August 15, 2022

What the heck happened to the gap?

What the heck happened to the gap?

Fisher planned to call the store Pants and Discs, but his wife Doris came up with the winning name: “The Gap,” short for the generation gap.

Gap Benefited from the rise of denim As the one looking for a generation of American youth then expanded into khakis, T-shirts, T-shirts, and other basics. The brand has captured everyone from moms to office workers to celebrities like Sharon Stone, who wore a black Valentino skirt and $26 Fake Gap Turtleneck At the 1996 Oscars.
At that time it was a symbol of cool and casual elegance. “Everywhere like McDonald’s, centralized administration like the former Soviet Union and American like Mickey Mouse, Gap Inc. has it covered, from cradle to grave,” The New York Times He said in 1992.

But sales at the flagship Gap brand have been sluggish for years and have become an afterthought for many American shoppers. The company’s other brands also suffered, including Old Navy and Banana Republic.

On Monday, the company announced that CEO Sonia Singhal will be stepping down after less than three years. She will be replaced by a temporary CEO while the company searches for a permanent leader.

Here’s what the next CEO will be up to the difference (GPS).

Excessive expansion and competition

The Gap captured the expansion of suburban malls in the 1980s and 1990s, becoming one of the largest malls stores in the United States. So her fortunes have been largely tied to those of malls – great news in the ’90s, but terrible news now. Malls lose customers quickly due to online shopping and supermarkets.

Gap said in 2020 it would close 30% of its stores in Gap and Banana Republic in North America by 2024 – most of them in malls.

In the decades since the heyday of the mall, analysts say, Gap has fallen out of favor with the Baby Boomers who grew up on the brand and failed to appeal to the Gen Z and Millennials who drive today’s fashion trends.

At the same time, brands and retailers such as fibrous (fibrous)And the targeting (TGT) And fast-fashion vendors H&M and Zara have drawn in denim shoppers from Gap. Direct-to-consumer brands online have also dented the Gap audience.

“When they were great, there was no ecosystem of young, specialized players,” said Ken Pilot, former Gap president and longtime CEO at the company. “Gap was competing with and killing supermarkets.”

Gap has also broken down its own brand of similar styles in Old Navy and Banana Republic, and added, “It’s been a clever way of building their portfolio, but even those who have created their own form of competition for the Gap brand.”

Gap tried several strategies to revitalize its flagship brand, including a Partnership with Kanye West A collection of Yeezy-branded clothing. But the partnership did not meaningfully raise sales.

Its initiatives “have been fragmented and not part of a large, cohesive plan for revitalization,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients on Monday.

Moreover, the main brand is becoming increasingly less important to the company. Old Navy and Athleta are its future: Together they will account for about 70% of all Gap sales by 2023, the company says.

Driving slips

Whoever becomes the new leader of Gap will not be the first of its CEOs to face challenges.

Mickey Drexler, better known as “The Trade Prince,” was the one who built Gap into a powerhouse during the ’90s. Initially president of Gap’s division and later CEO of the company starting in 1995, Drexler pushed Gap to expand beyond jeans into khakis and oversaw the creation of the budget chain Old Navy in 1994.

But during Drexler’s tenure, Gap lost touch with its core customers. He suffered 24 consecutive quarters of low same-store sales at the end of his reign, and he step down in 2002.
The company then rotated through several CEOs, including former Disney (dis) CEO Paul Pressler, CEO of Pharmacies Glenn Murphy, and Gap veteran Art Beck. Sonia Singhal took over from Beck in 2020.

“Gap’s failure all had to do with her lack of leadership,” said Mark Cohen, director of retail studies at Columbia University Business School. “They had a wonderful period of growth and popularity, which they dispelled.”

Recently, Gap attempted to detach Old Navy, which is now the company’s largest brand. but that reverse path In 2020 after declining sales.
Since then, Old Navy has continued to struggle, including a failed attempt Resizing to make it more comprehensive. This move won praise at first, but the brand ended up carrying too many too small and too large items and not enough of the more common medium sizes. In May, the Old Navy said it would reinstate that strategy.

Susan Anderson, an analyst at BP, said: “A new set of eyes on the entire company can be beneficial to the brand.”