The news: Old Navy is venturing deeper into beauty. The Gap Inc. unit will begin selling its own branded beauty products this fall, alongside an expanded selection of items from brands like e.l.f. and Mario Badescu, per The Wall Street Journal.

• Most items will retail for less than $25 to fit with Old Navy’s value proposition.
• The larger beauty assortment will be available at roughly 150 stores, with 45 of those featuring dedicated shop-in-shops and beauty advisers.

The rationale: CEO Richard Dickson believes that both Old Navy and Gap now have enough “credibility with consumers” to expand into categories adjacent to apparel—a view that will soon be put to the test.

• In addition to the Old Navy expansion, the company plans to begin selling beauty and personal care items in Gap stores next year, starting with fragrances.
• While it may appear to be a big leap, Dickson is confident that Old Navy customers will respond positively: 7 in 10 say they would buy beauty products from the chain, per a company survey.

Our take: Old Navy’s beauty expansion is a bold bet, given the enormous number of brands already in the market and the increasing ranks of retailers hoping to benefit from resilient beauty demand.

• Execution will be key, although Dickson’s beauty experience could help minimize growing pains.
• Still, Old Navy will have to find ways to differentiate itself in an extremely crowded marketplace. That could include positioning itself as a “value beauty” destination and playing up the practicality of its product line—or forging partnerships with more established brands to quickly gain credibility.

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