Is a trendless fashion industry killing Gap’s business?
It’s been quite some time since Gap was at the forefront of fashion. Some have pointed to the general decline of malls as the source of the chain’s poor performance. Some have pointed to deep discounting and a lack of new ideas for the once essential brand’s current lack of popularity. But on top of that, CEO Art Peck sees another significant challenge — a fundamental flaw in today’s fashion world that’s making it rough for the company to find its footing.
At an annual retail conference hosted by Goldman Sachs, Mr. Peck told analysts, “There are no [compelling] fashion trends driving the business,” reported The Street. Mr. Peck contrasted today’s apparel landscape with that of 2012, when colored skinny jeans drew customers to the chain.
Mr. Peck stepped into the role of CEO in early 2015 promising technological innovations that would bring the company back to its heyday. But there has not been much word on the company’s omnichannel strategy, dubbed Retail 3.0, since the moniker was first thrown around last year.
Gap’s stock performance has continued on a downward slide. The company reported a drop in sales for the eighth straight month in a row early in September, according to The Street. The numbers were made slightly better by a one percent increase in sales at Old Navy.
Some are painting the increase in Old Navy’s sales as a potential resurgence of what had, until recently, been the single standout brand in Gap’s portfolio.
The phenomenon of Old Navy’s success despite its parent company’s tribulations was attributed in no small part to the fast-fashion acumen of the head of global sales, Stefan Larsson, formerly of H&M. Larsson left Old Navy towards the end of 2015 to become CEO of Ralph Lauren. Shortly after that, a sales slide began which continued well into 2016.
Not all of Mr. Peck’s comments at the retail conference were about the state of fashion, according to Fortune. The recent closure of 100 Macy’s stores may give Gap leverage to pursue reductions in rent in some malls, depending on how their leases are written.
- Gap CEO’s Brutally Honest Presentation to Goldman Bankers Should Really Frighten Investors – The Street
- Gap’s Slide Towards Irrelevance Quickens as Sales Slip for Eighth Straight Month – The Street
- Gap is still waiting for a turnaround – RetailWire
- Where will Old Navy’s new captain steer the ship? – RetailWire
- How Macy’s Store Closures Could Help Gap – Fortune
DISCUSSION QUESTIONS: Do you agree with Art Peck that a lack of significant fashion trends, in general, is a root cause of Gap’s poor performance? What can apparel retailers do to thrive in such a trendless environment?