Wild Company

by Mel Ziegler

  Traveling as much as we did and growing as fast as we were would not have been possible without Ed. A stocky man with a sweet, ineradicable grin, Ed was all action. So much action that he had no time for paper on his desk. He was always circulating throughout the company, determining what wasn’t getting done right and fixing it. We could not have asked for a more perfect buffer between us and the operating side of Banana Republic. We had total confidence in him. He barked and hounded people into being smart in performing their jobs, and they were. He unfailingly got what he wanted from employees, and if he didn’t, they were soon gone. His take-charge style liberated us to focus on product, stores, catalogue, and responding to a growing number of media requests.

  Ed’s sizable army of operational employees had a down-to-earth, analytical common sense that neatly balanced our constant invention. They could calculate how many of each item should be made in each color and each size, and which stores got what. They tracked the cash flow, the terms, the schedules, the logistics. They got the clothes manufactured and delivered, the stores built and stocked, the catalogue in the mail, the orders fulfilled, and the money in the bank. Yet they stood ready to execute every creative whim we threw their way. Theirs was a language of “price points,” “finished goods,” “inventory turns,” “margins,” and “markdowns.” They were the bones of the business, and without them, we never could have expanded as quickly. As weeks turned into months turned into years, their data grew into history, which allowed them to calculate to perfection how Seattle would react to white blouses, the best way to skew the size runs in Chicago, which tops would sell best in October, and whether a given item should be expanded—and if so, in which sizes, colors, and stores.

  The Banana Republic bookstores got up and running in less than a year under the direction of Irma Zigas, who had previously created the bookstore for the San Francisco Museum of Modern Art. With the exception of one freestanding store on Grant Avenue in downtown San Francisco, the bookstores were built inside or adjoining our larger existing stores. They were an instant hit. Carefully selected books about every region of the world could be borrowed or bought. We also published a separate Banana Republic bookstore catalogue.

  The magazine, Trips, was slightly more problematic. Karma found me employing other unemployables, and it was . . . interesting. The editor I hired, Carolyn White, could not comprehend why I should have anything whatsoever to say about the magazine and the stories in it. For reasons perhaps well merited from her prior employment in corporate-owned media, Carolyn harbored a suspicion that if left to my own devices, I would pollute the magazine with puff pieces about Banana Republic. This to me was more than a little maddening, since I conceived the magazine to be independent of the clothing company. In fact, I saw its independence as its greatest merit in affirming that Banana Republic respected the intelligence of its customers—who themselves would appreciate independent journalism. In the magazine, I saw Banana Republic “presenting” first-class travel journalism, much in the way that a public television station is supported. We accepted advertising from other companies and ran some ads of our own.

  But Carolyn never let go of her suspicions. Oddly, as a former journalist myself, as much as I knew she was wrongheaded, I could empathize with her caution. This time, unfortunately (but in a larger picture, fortunately), I was the moneybags, no matter how I saw myself. Nonetheless, and not easily, we worked it all out somehow, and the first issue went to press with stories by noted writers such as Richard Ford, Lewis Grossberger, Charlie Haas, and Marguerite Del Giudice. It was fearless travel journalism throughout, hardly puff stuff. In one tough story, a reporter was dispatched to the little-known and privately owned Hawaiian island of Niihau, which in some ways operated like a medieval fiefdom. I probably would have preferred not running the photo of the man with the gun at his head in a travel magazine, but Carolyn, I suspect, wanted to send confirmation to her colleagues back in New York that she hadn’t sold out and wasn’t producing a Banana Republic magazine-length advertorial. The inaugural spring 1988 issue, designed in digest format by the celebrated magazine designer Roger Black, was stunning.

  While both businesses were revving up, Bob Fisher remained skeptical.

  “How do we sell more clothes with a bookstore?” he asked. “What does a magazine have to do with selling clothes?”

  That either would have an indirect salutary influence on infusing the notion of travel into a brand of travel clothing—adding to the brand’s authority, and therefore selling more clothes—seemed to him far-fetched or, at best, fanciful. His prodding did, however, lead Patricia and me to wonder occasionally how much we might be the subject of conversation at family dinners when the clan assembled at its Sugar Bowl ski cabin near Lake Tahoe, or in Don and Doris’s Laurel Heights home in San Francisco.

  I had, in fact, begun to notice a subtle shift in Don’s tone.

  When I mentioned that the home business would be next to launch, he listened quietly without commenting and started the ensuing discussion by telling me that I reminded him of his father. When I asked why, he said his father had been a “dreamer,” full of ideas, and “often those ideas didn’t work out.”

  “I don’t know about this home business,” he said in conclusion. “It’s best to stick with what you know.”

  Patricia was frustrated and disappointed, but it was his money, after all, and when he bought Banana Republic, it was a clothing business, not a home business. So we iced the home plans. The incident riled me for a minute or two, but then I let it go. Maybe Don was right. We were busy enough anyway with the clothing business, the bookstore, and the magazine. Throwing another business on top of all these would have strained our resources.

