Gap: where did it all go wrong for the iconic 90s brand?
When Gap appeared on British high streets in 1987, its particular brand of all-American fashion proved an instant hit. Three decades on, however, it had lost its distinctive appeal and yesterday (July 1) shuttered all 81 of its UK stores. So, where did it go wrong?
The closure of Gap stores was not a total shock. The fashion giant hinted at troubles earlier this year when it said that it was reviewing the profitability of 19 outlets. Global sales for Gap Inc, which includes sister brands Old Navy and Banana Republic, were down 16% to $16.4bn last year.
But the decision to pull out of the UK and Ireland, with the estimated loss of more than 1,000 jobs, was unexpected. “The closure of Gap’s bricks and mortar brand definitely feels like a big one, up there in Woolworths and HMV stakes as a fallen high street idol,” says Ben Mooge, chief creative officer at Publicis Groupe UK.
Failure to adapt
Gap’s biggest problem was its fundamental inability to adapt and innovate. When it first arrived, Brits lapped up its laid-back American style, sitting somewhere between teen brands like Topshop and the grown-up M&S. Its denim was a Levi’s alternative and its baby and kids wear gave value to parents who still wanted their children to look cool. And then it got complacent.
“It never really made it beyond 2004,” adds Publicis’s Mooge. “But unlike an HMV or a Blockbuster, this was all in its control – it wasn’t market forces or format change that did for Gap.”
As the fashion market moved to a faster model and shoppers shifted online, Gap remained resolutely the same. It stood by the tried-and-tested model of distributing the same product across markets with little variation and passively watched as cheaper competitors such as Primark and H&M, with their infinitely more efficient supply chains, got to the younger online shopper quicker. The rise of sports brands crossing into fashion was the death knell for the original athleisure brand, eating up any market share Gap had left.
“Teenagers didn’t want to be wearing the same sweatshirts that their Mum had bought them when they were 10, so they left the brand and never came back,” says Catherine Shuttleworth, chief executive at retail consultancy Savvy.
Its solution – at least in the UK – was a disastrous cycle of discounting that eroded its value. Not a month went by where an email wasn’t sent offering significant price reductions across its website.
“Shoppers believed that 40% off was no longer a discount but a standard price and the impact on margins in the longer term was fatal,” says Shuttleworth. “As online shopping grew, the Gap global e-commerce site did not adapt quickly enough for the UK market and shoppers moved on.”
Beyond basic operations, it also appeared that, until recently, Gap had all but given up on advertising investment. In its heyday, the retailer was arguably standing alongside Apple in brand marketing terms, ploughing big budgets into bold TV campaigns with creative that helped it stand out from the masses.
It inserted itself into pop-culutre by landing brand ambassadors like Sarah Jessica Parker, who fronted its ads at the height of Sex and the City's popularity (see end video), and Madonna who starred alongside US rap star Missy Elliot in a 2003 campaign.
“It had such confidence in the brand, knew its white world as clearly as Apple knew its colored one," says Mooge. “Its logo was as big a stamp as HBO or Netflix. It had Spike Jonze making ads long before he made Apple ones.”
To its credit, it appears that attempts have been made to get back to that. In 2019 it hired a new chief marketing officer – Alegra O’Hare – from Adidas and for the first time in seven years appointed a creative agency – Johannes Leonardo – to handle its advertising. But within a year O’Hare had quit the role and the output from its agency has failed to make headlines.
“The last hurrah in advertising terms over here was maybe Kim Gehrig’s film of three years ago,” says Mooge. “And that’s the problem. When Uniqlo has the look and H&M has the story, standing still is going backwards.”
After the last stores shut in September it will continue to have an online presence in the UK, with the company saying in a statement that it strongly “believes in Gap’s global brand power” and that it will be “executing against Gap’s power plan...to amplify our global reach”.
But what that power plan looks like in the UK remains to be seen. According to data supplied to The Drum from YouGov, Gap scores highly among shoppers for Quality, Brand Impression and Customer Satisfaction, but falls below on Reputation, Recommendation and Value for Money. And in the last three months, its Quality, Brand Impression and Customer Satisfaction scores have plunged significantly.
In its first quarter earnings, chief executive Sonia Syngal said the team was focused on building relevance in the US – where sales were up 9% – “which gives us the power to export that relevance globally”.
So far that appears to be through a campaign called ‘Generation Good’, which spotlights teen activists and inclusive ‘creators’ in its marketing, as well as a 10-year long collaboration with Kayne West and the launch of a homeware division in partnership with Walmart.
Its new CMO Mary Alderete told The Drum in an interview last year that it wanted to be the brand face of "modern American optimism" but it's anyone's guess how this will translate across the pond and help it compete with the brands that have eaten away its marketshare.
For now, it just needs to get the basics right if it wants to stand out online.
Sharon Jiggins, chief marketing officer at FCB Inferno, is more positive on Gap's outlook, saying the end of its bricks and mortar operation gives it a "huge opportunity" to reinvent itself in the eyes of British shoppers.
“It needs to expand its range beyond its classics to reflect the current trends and it needs to think about how it can also be more reflective of its customers. Its Gapfit range is great, but is it showing it off as best it could? There is very little by way of body shape diversity," she says.
“Plus, it has some great initiatives, like its Generation Good sustainable clothing range, hidden away. So maybe this is the time for Gap’s brand personality to come to life in the e-commerce world, moving from a functional sales window to a lifestyle brand that truly reflects today’s customer.”