Gap Can’t Afford To Let Kanye West And Yeezy Go

When news broke that Kanye West, now officially known as Ye, intends to end his ten-year contract with Gap prematurely, it sounded much like the petulant child who packs up his toys to play somewhere else.

The official termination letter was sent by Ye’s lawyers Thursday September 16 but not before Ye announced over social media that he planned to open a chain of Yeezy stores, starting in Atlanta and expanding across the U.S. and then the world.

He also said he planned to leave his existing partnership with Adidas when it expires in 2026, saying it is time for him to go it alone. “No more companies standing in between me and the audience.”

Gap president Mark Breitbart immediately shot off an email to all Gap Inc. employees suggesting it was a mutual decision.

“While we share a vision of bringing high-quality, trend-forward, utilitarian design to all people through unique omni experiences with Yeezy Gap, how we work together to deliver this vision is not aligned. And we are deciding to wind down the partnership,” the email stated in a copy Gap shared.

Ye claims that the Gap has not met the terms of its agreement, specifically to sell 40% of the Yeezy Gap clothing in brick-and-mortar stores and to open five Yeezy stores by end of July 2023.

To that, Breitbard stated, “Important to know is that throughout this partnership, we have upheld our commitments.”

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And he added, “The teams have done so with the utmost integrity, navigating obstacles and demonstrating incredible resolve.” That speaks volumes about how Gap perceived Ye in their working relationship, i.e., not very well.

At first blush, it appears to be a “suits versus creatives” controversy. And with so much money hanging in the balance – ending the Adidas deal alone threatens to bump Ye out of the billionaire leagues, according to Forbes – Ye appears to be cutting off his nose to spite his face.

Vision not money

But this isn’t about money to Ye. It’s about vision. “I’m an innovator. I’m fighting for a position to be able to change clothing and bring the best design to the people,” he told Fox News in an interview.

Gap, on the other hand, was dealing in a different currency, the dollars and cents. And for that, Ye has proven his power, so it makes no sense for Gap to let him take Yeezy away and go it alone.

Gap needs to come around and realize Ye has exactly what is needed to revive the brand and bring it back to cultural relevance. That is Ye’s vision, passion and energy, plus an equally passionate and energetic customer following.

Early on in the partnership, Ye asked for a seat at Gap’s board of directors’ table. The company sloughed the suggestion off.

“To be honest, he can’t do a worse job than the board has already done,” said retail analyst Neil Saunders of GlobalRetail at the time. “They’ve overseen the decline of what was once an American icon.”

Claiming the board is made up of too many beancounters, Saunders continued, “Those people shouldn’t be running the company because they’re boring. You need people who understand brands and customers and societal trends. You need people with vision.”

Gap’s troubles mount

Regrettably, those beancounters have a lot fewer beans to count these days.

Ever since 2005 when Gap Inc.’s Old Navy brand overtook Gap in sales, after it dropped from $7.2 billion in 2004 to $6.8 billion in 2005, Gap has been stagnating. The two brands ran neck-to-neck through 2015, then Old Navy took off and Gap’s losses mounted.

By 2021 Gap brought in less than half the revenue of Old Navy, $4.1 billion to Old Navy’s $9.1 billion.

Of course, once high-flying Old Navy has hit the skids recently too, with first half 2022 revenues down 15% from same period last year, declining from $4.7 billion to $3.9 billion this year. Gap is only off by 10%, dropping from $1.9 billion to $1.7 billion.

And amidst all the other troubles Gap Inc. faces, it’s got to find a new CEO after Sonia Syngal departed this past July. She held that post for a little over two years, after heading up Old Navy for nearly four years.

Syngal made her exit after Horacio Barbeito was appointed to head up Old Navy replacing Nancy Green who left this past May. Barbeito had been with Walmart for 26 years, as president/CEO Walmart Argentina and Chile and most recently Walmart Canada.

Disruption needed

Brietbard’s email to employees said his plan was to return the brand to what it was originally known for – “Being bold, breakthrough and disruptive.” That was just what Ye and the Yeezy brand offered.

The gap between the two parties looks too wide to bridge. But Gap should have taken Ye at his word and not tried to put him in a box when he made it clear that he would never stay there.

“This is not celebrity marketing. This is not a collaboration. This is a life mission,” he told a group of Gap executives. “We gotta be the highest energy brand in the mall. I love Gap… You have to really give me the position to be Ye and do what I’m thinking or I’m going to have to do what I’m thinking somewhere else…This is the moment. There’ll never be this opportunity where a guy like me cares this much about specifically this brand and who’s done this, up to this point… This is bigger than us and we shouldn’t argue amongst ourselves.”

Here’s hoping that Gap makes amends fast. As unsettling as disruption is, Ye is just the disruption that Gap needs.

The Tycoon Herald