Inc.’s experiments with new brands haven’t always been successful. In 2005, for instance, Gap Inc. launched Forth and Towne, a brand that was designed to appeal to women 35 and over, competing with brands like Chico and J.Jill. The company had calculated that women over 35 were an underserved market, with significant disposable income. But only two years into the experiment, the brand shut down and closed all 19 of its retail stores. Some said that it was because the brand made the mistake of marketing itself to “older women,” which was not particularly flattering to customers.
With Hill City, Gap Inc. appears to be more in tune with what the market is currently looking for, given the success of other digitally native technical men’s clothing brands like Mizzen+Main, Ministry of Supply, and Tommy John. And perhaps more importantly, by not investing in brick-and-mortar stores from the get-go, the brand is more able to be flexible and responsive to customers as it evolves. “We’re trying to be nimble,” he says. “We’re going to see what works and go from there. And we’ll also be sharing any learnings with the parent company, to potentially bring new ways of doing things to other brands.”
But it can’t afford to make any mistakes when it comes to the quality of the garments–something Gap Inc. has done with its other brands–because the effectiveness of the fabrics is particularly important to customers who are in the market for technical clothing. If Hill City’s clothes don’t perform, they’ll lose their customer.