Gap Hired a Chief Entertainment Officer. Retail Is Now a Media Game

Gap Inc. hired a chief entertainment officer this year — a newly created role — tapping former Paramount executive Pam Kaufman to run its entertainment, content and licensing platform. The hire signals how far legacy retailers will now go to win shoppers' attention, treating fashion as content and stores as stages.

Since Kaufman arrived, Gap has rolled out major campaigns, partnering with bands like Just Your Type and building on last year's ads with girl group Katseye. The strategy has a name inside the company: "fashiontainment," a blend of retail and entertainment designed to align better with consumers.

"Beloved brands have value beyond the products they sell. Consumers identify with them, trust them and want to be part of their world," Kaufman told CNBC in a statement. "The key is authenticity: Every extension has to reflect what the brand stands for and give its fans a meaningful new way to experience it."

Gap CEO Richard Dickson put it more bluntly. "Brands are stories, and we are the storytellers," he said at the Goldman Sachs Global Consumer and Retail conference in September. "I think you could see that come to life when you look at some of the work that we've done, putting our brands in the center of culture and cultural conversation."

Why is retail chasing entertainment now?

Dickson knows the intersection firsthand. Before joining Gap, he was president and chief operating officer of Mattel when the company's "Barbie" movie drew massive box office success by building on a decades-old fan favorite's intellectual property.

The consumer has changed since the pandemic, said Bryan Eshelman, who leads the retail practice at consulting firm AlixPartners. "I think the post-Covid consumer attitude around shopping certainly evolved a lot," he said. "It has gone from shopping as a fulfillment task to shopping, in many instances, more as an entertainment form."

Retailers are responding on two fronts: experiences in physical stores and media campaigns featuring exclusive content. Eshelman said community is now a core loyalty driver. "Community, at the end of the day, is one of the key ways to drive loyalty, so I think retailers of all types are trying to tap into some sense of community, some sense of lifestyle, some sense of belonging that's beyond the product that they offer," he said.

Branded entertainment itself isn't new — Procter & Gamble helped coin "soap opera" in the 1930s. What's changed is social media, content creation and short-form offerings. Experts said audiences are hungrier than ever for something new and original.

What makes IP the prize?

Intellectual property is becoming more valuable than ever as consumers encounter more marketing than they can process, experts said. The companies that win the battle for attention are the ones that can "cut through all of the noise," said Alex Michael, senior managing director at investment firm LionTree.

"The hardest thing to find and to get is audience these days," Michael told CNBC. "IP, in that sense, is the most valuable thing out there, and only becoming more valuable because it's attached to audience."

Distribution is broadening too, spanning video, audio, short-form, long-form and live events. Because consumers are redefining brand loyalty, companies have to "play much earlier in the consumer journey" than in years past to secure trust, he said.

Cross-sector executives are greasing the wheels. Kaufman came from Paramount; Dickson and Skydance co-CEO Ynon Kreiz both held top roles at Mattel. "The gray areas have never been more pronounced as to what is classically defined as retail or media or entertainment or live events," Michael said. "People who have cross-sector expertise are increasingly more valuable because you can't be defined by a single vertical, especially as things change so quickly."

Who else gets a lane — and what actually converts?

Studio consolidation is opening doors for outsiders, said Sean Akaks, CEO of SonderCo, an agency that partners brands with celebrities and entertainment properties. "I think it's a really interesting time for nontraditional players to be making content because you're seeing this massive consolidation of these legacy entertainment companies," he said. "I think there are just more open lanes for independent creators and also brands and anyone outside the traditional studio system to create content."

Retailers can tap creators who reach consumers directly on their own platforms. "I do think there's a world where we're going to see creators and brands sort of co-creating IP that maybe they're owning together," Akaks said.

Once shoppers are in the door, experiential retail takes over. Dick's Sporting Goods, for example, offers interactive activities and simulators in its stores. The payoff is measurable: according to AlixPartners data, companies investing in experiential retail such as Coach and Ralph Lauren saw close to 10% year-over-year increases in consumers' average basket size.

"The idea that retailers would potentially invest in some distributed electronic content to help drive traffic, and then when you get there, it's experiential — it really goes into the kinds of flywheels that entertainment companies are also trying to build and grow," said Jeff Goldstein, co-lead of the media and entertainment practice at AlixPartners.

Does entertainment guarantee sales?

Not necessarily. Entertainment is one piece of a larger retention puzzle, and translating engagement into tangible sales growth isn't a given.

"The basics of having great product in stock at a transparent price that feels like value is not swept away by animatronics," Eshelman said. "The fundamentals are still there, and if you're going to have a good retail proposition, you need to have that balance. You can't mask bad product at a bad price with no inventory with glitz and glamour."

The takeaway: entertainment can lift baskets and buy attention, but it won't paper over broken retail basics.