Gap, Inc. has had a very tough century so far. Its flagship brand, Gap, has had a particularly tough go. Misses in styling and customer defections to less expensive, more stylish fast fashion brands have hurt it tremendously. The decline of Business Casual hasn’t helped it much either.
In the 80’s and early 90’s, Gap was hot as a pistol. Its preppy look was a hit with young adults because the clothing was comfortable and worked nicely with the trend towards “casual Fridays” at work. In fact, you could argue that the term casual Friday and Gap were almost synonymous.
Floral prints --really? (Gap website)
Gap circa 2015: floral prints –really? (Gap website)
Parents also enjoyed buying Gap clothes for their kids. The logo-emblazoned, not-too-expensive clothes were comfortable and stylish and worked well at school or at play.
In 2011, Gap’s flagship store count stood at 1,389 around the world (968 in North America, 193 in Europe and 228 in Asia). At that time, the company announced it was closing 200 stores in North America to focus on more store openings in Asia. The chain announced today that it is closing another 175 stores in North America. We suspect this won’t be the last of it.
This begs the question: What has gone so horribly wrong?
The company has certainly had a revolving door of executives and merchants. Most recently, Art Peck replaced Glenn Murphy as CEO, who retired after 7 years on the job. Rebekkah Bay was removed as Chief Creative Director and replaced with…no one. She had been on the job since 2012.
Like other logo-driven companies (think Abercrombie & Fitch for one), the original styles grew tired. Today’s teenagers are less enamored with logos and far more interested in fast fashion. And when you cut through the logos, what you had at Gap were khakis and tee shirts: items that could be bought for less at Target, Kohl’s or any one of a myriad of retailers.
Casual Fridays started to decline in popularity as well. Back in 2010, Bloomberg wrote a piece called “The Tragic Decline of Business Casual.” It was no surprise that Gap suffered a decline along with that clothing era.
For the past few years it has been very hard to determine what Gap stands for. During a recent trip to its new flagship store on Lincoln Road Mall in Miami, I found a confusing array of floral prints, hoodies, and other contrasting merchandise styles. I couldn’t imagine who might buy all the florals – especially in South Florida where they looked the complete opposite of hip. Worse, it didn’t look like Gap product at all. The signature style was gone, replaced by…I’m not quite sure what.
This time around, Gap announced in a statement that it is reducing its store portfolio to reflect the move to online shopping. This statement stretches credibility. Online sales represent 7% of total retail sales (excluding automobiles and gasoline). Apparel represents 19.5% of those sales, but that still is a pretty small percentage of total sales.
It’s more realistic to say that in general, North America remains over-stored, and with new competitors jumping in daily, Gap is getting a smaller piece of the pie. It has been unable to differentiate itself with fresh styles or low prices.
Going promotional hasn’t helped profits. All three major Gap brands (Old Navy and Banana Republic along with its eponymous brand) started their 2014 holiday seasons with “Take 40% off every item in the store” sales. This was raising the stakes on 2013’s “Take 30% off every item in the store” promotions.
The problem with going so promotional is it further cheapens already tarnished brands. Stores may seem crowded, but not all revenue is good revenue, especially if it sets a lower bar for price-savvy consumers.
eCommerce isn’t Gap’s problem. A loss of brand identity is. Closing more stores may indeed help, but the company sorely needs to find its voice again. Product freshness is the first step on that path.