The Gap, Inc. (GPS – Free Report) is making a concerted effort to strengthen its digital business through technological advancements, in addition to boosting its brands’ assortments. In a final move, to improve its digital portal, the clothing retailer bought Context-Based 4 Casting Ltd. (CB4), a renowned AI platform based in New York and Tel Aviv.
CB4 uses the latest AI technologies and machine learning tools to transform its retail operations to increase sales and enrich the 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 negotiated by Gap’s strategic growth office. This division is exploiting growth opportunities and looks forward to new capabilities across its brand portfolio.
CB4 technology provides recommendations to drive new sales and keep customers happy. The technology has been implemented by retailers like Levi’s (LEVI – Free report), Urban outfitters (URBN – Free Report), Lidl and Kum & Go. We believe that investing in CB4 will pay off in the future by better understanding consumer insights and dramatically increasing sales and profits.
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Gap made significant investments in technology to bring innovations after moving to the cloud last October. The company previously acquired Drapr, an e-commerce startup with 3D-fit technology and virtual fitting rooms to reduce online returns.
Gap deployed AthletaWell, which is an immersive digital platform created to develop loyalty and a community of empowered women. Customers can also engage in conversations with approved experts on topics such as equipment, fitness, mental health, and body positivity. They can also participate in interactive guided meditation workshops and enjoy premium content from partners like obe Fitness. Adobe Fitness is a digital fitness platform and partners with Gap’s Athleta to bring entertainment, pop culture and design to fitness.
The company is on track to embrace a quick trial, quick learn, and big-picture mindset to deliver 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 has been hugely successful, while the speed of on-site work and the company’s inventory availability contributes to its best Net Promoter Score.
Gap has seen substantial growth in its large-scale digital business since the start of the pandemic. In the second quarter of fiscal 2021, digital sales jumped 65% from the tally for the second quarter of fiscal 2019, accounting for 33% of total sales for the current quarter.
The continued growth of the e-commerce business has significantly supported the company’s consolidated sales as well as the gains of its Gap, Old Navy and Athleta brands. Online business benefits from the dominant strength of omnichannel and the company’s extensive distribution network. Going forward, the momentum of e-commerce is expected to be sustained and continue to drive its overall results.
Contributions from the ecommerce wing and other strategic efforts have helped this currently ranked # 1 Zacks (strong buy) stock to generate an 18.3% return so far in the year against the downturn. 1.9% of the industry. You can see The full list of today’s Zacks # 1 Rank stocks here.
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Another stock in the same space that is worth seeing is Abercrombie (ANF – Free Report), which has a long-term earnings growth rate of 18% and a Zacks rank of 1 right now.