  “Stick to what you know” thereafter became Don’s refrain. I wondered if he was ever aware of the irony. What attracted him to us in the first place was our success at starting Banana Republic as professional amateurs. Sticking to what they know may be the one thing that professional amateurs unequivocally can’t do.

  We had already outgrown our offices by the time we finished the renovation in 1986. Luckily, a similar building abutting our Bluxome Street headquarters was available. All we needed to do was punch a hole through the adjoining wall to unify the offices. A structural engineer was hired to inspect the site in order to draw up the plans for a permit.

  As the engineer entered through the ground floor of the renovated office building, he looked up at the newly sandblasted twelve-by-twelve-inch wood trusses. Walking over to a supporting post, he examined the steel braces that connected the post to the trusses.

  He turned to me and shook his head.

  The simple matter of adding some extra office space would pivot into a series of unexpected events that would soon take the Banana Republic we’d built and tear it apart.

  24

  Money Knows Best

  This building,” said the engineer, pointing solemnly to the ceiling of our newly renovated offices, “won’t withstand a 5.0 earthquake.”

  This news wasn’t just bad—it was havoc. We had just sunk $2 million into the renovation. The final result was a dream creative space of exposed brick walls and sandblasted wood, ten-foot-high steel windows, and a wide-open floor plan.

  A 5.0 earthquake is not uncommon in the Bay Area. I had experienced a few myself. The jolt and the roll before the shelves sway and light fixtures swing. Eerily, everything goes silent except for the books or cups or file cabinets crashing to the floor. In the next long and suspended moment comes a cascade of horrifying thoughts: Who’s been hurt? Have the bridges snapped? Did skyscrapers fall? How bad are the fires? If it had been the early days, with only Patricia and me and no employees, the two of us might have been crazy enough to game the law of averages and stay. But now that was unthinkable.

  “We’ve got to get out of here in two weeks or less,” I told the managers.

  Not surprisingly, we were unable to find an adequate space for a few-hundred-plus people on short notice. T
his necessitated splitting the company into two locations, many miles apart in the traffic-clogged Bay Area. Patricia and I moved with the creative, design, merchandising, and production staffs to a frumpy, low-ceilinged, fluorescent-lit office in a low-rise building in downtown San Francisco. The administrative and finance people went to Gap headquarters, about twelve miles south in San Bruno, where Don Fisher made space available for them.

  Once we were out of the building, we handed the keys and structural engineer’s report to the landlord. He sued us for breaking the lease.

  Our relationship with Don Fisher remained amicable. While not reticent to send along a suggestion or two whenever he had one (“Have you thought about selling jeans?”), Don made a point of reiterating at every opportunity, “This is your company, I don’t know how to run your company.” In spirit as well as word, he honored the agreement we had made. On his visits, true to form, he vacuumed in as much information as he could—not only from us, but others throughout the company. Having a reporter’s ear, I marveled at how well Don listened. You had the feeling that every comment was being sucked into a private data bank in his brain, to be recalled effortlessly at any time. There was little in Don’s easygoing manner to suggest the widely reputed shrewd, tough businessman.

  What fascinated him about Banana Republic, as he frequently articulated it, was how we blended merchandise, marketing, and design into a single story; how we named each piece of clothing and wove its tale into the company’s ethos. He wanted to tie together his own stores with an idea for what Gap stood for and put it all into a cohesive package like ours. If the five hundred Gap stores could somehow catch some of the magic of Banana and move up a notch, the results could move the stuck needle on the company’s stock price. After a long search for a new CEO who might be up to the task, he settled on a rising merchant named Mickey Drexler, who had recently rejuvenated Ann Taylor.

  Ed knew him, or knew of him. He was uneasy.

  “Watch out for Mickey,” he warned us. “He’s a grabber.”

  Before we were forced to abandon our headquarters on Bluxome Street, Don called to say that Mickey was interested in sharing some of the space there. Suburban San Bruno, where Gap was located, is only fifteen minutes away by car but light-years from San Francisco culturally. I figured that Mickey, a New Yorker, was feeling isolated down there in the industrial park cubicles that served as Gap offices. As a gesture of goodwill to Don, I might have been agreeable to letting Mickey have the space he wanted. Patricia, however, had misgivings, reinforced by Ed’s cautions about Mickey’s reputed unbridled ambition and wily corporate skills. I was not going to put Patricia and Ed into uncomfortable circumstances. I called Don to say Mickey’s moving in was not a good idea. I explained that we were concerned that having his designers and merchants in close quarters could result in changes to Gap’s line that would confuse the distinction between the Gap and Banana Republic brands. Don said he didn’t see why that would be the case, but he accepted our decision.

  While I had an inkling that Mickey might take our refusal to share space with him as a slight, I had a feeling he would never be a true ally anyway. As they say, good fences make good neighbors. Mickey was that rare CEO who was as involved in the product as he was in the business. I respected what he was doing for Gap. He brought everything under its own label, went for the classics, threw out the froufrou, and carved out a tasteful brand. But I felt like he was studying our game plan too closely. This attention made me uneasy. We prized our autonomy.

