Gap Inc's Hill City Jumps Into Physical Retail

Men’s active wear brand Hill City—Gap Inc.’s counterpart to the already successful Athleta for women—is the latest online brand to move into physical retail. Gap Inc. hopes going with a temporary brick-and-mortar location, among other moves, will amp up Hill City’s next phase of growth.

The brand, with a line of 80 products ranging from thermal light jackets and hoodies to running shorts and T-shirts, will open its first ever store, a 1,000 square-foot pop-up location in San Francisco’s Hayes Valley district next month. The company is planning to keep the store open for one year.

Hill City, which Gap Inc. launched almost a year ago, will also send an 18-foot truck (see below) roving around the Bay Area to participatory sports events like races. The truck will be equal parts store and mobile marketing billboard.

Like many modern clothing brands, Hill City started as an e-commerce business, seeking to figure out demand, customer behavior, and fine-tune the assortment before moving into physical retail. Now Hill City is ready to embrace that realm of retail and open what the brand’s head, Noah Palmer, calls the “aperture” of the brand. .

“We want to make it easier for someone to get to know Hill City,” Palmer told Fortune.

Other digital native brands that have added physical space in the recent past include Rhone (one of Hill City’s chief rivals), Untuckit, and Mack Weldon.

This isn’t Hill City’s first time in stores. Athleta—Gap Inc.’s women’s athletic wear brand—made room in stores during Hill City’s first six months. Athleta stores displayed a limited number of Hill City items on racks at a few dozen locations.

The idea was to piggyback on Athleta’s fast growth to increase brand awareness for Hill City, which Gap Inc. CEO Art Peck calls Athleta’s “younger male sibling.” Athleta is set to pass the billion-dollar mark this year. (Though the Athleta stores gave shoppers a first look at Hill City apparel, the items were only available for purchase online.)

Hill City will employ a mobile truck to serve as store-slash-billboard.

But Hill City is ready to return to Athleta stores too, with small shops inside seven Athleta locations on the West Coast to open soon. This time, shoppers will be able to buy Hill City products on-site.

What’s more, Hill City will test the waters of wholesaling some pieces to other retailers to grow the brand—something Gap Inc. hasn’t done for any of its other brands, including Banana Republic and The Gap. The list will includes specialized stores like outdoor gear retailer Westerlind, YogaWorks, Huckberry, and Neighborhood Goods, the buzzy new mini-department-store concept where Serena Williams launched her new clothing line.

The methodical approach Hill City is taking is understandable given how much competition there is for the company’s products, which Palmer says bridge the gap between athletic gear that isn’t fashionable, and streetwear that doesn’t offer much in the way of athletic performance.

“It’s an athleisure world today,” says Matt Powell, an analyst with NPD Group. “There is a consumer for better made product with performance characteristics.” That’s all the more true given that the Nikes, Under Armours, and Adidases of the world focus mostly on performance, leaving a hole in the market.

In addition to Rhone, Hill City competes with brands like Public Rec, Vuori, Path Projects, Tracksmith, and Peak Velocity. The brand’s most direct rival, Lululemon Athletica, is also Athleta’s biggest competition. Sales of Lululemon Athletica men’s products rose 27% during the quarter ending August 4th.

Like Athleta products on the women’s side, Hill City apparel skews slightly cheaper than Lululemon’s. Two-thirds of Hill City items are less than $100 and the average price is $80.

While Hill City won’t reveal sales numbers, the business is likely years away from moving the needle for the massive Gap Inc. But its success is a big test as the parent company looks for growth in the face of slumping sales at The Gap and Banana Republic, and as they prepare to spin off Old Navy, the most successful of the company’s brands. Peck recently called Hill City one of Gap Inc.’s “small growth seeds.”

Looks like the company hopes adding sales channels at stores will help those seeds sprout. “There are certain things you can do that make the brand more real to people,” Palmer said. “A physical presence is one of those things.”