“The retail environment is still growing because the population is growing,” Mulpuru says.
Gap Inc. has been moving too slowly to meet the fashion demands of the Millennial generation. The company announced Monday that it will close 175 brick-and-mortar stores in North America and lay off staff as it refocuses on new styles.
Gap Inc. Closing 175 Stores Nationwide to Boost Sales
The Gap brand, known for its preppy aesthetic, simple shirts and classic khakis, has had a difficult time reaching consumers under the age of 30 in recent years, who view the brand as “for moms and kids,” says Sucharita Mulpuru, a retail analyst at Forrester Research. While shoppers’ demand for low-price clothing remains steady, “Gap is kind of in the middle” when it comes to style. “Old Navy merchandise seems like it’s more up to date with trends — the kind so stuff you see on sites like Pinterest or Instagram,” she says.
Which stores will close will depend largely on location, the company said. About 250 jobs will be cut from its corporate offices during the 2015 fiscal year, the company said in a press release.
RELATED
The company’s other brands — Banana Republic and Old Navy — will not be affected by the closings; the Gap Outlet and Gap Factory stores will also remain open.
“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” Gap CEO Abe Peck said in a statement.
That doesn’t mean consumers aren’t going shopping, however. Outdoor shopping centers are becoming more popular as the economy recovers from the recession: shopping centers in the U.S. posted an average 92.7 percent occupancy rate at the end of 2014, the highest since the second quarter of 2008, according to the International Council of Shopping Centers trade group.
With that in mind, Gap will pay closer attention to online sales and the e-commerce potential for social media sites to direct customers to the sites of Gap’s different brands, Stefan Larsson, global president of Old Navy, said during a conference call for Gap investors Tuesday. “Our goal is to become the first aspirational American brand in the value space,” he said during the call. “The customer wants more convenience, they want to spend their time on more things than looking for the perfect product…. They want to a product to be inspiring, they want things to be more authentic than ever before — and, by the way, they want a good price going out the door. All of this really excites us.”
Two other long-standing classic clothing providers, Ann Taylor and J. Crew, have also struggled to appear stylish to Millennial consumers in recent years — and could eventually be forced to downsize and pivot their retail strategy, Mulpuru predicts. See Photos
5 Things to Know About the Economy This Week: 6/12/2024 The shifting fashion demand is the dominant factor behind Gap’s downsizing, but the decline of shopping malls and the rise of online sales and delivery through sites like Amazon are affecting all brick-and-mortar chains. After it downsizes, Gap will still have approximately 500 stores in North America. Sears Holdings Corp. – which owns Kmart and Sears stores – and Macy’s and JCPenney are also planning to close shops in 2015.
Write a Reply or Comment: