Walmart and Gap partner on licensing deal to offer home furnishings 

Walmart and Gap are launching a new brand of home essentials – Gap Home – to be sold exclusively at Walmart. The launch is set for June 24 on Walmart.com and will include more than 400 home decor, tabletop, bedding and bath furnishings items.

The products will be developed in partnership with Gap licensing agency IMG. Gap is not selling its own products on Walmart.com, but lending its name through a licensing deal with Walmart on new products created for Gap Home.

“We’re thrilled that Gap selected Walmart as the exclusive retailer to debut its home brand. A hallmark of American fashion, Gap is the ideal partner to bring its timeless, signature style into the modern home to help customers design and decorate beautiful living spaces,” said Anthony Soohoo, executive vice president, Home, Walmart. “Over the past few years, we’ve focused on expanding our home assortment to bring high-quality, stylish home goods and decor to our customers at an unbelievable value. Gap Home is the latest example of how we’ll deliver on that mission.”

The move comes as the retail giant seeks to grow its market share in the home decor category to catch up with competitors Target, Amazon and Wayfair in the higher margin business. Bed, Bath & Beyond, another major player in the home decor space, recently launched a private brand called Simply Essential which has 1,200 items at value pricing. The retailer said customers are looking for value-priced everyday items without sacrificing design or performance. Bed Bath & Beyond also recently partnered with DoorDash to expand same-day delivery to an additional 3,000 U.S. zip codes to and raise its competitiveness against Amazon.

Walmart said it is hoping the new Gap Home line will appeal to consumers wanting products made from organic and recycled materials. Gap Home will also have low opening prices to better compete with Amazon and the new line from Bed Bath & Beyond. Carol Spieckerman, the CEO of Spieckerman Retail, said the deal seems straightforward for Walmart and Gap, but there are nuances.

“Gap isn’t making existing Gap-branded products available to Walmart – products are going to be created for Walmart in an extension category (home) through a licensing deal. Arguably, it would have been more impactful for Walmart to strike a deal with an established home brand. As it is, Walmart is banking on Gap’s existing name recognition carrying over to a new category,” Spieckerman said.

She said Gap is likely thinking the deal won’t sully its brand since apparel is not part of the offering.

“Gap comes out the winner as the partnership will help mitigate Gap’s brand diminished store presence. The question is whether Gap will strike additional deals with retailers in home or other categories now that it has broken into the licensing business. If so, brand dilution could become problematic for Gap and its licensing partners unless category extensions are tightly managed,” Spieckerman warned.

The home furnishings industry has seen volatile revenue swings in the past several years, according to a recent report from Technavio. The forecast from 2020 to 2024 is a bit rosier. The global online home decor market is poised to grow by $83.32 billion during 2020-2024, progressing at a compounded annual rate of return of almost 13% during the forecast period.