Banana Republic Gains New Sovereignty by Going Upscale

"The biggest risk Banana Republic runs is that if the economy turns south, high price points will be less appealing," Snyder said.

Still, analysts aren't calling for a slowdown any time soon.

Experimenting With Identity

Banana Republic has come a long way since its debut in 1978, as a mail-order clothing business with a safari motif. After Gap Inc. bought the company in 1983, it experimented with Banana Republic's image and merchandise. It discontinued the catalog in 1989, and phased out the "out-of-Africa" theme in the late '80s, although it still sells such items as "Kenya convertible pants" and a "photojournalist's vest."

During its experimentation era, Banana Republic found itself with an identity problem. The company's frequent make-overs confused customers, and the brand had no clear image.

But slowly, Banana Republic evolved into an upscale clothier, catering to men and women who want well-made clothes that are more timeless than faddish. It also added fashionable home accessories a couple of years ago.

The typical Banana Republic customer is between 25 and 49, lives in a metropolitan area and might also purchase clothing from J. Crew, DKNY, BCBG or Bloomingdale's. About a third of Banana Republic's customers have an annual household income of more than $100,000, while about 40% draw $50,000 to $100,000.

"We're a brand for grown-ups," said Amy Schoening, Banana Republic's vice president of marketing. "We try to meet the needs of a modern lifestyle and offer a wardrobe that's very versatile."

Schoening said the company in recent years has targeted more affluent consumers by raising its styling and pricing. Store shelves are now stocked with cashmere sweaters, suede coats and Italian merino wool cardigans, with price tags running about $65 for a cashmere scarf, $395 for a lambskin jacket and $56 for a set of four martini glasses.

Refining its merchandise has aided in Banana Republic's revival, but the retailer also has benefited from the master marketing of its parent company.

Like Gap's khakis ad campaign, Banana Republic's in-house suede and holiday television commercials have won raves for delivering strong, enticing images.

Banana Republic's fall television campaign featured a diverse group of people swaying to "Feeling Good," by jazz singer Nina Simone. The in-house holiday commercials offer a montage of tender moments, such as a young couple kissing on a city street. A Finley Quaye reggae song, "Your Love Gets Sweeter," plays in the background.