At Banana Republic’s design studio in San Francisco, Sandra Stangl, the company’s CEO, pointed out an item that caused quite a stir in stores.
It wasn’t a shirt or dress draped on a mannequin. Instead, Mrs. Stangl walked over to a king-size bed with a parchment-colored back. The company has begun placing these bed frames, which retail for about $5,000, at the front of its stores in Los Angeles and New York. Enough customers have asked if they were on sale – the answer: Not yet, but Ms. Stangl and her team are taking a limited number of pre-orders for the fall.
Shoppers usually think of equipping themselves, not their home, when they walk into Banana Republic. But the brand is trying to change that. In March, the retailer announced it would begin selling home textiles, and has since rolled out items such as bedspreads, rugs and the eye-catching bed frames, selling home products online and in 16 of its stores.
The home category “gives us a wider addressable audience,” said Ms. Stangl, standing in front of a linen-and-cotton embroidered comforter, which the company says is a best-seller. She added that offering housewares “stabilizes the business a bit.”
During the pandemic, the retail environment for clothing retailers took on a boom-bust pattern. Stay-at-home shoppers first bought yoga pants, then looked for workwear as a full return to the office was imminent. Now that many people’s daily lives have moved into a more hybrid situation, consumers are even more choosy when it comes to buying clothes.
Banana Republic was no stranger to the ups and downs of the retail market. In the first quarter of the pandemic, the company’s net sales fell 47 percent. When Ms. Stangl took on the top role in December 2020, the Banana Republic design team began creating clothes that were both versatile and comfortable. When it was time to head back to the office, customers turned to the store for relaxed yet professional attire. In the first quarter of 2022, net sales increased by 24 percent.
But after three years of hybrid work, many people were looking for work clothes less often and no longer saw the clothes they wore to work as distinctive from the rest of their wardrobe. In the first quarter of this year, Banana Republic’s net sales fell by 10 percent.
Even before the pandemic, Banana Republic was experiencing declining sales and struggling to attract customers without a 40 percent discount. Losing customers, it began closing stores, going from 566 in 2019 to just over 400 in January 2023. That same month, Banana Republic said it would close its two-story flagship store in San Francisco, where its headquarters still remain. . It will soon open a smaller flagship location, selling home products and a new art collection, available now. The retailer also started selling sportswear and clothing for babies and toddlers.
Banana Republic’s push to sell goods in addition to clothing is not new. It follows a well-known play by other companies who have wanted to brand themselves as ‘lifestyle brands’ to inspire customers to buy all kinds of products from them.
Banana Republic is looking for a “long-term strategy to build brand relevance,” said Corey Tarlowe, a retail analyst at Jefferies.
“Banana Republic is not one of those companies that you think are doing great,” he added. “There have been so many problems for this Banana Republic company in the past 10 years. They try to see these opportunities and figure out what works.”
The problems are even more acute because the parent company, Gap Inc., is on the move. In April, Gap said it was laying off 1,800 employees, or about 9 percent of its workforce, to save $300 million. A month later, the company said sales of all its brands, including Old Navy and Athleta, had fallen in its most recent quarter. Gap’s stock is down 16 percent since the start of the year, and the retailer has been without a permanent CEO for a year.
Changing the perception of a store among shoppers isn’t easy. Marcela Diaz stopped by one of Banana Republic’s stores in San Francisco last Wednesday afternoon to check out some clothes, holding a Zara bag with a pair of silk pants in her hand.
Ms. Diaz, who describes herself as a casual dresser, said coming out of the pandemic, she thought of Banana Republic when she was looking for clothes suitable for professional meetings.
“When I went back to work, I shopped more online at Banana Republic,” said Ms. Diaz, who works at a nonprofit in Santa Fe, NM, and left the store without making a purchase.
While some shoppers and even Ms. Stangl consider the term “workwear” passé, Banana Republic still has a dedicated section on its website called “The Workwear Edit.”
Angela Branch, a 39-year-old who works at a university in Chicago, was also drawn to Banana Republic’s online store. She said she’d always thought of her clothes as “businesslike,” but bought a lightweight cashmere sweater and work pants because they worked well for both office brunch and weekend brunch.
Before the pandemic, she had a section in her closet devoted to workwear, and she regularly added to it. But now her clothes need to be more versatile, she said, and concerns about the economy have limited her spending even more.
“I’ve definitely slowed down a lot because I don’t really need anything,” said Ms. Branch.
But Banana Republic’s burgeoning home decor line, she said, could make her want to keep publishing there.
Eric Ford, a 30-year-old who works in marketing in New York, echoed that sentiment. His mother introduced him to Banana Republic when he was younger, but until recently the brand had felt irrelevant to him. The urge to sell fixtures and furniture comes at a time in his life and career when he is ready to spend money on those kinds of purchases.
“I literally told myself that 30 is the time when all my money goes to my closet, to my house, and to me on a trip,” said Mr. Ford, who lives in Brooklyn.
Analysts are still skeptical that Banana Republic’s home goods strategy will enjoy widespread success. The company is going up against the more established companies Ralph Lauren, H&M, Zara and Restoration Hardware. (Ms. Stangl, CEO of Banana Republic, was once the chief trader at Restoration Hardware.)
“There’s no way you become Restoration Hardware,” says Liza Amlani, the founder of Retail Strategy Group, a consulting firm. “Banana has a lot of competition, and they should just scrap that whole idea” and stay focused on clothing, she added.
Aaron Rose, Banana Republic’s chief commerce and experience officer, said there was room for the retailer to succeed, noting that no company controls more than 5 percent of its home market and that “there are plenty of opportunities for everyone .”
And if the home business turns out to be a success, Banana Republic has other ideas.
“Do we see ourselves entering the hospitality industry? Certainly. And restaurants? I think there’s room for that,’ Mrs Stangl said. “We dream about what travel means to us and to our brand. There’s something there, right?”
