Op-Ed | Yeezy was never going to save the Gap. What can?

It’s been nine months since Gap Inc. fired its chief executive. Since then, it has ended a once-promising partnership with rapper Ye (formerly Kanye West), shaken up its executive ranks, delivered disappointing results and has so far failed to name a successor. Reviving a century-old business is a tall order, but in many ways the market is ready and waiting for a reinvention that has been rigged time and time again.

Management at Gap Inc. has repeatedly promised a grand vision to return its namesake brand to its former glory and bolster Old Navy, Banana Republic and Athleta. But none of those efforts really paid off.

In 2011, Gap Inc. CEO Glenn Murphy told investors that expansion into foreign markets, particularly China, was “an important long-term cornerstone of the company’s growth.” It sold its China business this year. In 2015, under then-general manager Art Peck, his plan was simple. make more fashionable clothes and put them on the floor quickly. It was one of the worst-hit supply chain disruptions during the pandemic. Most recently, in 2020, then-CEO Sonia Singhal announced her Power Plan 2023 strategy, which included closing underperforming stores and doubling down on Gap Inc.’s athletic brand Athleta and value brand Old Navy. Both have struggled. The Yeezy partnership, signed in 2020 in hopes of building a billion-dollar brand, turned out to be a high-profile flop last year.

And yet, year after year, Gap Inc.’s pain points are the same: a lack of cohesive or distinctive clothing design, too many or cluttered stores, and inconsistent leadership. All this led to lower same-store sales and an operating loss of $30 million in the latest quarter, compared with operating income of $620 million in the comparable period in 2004, when the company was at its peak.

Time to try a new trick. The next CEO, which chairman Bob Martin said will come from outside the company and will be announced soon, may benefit from avoiding big announcements about plans to revitalize the Gap brand. Instead, they should take a page from the turnaround playbook of other previously beleaguered names like Levi’s Strauss & Co. and Abercrombie & Fitch, which fell out of favor with shoppers during the e-commerce boom. Like them, Gap is an iconic brand that could thrive again as nostalgia for the 1990s and 2000s aesthetic dominates fashion.

For decades, Gap was one of the most popular retailers in the United States. In the 1990s, the brand represented the optimism of the middle class, which grew along with the country’s geopolitical dominance and, of course, the expansion of shopping malls. For mall-wandering teenagers, the Gap was an affordable alternative to the preparedness served to J. Crew shoppers. Teenage shopping and The Gap, as it was called, simply went together, becoming a part of American culture that made the Gap more of an institution than a brand.

Like its peers, Gap lost relevance as fewer people shopped in malls and fast fashion and online shopping lost market share. But now, the cyclical nature of fashion trends, reinforced by the speed of TikTok and other social media platforms, have made that era of mall rats cool again.

So far, Gap has been reluctant to update its clothing designs, even as Y2K and ’90s fashion make a comeback. Although Gap has expanded its online business, its styles are out of touch with the sensibilities of today’s young shoppers. The Gap brand continues with brightly colored button-down shirts and boxy khakis that give off an elementary school uniform vibe. Gap’s fleet of cookie-cutter stores has become a burden on its profitability (although it is rapidly closing stores across all brands). And heavy discounting hit earnings in 2022 as it worked to purge inventory it bought that was outdated or the wrong size.

The clearance gives Gap a chance to follow in-store retail partners that have found a second life with today’s shoppers. Abercrombie & Fitch has revamped its entire store fleet to focus on local styles and preferences. Its new stores are smaller, with a clear view so shoppers can quickly see what’s available. It ditched the sexist marketing that defined its brand in the early years and focused on social media marketing through influencers. It also dramatically increased the quality of its fabrics, zippers and denim silhouettes (a top-selling category). And it diversified its global vendors to speed up its supply chain.

Similarly, under Chief Executive Officer Chip Berg, Levi’s Strauss has made a dramatic turnaround despite competition from new denim brands such as 7 For All Mankind. In 2018, Berg wrote for the Harvard Business Review about his “in-home” visits with clients, where he walked them through a collection of jeans to understand what they liked and didn’t like. He had the finance department slice and dice data to develop a profitability plan that focused on its top money-making categories (jeans) and identified growth areas such as shirts and dresses. He moved the company’s innovation lab from Turkey to its headquarters in San Francisco and bought the naming rights to the new home of the San Francisco 49ers, cementing the brand as a California institution.

The Gap brand has runway for this kind of twist. The company’s ability to stay afloat despite missteps hinges on Old Navy maintaining its appeal as a mainstream retailer even as Gap has faltered. Despite recent inventory issues, Old Navy should do well in today’s downbeat economy, where shoppers are scrambling to save pennies. Gap Inc. also has cash from real estate sales, including its Old Navy headquarters in San Francisco and the planned sale of its Athleta headquarters this year.

There’s a wide-open path for Gap to capture a niche among younger shoppers looking for high-quality casual wear. But so far, Gap’s strategy of winning investor confidence with big plans and well-known brands can’t mask the structural problems the company faces. Slow and steady wins the race for that kind of improvement.

By Leticia Miranda

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