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The Gap closing 175 stores

🕐 5 min read

How millennial shoppers have made chain’s ‘basic’ look obsolete

During its most successful run, Gap’s fashion catered to children of the 1980s and ’90s — first with plain T-shirts and blue jeans, then with button-downs and clean-cut khakis. Artists and musicians helped popularize the androgynous look, one that seemed to define Generation X, whose shoppers strove to fit the trend.

It was a snapshot of pop-culture. In 1993, it was used as fodder for a “Saturday Night Live” skit “The Gap Girls.” In 1995 and again in 1998, Sharon Stone sported Gap shirts on the red carpet.

But the idea that once made Gap so popular has become obsolete.

“Historically, Gap has had a very distinct look. It was very much about creating uniforms,” said Kelly Tackett, research director and retail analyst at Planet Retail. “Millennials want to put together their own identity.”

On Monday, Gap, which was once touted as the world’s largest specialty apparel retailer, said it’s closing 175 stores in North American to attempt to boost profitability. After cutbacks over the next few years, the chain in North America will include about 500 regular-price stores and 300 outlets. Stores that are being shuttered are regular-price Gap shops.

In addition, the company said it’s cutting 250 positions at its San Francisco headquarters.

“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” chief executive Art Peck said.

The problem, experts say, is that Gap has failed to keep up with its target customers — the millennials — who have a dramatically different fashion sense from the generation before them. These shoppers are less interested in name brands and more about creating their own unique style, according to market research. They’re also less willing to pump their entire paycheck into their wardrobes. That’s why stores like Forever 21, H&M and Uniqlo have been giving Gap a run for its money, experts say, because they offer customers a unique appearance at a lower cost.

That’s also why Gap Inc.’s budget brand, Old Navy, has kept the parent company afloat. When shoppers want the basics, they can find them at Old Navy for a much smaller price tag.

“The problem was Gap got boring,” retail analyst Candace Corlett told Racked. “After the popularity of the khaki, it was an ongoing parade. How many tan khakis and white button-down shirts does someone need? They were always the old, reliable Gap but high-energy, trendy retailers were moving into the closet.”

Gap knows this.

Gap opened its first store in San Francisco in 1969, selling Levi’s and LP records. It was enormously successful during Gen-X’s reign. But for more than a decade now, the brand has been on the decline. In 2007, Gap hired creative director Patrick Robinson to increase sales, but by 2009 sales were down 10 percent and he was let go. In late 2012, it hired Danish fashion designer Rebekka Bay who vowed to bring the brand’s basic style into a new generation. However, her pieces were called drab and she was let go earlier this year, according to The New York Times.

Gap’s most recent attempt to revamp its brand came with a new marketing campaign, which uses taglines such as “dress normal,” “dress like no one’s watching” and “simple clothes for you to complicate.” The idea, it seems, is to tweak Gap’s once successful image to make it more relevant, tapping into the normcore fashion trend that has popularized average-looking apparel.

But despite its best efforts, Gap has been treading water.

Sales fell 10 percent in the three months leading up to May 2, according to the Wall Street Journal, and its shares are down about 9 percent so far for the year.

“I continue to be disappointed but not surprised by Gap’s performance,” Peck told Bloomberg Business in May. “I can promise you that the team is all over it.”

Peck said the cutbacks are intended to keep the brand the right size for its market. “Many of these stores are in centers we’ve been in for a long time,” he said.

Experts say many large American retailers are “overstored,” meaning they have more locations than they need during a time when regional malls are competing with online shopping. Abercrombie & Fitch, Macy’s and Sears have also said this year they will be closing some shops.

“Customers are changing way they’re shopping,” Tackett said. “There’s less of a need for retailers to have expensive real estate in stores; that real estate can be better used elsewhere.”

Tackett said younger shoppers add contributing factors into the mix. Today’s consumers are spending more time shopping online and less time browsing in stores, which has brought store productivity down exponentially. Also, consumers have more expenses competing for their paycheck such as entertainment, technology and dinners out, which are “winning a greater share of the wallet from teens and young adults,” she said.

But Tackett said the bigger question is whether the Gap’s downsizing will free up the capital the company needs to address the real problem: its products. She said similar stores such as American Eagle, Aeropostale and Abercrombie & Fitch — once popular for their recognizable brands — have taken a hit as well, which only emphasizes the fact that the fashion industry is changing.

Abercrombie & Fitch, for instance, announced last year that it was reducing the size of its logo and adding more variety to its women’s line to appeal to millennials who want to stand out.

“They no longer want to be a walking billboard of a brand,” Abercrombie spokesman Michael Scheiner told Reuters. “Individualism is important to them, having their own sense of style.”

Tackett said that’s a lesson worth learning.

“You always need to stay close to the customer you’re designing for,” she said.

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