Gap Introduces New Tiered Loyalty Program

Need to Know

• Gap will roll out a tiered system that rewards its most loyal customers with faster shipping.
• The deliveries’ speed will be broken down into three tiers—gold, silver, and bronze—which will help Gap manage fulfillment costs and reward its most loyal customers.
• The new tiered delivery system will exist within Gap’s Bright loyalty program, which the retailer launched last year.

Analysis

In an effort to manage both an uptick in delivery demands and cultivate stronger customer loyalty, Gap is planning to launch a new program that will reward its most loyal customers with faster shipping.

The new program will rank Gap customers along three tiers: gold, silver, and bronze. The aim of the new feature is twofold: dedicated customers will be prioritized and rewarded, while the company will be able to better manage its fulfillment costs and demands by setting expectations for its more infrequent shoppers.

The tiered delivery system will be an extension of Gap’s Bright loyalty program, which it launched last year. Bright gives members two points for every $1 spent on in-store and online purchases. Gap has not disclosed exactly how tiered shipping will be integrated into Bright but has said that the new delivery program will apply to all of its brands, which include Old Navy, Banana Republic, and Athleta.

Gap saw a substantial spike in e-comm in 2020, with online sales hitting $6 billion, a 54% year-over-year increase. Gap CEO Sonia Syngal said on the company’s latest earnings call that the company’s “powerful omnichannel platform” has been to thank for the company’s overall online successes. “​We now have over 50% of traffic and 75% of sales annually through mobile,” she said. “With mobile as the primary engagement platform, we’re working quickly to create frictionless mobile shopping and new digital experiences as devices, network, and customer preferences evolve.”

The new Gap delivery program has echoes of Amazon’s subscription service, Amazon Prime, which rewards members with same-day or next-day shipping on their purchases.

Gap is not the first company to investigate ways to offset a spike in delivery demand brought on by an increase in e-comm due to COVID-19. Late last year, Amazon, Target and Macy’s revealed no-rush delivery incentives, in an effort to manage fulfillment pressure during the holiday shopping season. Amazon offered discounts of up to $3 to customers who opted for slower shipping, while Target offered customers the ability to save $1 if they selected an option that would see their orders consolidated into fewer packages, and therefore arriving more slowly. Macy’s, meanwhile, is offered cashback to shoppers who select no-rush shipping.

The new program from the Gap comes just months after the retailer announced a partnership with Afterpay that made buy now, pay later financing available across all of its brands. That integration was part of Gap’s overall rebound strategy for 2021, which prioritized investments in e-commerce, plus a pull-back from “low-productivity, high-rent” bricks-and-mortar store locations.