- Gap, the largest retail company in the United States, was once one of the most beloved clothing brands by Americans. The brand is known for its basic products and classic denim style.
- The organization is currently struggling to stay afloat amid a steady decline in sales and recent executive transitions, including the sudden departure of CEO Art Peck.
- This is the story of the company’s rise to fame, its golden age, and its eventual downfall.
- Discover more stories at Business Insider Spain.
When Gap announced that its CEO, Art Peck, was unexpectedly leaving the company, it was taken as a sign of an uncertain future for the group, which is also experiencing a sales slump.
The sudden board shakeup came on the heels of a particularly disappointing third-quarter earnings report, including a 4% year-over-year drop in comparable sales across the Gap brand empire. Its namesake brand posted the biggest decline, with comparable sales falling 7%, while revenue at Old Navy and Banana Republic fell 1.5% in 2018. were reduced by 4% and 3%, respectively.
For decades, Gap was one of America’s most beloved retailers and became an iconic fashion brand in the country. With its classics and iconic jeans, it became the go-to place for finding the best style of the moment at an affordable price. Its vibrant marketing campaigns were accompanied by catchy songs and a wide cast of famous faces. During the 1990s and early 2000s, It was impossible to walk down the street without seeing a sweatshirt with their logo.
However, the company has had to face tough competition due to the launch of new clothing brands. In addition, the fall in offline sales has also hurt the business, which has seen e-commerce take a big bite out of it. In just a few years, Gap has gone from being a reference to being just another brand. And some of its most powerful brands, such as Old Navy are losing steam.
Although Gap remains the largest clothing retailer in the United Statesthanks to its namesake company and Old Navy, Banana Republic, Athleta, Intermix, Janie & Jack, and Hill City, the future today is uncertain. Therefore, Business Insider He wanted to review its origins to find out when its decline began.
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Gap was founded by Doris and Don Fisher in San Francisco in 1969.
Gap
The reason for opening the store was “simple,” according to the Fishers: Don couldn’t find a pair of jeans that fit him properly.
Source: Gap
Together they raised over 54,500 euros to open their own store on Ocean Avenue. The name is a reference to the concept of the generation gap.
Gap
Sources: Gap, Culture Trip
The first Gap store sold mostly Levi’s and records.
Associated Press
Source: Culture Trip
Gap’s popularity continued to grow. The following year, the Fishers opened a second store in San Jose, and then established the company’s headquarters in Burlingame, California, in 1971.
Kevork Djansezian/AP
Source: Culture Trip
By 1973, Gap had 25 stores across the United States, so it decided to expand along the East Coast.
Reuters
Some high-end stores began selling Gap products, which boosted the brand’s reputation.
Source: Culture Trip
The store became synonymous with American classics such as jeans and T-shirts.
Justin Sullivan/Getty Images
In 1976, it officially began to take off.
Gap
As Gap grew, it began to consider acquiring new brands or creating its own labels. In 1983, it bought Banana Republic.
Marina Nazario/Business Insider
To continue growing, it began selling a wider variety of clothing and created Gap Kids in 1986.
Associated Press
Source: Gap
Later, she also opened GapBody for intimate apparel and sportswear, and BabyGap for baby clothes.
Business Insider/Jessica Tyler
In 1987, Gap began its internationalization and opened its first store in London.
Ben Pruchnie/Getty Images
Source: Gap
To develop a more sophisticated identity, he hired Millard “Mickey” Drexler as CEO, who ran the company for much of the 1990s.
Darryl Bush/Getty Images
During Drexler’s tenure, Old Navy was created, initially intended to be a low-cost Gap brand. It opened its doors in 1994.
Reuters
Old Navy quickly became a favorite brand for a wide segment of society. Its fun designs and looks designed to celebrate the 4th of July captivated many.
Robert Alexander/Getty Images
However, after 29 consecutive months of declining sales, Drexler was asked to resign in 2002. That was the beginning of Gap’s decline.
Rob Kim/Getty Images
He later became the CEO of J.Crew.
Source: New York Magazine
Although the problems were latent, in the early 90s they began to develop iconic advertising campaigns.
J. Vespa/WireImage
In 1998, he won several awards for his “Khakis Swing” commercial, and began to become known for his celebrity-studded ads and catchy songs.
Source: Gap
Gap has been involved in several charitable projects, and in 2006 launched its Product (Red) initiative.
Justin Sullivan/Getty Images
Source: Gap
In 2006, the company received multiple complaints following reports alleging poor working conditions at its factories outside the United States.
Justin Sullivan/Getty Images
Source: Slate
Looking ahead, Gap embarked on a series of failed experiments, including the launch of Piperlime in 2006.
Barry Brecheisen/WireImage
It served to get ahead of the growing online commerce, but things were not done well and ended up closing in 2015.
In 2007, Gap closed Forth & Towne 18 months after launching it. The store was aimed at women aged 35 and older.
Tim Boyle/Getty Images
Learning from his mistakes, he made smart acquisitions and bought Athleta in 2008.
Bethany Biron/Business Insider
Despite representing a relatively small part of the business, the Athleta brand is performing well.
Gap, despite its flaws, is a major company that has garnered a lot of attention. Even former President Barack Obama visited the company.
Thomson Reuters
Still, Gap’s brands began to feel the brunt of falling offline sales. In October 2011, it announced it would close 189 stores in the United States.
Justin Sullivan/Getty Images
He began to make changes and returned to his philosophy of acquiring brands, as well as exploring other areas of growth.
Irene Jiang/Business Insider
In 2013, Gap acquired designer clothing company Intermix, adding a touch of luxury to the brand.
Mark Sagliocco/Getty Images
In 2018, he sought to capitalize on the growing menswear market with the launch of his own company: Hill City.
Hill City
In 2019, it purchased children’s clothing company Janie & Jack from Gymboree.
Facebook/Janie + Jack
It has also included the possibility of paying with a mobile phone in physical stores.
Gap
Still, sales continue to suffer and the performance of Gap’s namesake brand remains especially dismal.
Irene Jiang/Business Insider
In February 2019, it announced it would spin off Old Navy and operate as an independent brand.
Drew Angerer/Getty Images
However, a few months later, the trademark was registered its first sales drop in three years in the second quarter of 2019, with a subsequent decline in the third quarter.
Source: Business Insider
To add fuel to the fire, Gap announced that its CEO, Art Peck, was leaving unexpectedly, effective immediately.
JP Yim/Getty Images
Peck I had worked at the company for 15 years and had been CEO since 2015. Board member Robert Fisher is currently acting as interim CEO in Peck’s absence. The company did not give a reason for Peck’s departure.
Source: Business Insider
Peck’s departure, coupled with poor sales of the brands, caused the company’s stock price to plummet.
Associated Press
Source: Markets Insider
As the company’s turnover declines and its stock price falls, the founders are losing money. The Fisher family has lost more than 900 million euros this year.
Gap
Source: Forbes
Looking ahead, Gap’s fate remains uncertain.
Bethany Biron/Business Insider
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