Although Gap has had a rough past five consecutive quarters of sale declines, new Chief Executive Art Peck is giving everyone encouraging signs that Gap will look better by next spring.
This past Monday, Gap said that it was closing nearly a quarter of its North American stores and planned to lay off 250 people in the corporate office. That is a meaningful first step in their plan to turn around, though. The last time they announced similar mass closures was in 2011, and it helped rid them of being bound to underperforming locations’ leases.
These closures, Gap announced, would lead to a sales loss of about $300 million, but the annualized savings from these changes would add up to $25 million come 2016. The most difficult way to bring the customers back in would be to follow in the footsteps of its sister store, Old Navy, and identifying and testing trends in stores. If the trend sold well quickly, Old Navy would act on it. By following this trend-tracking system, Gap won’t have as many mark-downs or fashion misses.
Some say the problem with Gap is that they lost the customer that expected their favorite pair of jeans to be available year after year. The “unfashionista” who shops more like a man who just buys the essentials and only the essentials. If they can get that customer back, they may just win the game.
– Amy Donkel
Source & Graph: WSJ