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Banana Republic Pins Hopes on Olivia Palermo

The style influencer has been named a brand ambassador for Banana Republic. Will she help revive the retailer’s fortunes?
Global style ambassador Olivia Palermo stars in Banana Republic's Autumn 2016 campaign | Source: Courtesy
  • Limei Hoang

SAN FRANCISCO, United StatesBanana Republic has announced Olivia Palermo as its first women's global style ambassador. The appointment is part of the retailer's efforts to address some of the challenges it has faced in recent years, including falling sales, over-diversified product offerings and increased competition.

In choosing Palermo, the company is hoping to cash in on the style influencer’s uncanny ability to convert her celebrity into successful sales and to add a layer of fashion credibility to the brand, which Banana Republic hopes will bring some much needed attention to its new product offering.

But is the appointment of Palermo enough to help revive the struggling brand, whose identity has been eroded in recent years by failed attempts to become more fashion forward?

Banana has become a very confused brand — where once the positioning was quite clear, it is now murky.

The decision to appoint a global style ambassador came from the need to communicate a clear message about the company’s product offering and position in the retail market, says Lexi Tawes, senior vice president of merchandising and digital at Banana Republic.

"Olivia represents an incredible versatile style that is inspiring for our customers. We want to build on her ability to connect with customers of all different ages and backgrounds," Tawes, who previously worked with Palermo on a collaboration at the now-defunct Gap-owned brand Piperlime, told BoF.

“From an engagement standpoint, the things that she was involved with were incredibly successful… So obviously, we are hoping to leverage that same level of success here and I see no reason why that wouldn’t be true.”

Palermo will feature in the brand's global marketing campaign, which will focus on tailoring, product fit and quality, launching this autumn and running throughout 2017.

As part of the partnership, Palermo has curated a selection of limited-edition pieces that will be available for purchase straight after the brand’s presentation at New York Fashion Week on September 10. The capsule collection will be sold online and at Banana Republic’s Flatiron store in New York.

“Banana Republic is one of the top brands in America and its fashion has always been very accessible for young women that are just starting out in the workplace and for those who are looking for work pieces but also pieces that they can transition into their wardrobe for weekends and off-time,” said Palermo.

Brand Overhaul

However, the brand still has a way to go before it can celebrate any successes. In August, Banana Republic reported a fall of 9 percent in comparable sales for the second quarter of 2016. It was the sixth straight quarter that sales have fallen, and had worsened compared to last year’s decline of 4 percent.

The disappointing sales come at a time when parent company Gap is attempting to revive many of its businesses by shuttering some overseas stores, monitoring inventories and reducing production times. Gap has also forecast that its full year profit for this financial year would fall below analyst estimates, partly due to falling sales at Banana Republic.

The brand needs a complete overhaul, says Neil Saunders, managing director of retail research agency and consulting firm Columino. “Gap still seems to be quite clueless as to how they are going to do it. Unfortunately, in recent years Banana has become a very confused brand — where once the positioning was quite clear, it is now murky.”

Banana Republic’s regularly discounted merchandise has also damaged the brand’s sales, he continues. “It’s become a lot more like Gap in that respect. The continued discounting has diluted the brand and the brand’s image and is also dissuading people from coming to buy at full price.”

Tawes says the company has been focused on putting the right strategies in place to help communicate its product offering more clearly. “We are now at a point where we really need to make sure that we are telling that message. And I think Olivia is a great vehicle for us to continue to get that message out there.”

Banana Republic’s problems run deep though, particularly when it comes to how it is managed by Gap, whose strategy implementation across its brands has not shown much success so far. “The products aren’t right so it doesn’t matter how much you discount or promote it. There are a lot of brands that do a much better job than Banana does,” said Saunders, noting the success of its competitor J. Crew.

“It needs an enormous amount of work to revive it. The problem with Gap is, when you look at the core Gap brand, they’ve never been able to revive that despite years and years to get it back up. If that’s the template, it doesn’t bode well with Banana.”

Related Articles:

Gap Shoppers Don't Want to 'Dress Normal'
Gap to Close 75 Old Navy, Banana Republic Stores Outside North America

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