Gap (GPS) Embraces CB4 to Enhance Customer Experience & Sales

The Gap, Inc. GPS is making concerted efforts to strengthen its digital business via advancements in technology besides boosting assortments across its brands. In a latest move, to enhance its digital portal, the clothing retailer bought Context-Based 4 Casting Ltd. (CB4), which is a renowned New York and Tel Aviv-based AI platform.

CB4 uses the latest AI technology and machine-learning tools to transform its retail operations to lift sales and enrich customer experience through analytical research and demand sensing. The CB4 team will join the company as full-time employees. We note that the latest transaction was brokered by Gap’s Strategic Growth Office. This division taps growth opportunities and looks forward to new capabilities across its brands’ portfolio.

The CB4 technology provides recommendations to boost new sales and satisfy customers. The technology was implemented by retailers like Levi’s LEVI, Urban Outfitters URBN, Lidl and Kum & Go. We believe that investment in CB4 will pay off in the future by better understanding consumer insights and greatly increasing sales and profits.

More on Digital Drive

Gap has been making significant investments in technology to bring innovations after it moved to the cloud last October. The company had earlier acquired Drapr, which is an e-commerce startup with 3D-fit technology and virtual fitting rooms to lower online returns.

Gap rolled out AthletaWell, which is an immersive digital platform created to develop loyalty and a community of empowered women. Customers can also engage in conversations with vetted experts on subjects like outfitting, fitness, mental health and body positivity. They can also join interactive workshops on guided meditation and avail premium content from partners like obe Fitness. The obe fitness is a digital fitness platform and partners Gap’s Athleta to convey entertainment, pop culture and design to fitness.

The company is on track to embrace a try fast, learn fast, think big mentality to offer a seamless customer experience. With the debut of Yeezy Gap, it rolled out a modern out-of-the-box online experience. Gap’s Athleta and Old Navy Instagram shopping file proved to be immensely successful while the company’s work-on-site speed and inventory availability are contributing to its better Net Promoter Score.

Gap has been experiencing substantial growth in its scaled digital business since the onset of the pandemic. During second-quarter fiscal 2021, digital sales surged 65% from the second-quarter fiscal 2019 tally, accounting for 33% of total sales in the reported quarter.

Continued growth in e-commerce business hugely bolstered the company’s consolidated sales as well as gains in its Gap, Old Navy and Athleta brands. Online business is benefiting from the company’s dominant omni-channel strength and scaled distribution network. Going forward, the e-commerce momentum is likely to stay and keep driving its overall results.

Price Performance

Contributions from the e-commerce wing and other strategic efforts have helped this currently Zacks Rank #1 (Strong Buy) stock return 18.3% so far in the year against the industry’s 1.9% dip. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment ResearchImage Source: Zacks Investment Research

Another stock in the same space that is worth a look is Abercrombie ANF, which has a long-term earnings growth rate of 18% and a Zacks Rank of 1 at present.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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