Gap to Shutter 21 Percent of Its Stores
If you can’t beat ’em, close some stores. Gap Inc. announced it plans to shrink its North American store base from 889 at present to 700 within two years. The company had announced several years ago that it was looking to reduce its footprint in the domestic market but had not been specific about a store count number.
"Over the next 26 months, we’ll look store by store at our specialty fleet and determine which stores meet the standards we’ve set for our brand," Art Peck, president of Gap North America, told The Associated Press. "This is a continuation of our work since 2007."
Most of Gap’s wounds have been self-inflicted, with the chain failing to come up with merchandise that excited consumers.
Back in March, the company announced it was "disproportionately" shifting more of its focus to consumers between 25 and 30 as well as African Americans, Asians and Hispanics.
On the younger consumer question, 79 percent of respondents to a RetailWire poll said it would be somewhat to very difficult for Gap to capture the target audience.
Edward Yruma, a senior apparel and retail analyst at Keybanc Capital Markets, saw the Gap store closings as a reasonable response to market conditions.
"Retailers were overstored before we headed into the downturn," Mr. Yruma told The Wall Street Journal. "Given the way consumers are spending, coupled with the fact more are going online, we just need fewer stores."
While the retailers plans to close mainline stores, it is looking to open 50 additional Gap Outlet locations in North America and further develop its online business. The company also plans to aggressively develop markets outside the U.S., including China.
"The combination of our global strategy and formidable growth platform puts us in a strong position to expand our reach into the top 10 apparel markets worldwide," said Glenn Murphy, chairman and chief executive officer of Gap Inc., in a press release. "In North America, we’re taking a number of steps to improve sales in the near-term, and I’m confident that with a strong management team in place, we’re well positioned for sustained growth across the business."
- Gap to Slash Its Store Count – The Wall Street Journal
- Gap Inc. Demonstrates Strong International and Online Growth at Annual Investor Meeting – Gap Inc.
- Gap closing about fifth of U.S. stores, expanding – The Associated Press/USA Today
- Gap Seeks Out New Customers – RetailWire
Discussion Question: What is your take on the latest news from Gap Inc.? Will these moves strengthen their core business?