When Old Navy sails into Ontario this spring, it’s bound to crowd some Canadian retailers out of the cheap-and-cheerful clothing segment, say retail experts. And it’ll be those that haven’t invested in advertising to anchor their brand awareness who are going to feel it the most.

Old Navy, which surpassed the $1-billion mark in its first four years of operation – making it the most successful retail launch in bricks-and-mortar history – will enter Canada with 12 stores in southern Ontario. The eight-year-old chain offers competitively priced, fashionable clothing for the entire family in 500-plus U.S. stores.

With its fun in-store atmosphere and colourful advertising campaigns, Old Navy has been able to build cachet among youngsters, without turning off the people who hold the purse strings – their parents.

Canadian shops, which have traditionally relied on their location to draw in consumers, stand to lose out, says John Torella, a consultant with J.C. Williams Group.

‘You need to own top-of-mind awareness and that’s created through marketing, advertising and promotion. That’s something that our Canadian marketers have to go to school on.’

A subsidiary of San Francisco-based Gap, Old Navy – whose executives declined to comment on the company’s Canadian marketing strategy – has established a somewhat campy identity south of the border. A recent TV spot casts Magic, the store’s canine spokesperson, as a designer in charge of a mock fashion show. The company also employs a host of larger-than-life spokespeople – including actress Morgan Fairchild and wacky New York fashion writer Carrie Donovan – to boost the brand.

The most recent Old Navy ads are ‘bright, poppy and stand out,’ says Max Valiquette, executive director of Toronto youth insight and fulfillment firm NRG Solutions. They feature Lisa Ling, a host of The View, and Megan Mullally, who plays the sharp-tongued Karen on Will & Grace, in a faux, big-budget musical.

‘They’ve taken accessible, urban personalities who are known for being a little off centre, but are still unbelievably likeable,’ he says. ‘The early adopter who looks at Megan Mullally ads will say, ‘Pajama pants for $20, that’s great! Those are so hip and fantastic and it’s such a big brand.”

Who stands to lose the most from Old Navy’s arrival? Likely the department stores, says Richard Talbot, president of Toronto-based consulting firm Talbot Consultants International, since Old Navy has much more cachet among tweens who shop with Mom.

Talbot says department stores are not doing as good a job as they should at marketing to youth. ‘It’s part of the problem of department stores – they really need to be all things to all people and that’s an area that puts you at the greatest risk, because a focused retailer like Old Navy could come and snap the whole thing away.’

According to David Brodie, an analyst with HSBC Securities, department stores that invest in their own private labels have a better chance of fending off competitors like Old Navy. ‘You keep promoting and developing those that are aimed at that age group and try to compete on the basis of building up brand equity and offering good value for the money.’

The Bay and Zellers have already moved in that direction. Last year, for instance, The Bay scrapped some 65 labels in order to zone in on six mega-brands. Meanwhile, Zellers has invested heavily in its youth-targeted Request brand.

Specialty retailers, particularly in the mid-price range, are also not immune to attack, says Torella, who cites Thriftys, Bootlegger and Stitches as examples of companies in the line of Old Navy’s fire.

Valiquette says Canadian retailers probably can’t afford to advertise to the same extent as Old Navy.

But that’s not to say a retailer can’t use more economical tactics to keep Old Navy at bay, he adds.

The Vancouver-based chain Bootlegger, for example, recently teamed up with teen magazine What and Ford Motor Company of Canada on a teen-targeted contest called Free to Drive. An ad in What provided readers with a decoder which, when placed over an otherwise undecipherable patch on their computer screens at www.bootlegger.com, told them whether or not they’d won a prize. According to What publisher Nancy Moore, the promotion increased traffic on Bootlegger’s site by more than 250%.

Canadian shops can kick Old Navy’s ass, says Valiquette, if they ‘give themselves the freedom to behave like truly different brands.’