  We did our best to cooperate where we could.

  Gap was going to make a presentation to Wall Street analysts in New York, and Don asked us to come and talk about Banana Republic. The implication, of course, was that the analysts would smell a growth opportunity, which might boost the languishing Gap stock. The presentation took place in early 1987 in our largest store at Fifty-ninth Street and Lexington Avenue. The store was designed to be a colonial African home with rooms of painted wainscoting, grand stairways, and a great room with a fireplace, worn leather armchairs, and replica trophy heads on the walls. A thorn tree inspired by the one standing in the New Stanley’s courtyard in Nairobi was sculpted in stucco on the facade, setting it apart from other storefronts nearby.

  Before the official presentations, analysts took the time to walk around and handle the merchandise. Then they all gathered in the great room to hear Mel describe the travel theme and how it was playing out not only in clothing but also in our bookstores and now Trips, the travel magazine. At Don’s urging, Mel told the analysts about our record-breaking sales per square foot and hinted at our extraordinary margins.

  Then Mel handed the microphone to me to make the clothing presentation. Before I started, a hand went up.

  “Do you see the safari trend starting to flame out? Hasn’t it peaked?” an analyst near the back of the room asked.

  “We don’t look at it as a trend. We believe khaki has got at least the staying power of denim,” Mel replied. “Also, our focus is more travel than safari, so we expect to be around for a long time.”

  “With your comps beginning to fall, isn’t that suggesting the concept may have reached a saturation point?” interjected another analyst. “Comps,” or comparable, is the term retailers use to measure sales in the same stores from one year to the next.

  “No,” Mel said. “But you can’t expect comparable stores sales to grow double digits year after year. You can’t have peaks without valleys.”

  “I see you’re opening a new store just about every other week,” said a third analyst. “How large a store base can you grow on a limited concept like this?”

  “I don’t see us as limited,” Mel replied. “Our customers are people of all ages, men and women, teenagers to grandparents. Why don’t we let Patricia talk about the clothes—you’ll see why.”

  Before I could say a word, another hand went up:

  “What effect do you think these movies like Out of Africa and Raiders of the Lost Ark are having on your sales? I know you’re saying you’re not a trend business, but you can’t deny these movies have primed the pump, and where does that leave you when Hollywood is on to something else next year?”

  “Patricia will show you why,” Mel said evenly. We exchanged a quick look.

  If we hadn’t proven to be agile and resourceful, or hadn’t at that moment been achieving more sales per square foot than any other apparel retailer in America, these might have been worthy concerns. But the narrow, hard-nosed line of questioning, plus a few questions about the catalogue business, was the only line of questioning that night. Cynicism gone amok. I was troubled. What unsettled me most was their presumptuousness and lack of curiosity about what made the company work. There were still lines out the door on weekends, but these financial people were fixated only on what might go wrong.

  I caught a glimpse of Bob Fisher and the look he shot his father.

  Later I learned that a highly regarded analyst was mulling a downgrade of Gap stock. His reasons were mostly particular to Gap, but it was clear he also saw “the Banana Republic concept” as only a “limited” rollout.

  In stock market terms, the adjective limited isn’t exactly the rocket fuel that sends a stock soaring.

  When I finally began my presentation, I took the analysts through the core pieces we sold year in and year out, with only the colors changing. I showcased women’s items such as the white linen blouse, pleated trousers, and featherweight cashmere sweaters. Far from trendy, these classic pieces not only traveled well but were also ideal for the office, restaurant, and most everyday occasions. I pointed out the unsized accessory line of Italian scarves, belts, and bags that now comprised a healthy 15 percent of the business, with nearly 80 percent gross margin. Also, a new shoe business that enabled us to dress our customers head to toe. I took them through the vintage-inspired leather collection, and pointed out the washed and aged fabrics we had developed. By turning garments inside out, I showed how well they were made, what a great valu
e they were to the customer while still a good margin for us. Then I ran through the men’s items in detail, making similar points. Finally, I showed the surplus items that gave customers the thrill of discovery.

  As soon as I finished, another hand shot up.

  “The clothes are nice—my wife even buys your things—but don’t you think you might be drinking your own Kool-Aid? What’s to say it’s not a fad? What’s to say you haven’t peaked?”

  Back in the Bay Area after the analysts meeting, Bob was grumpier than usual. It was no secret if you read the financial pages that the economy was stalling after a period of high growth. Gap was not doing well. Mirroring the economy, our sales too were starting to slow, particularly in cities where we had opened more than one store. The comp stores, which had been consistently growing by double-digit percentages for years, slipped to high-single-digit increases—still very good by almost any standard. Bob asked Mel if he was concerned about the comp store growth slowing. Mel said he wasn’t, that expecting double digits year after year was not realistic. He repeated what he told the analysts, “You can’t have peaks without valleys.”

  Bob asked me if maybe the “drop in comps” had anything to do with the merchandise.