The Rise And Fall of Gap

The massive clothing
retailer Gap Inc., parent company of
several brands including its original Gap stores,
is breaking up. Some big news out of
the company with plans to separate into
two separate companies, spinning off a yet
to be named company, NewCo, which will consist
of The Gap brand, Athleta, Banana Republic,
Intermix, and Hill City. Then the remaining company
will be Old Navy. Gap’s net sales slowed at
the turn of the 21st century, well
before the financial crash of 2007
devastated the retail industry. Over a decade
later, Gap Inc. continues to struggle. This is largely due
to the Banana Republic brand and the original
Gap stores, which haven’t recaptured the
explosive success they cultivated in
the 1990s. For the last few years,
Old Navy and the athleisure brand Athleta
have carried the company. Both have shown
consistent year-over-year sales growth
post-recession. Gap stocks surged by over
20 percent the day the news broke as
investors and analysts applauded the move. Frankly, it’s
about time. Old Navy is a nice
business, 3 percent same store sales growth, in
spite of an anemic fourth quarter. Now it’ll finally be able
to free grow on its own, with its laser
like focus I think it can beat
the 3 percent. But others are skeptical,
calling it simply a move to boost the
value of Old Navy. My initial instinct was that
this was a move for valuation, meaning
that Old Navy’s valuation was probably
a little depressed being inside of
Gap Inc. They’ve had to do something
to get the stock higher. This feels like
that something to get the stock higher. But this is
about the stock. This is not
about the company. Whatever the future holds for
Gap, this is a stunning move for a company
that grew from a single store in San
Francisco to become the defining apparel retailer of
the 1980s and 90s. The first Gap store opened
as The Gap in San Francisco in 1969. The store’s name was
a reference to the generation Gap between
the young, liberal baby boomers and
their conservative, postwar parents. Hoping to entice
the huge baby boomer generation, The
Gap’s founders Donald and Doris Fisher decided
to sell nothing but records, tapes, and
wildly popular Levi’s jeans. Jeans, especially
Levi’s, boomed in the 1960s and 70s
due to what fashion historians call the
casualization of the American wardrobe after
World War Two. People didn’t look sloppy,
but they certainly adopted more casual
bottom elements into their wardrobe. It was this very
clean, simple approach to getting dressed. The Gap was
an immediate success. By 1972 it had
twenty five stores, including one across the country
in New Jersey. In 1973, it began
offering other brands besides Levi’s, as well
as its own Gap label. By 1975, it had
186 stores in 21 states and sales of
100 million dollars. It went public
the next year. Donald Fisher appointed
Mickey Drexler as Chief Operating Officer
and President in 1983. Under his leadership,
The Gap saw explosive growth throughout
the next two decades. Under the leadership
of Mickey Drexler through the 80s and 90s,
Gap used to be the premium growth retailer
in America. At the time it
was smart, even hip as my parents
would have said. The Gap expanded its
own brands, founding Gap Kids, Baby Gap,
and Gap Outlet stores. It even dropped Levi’s,
the only product it sold in the original
Gap stores, in 1991. It also expanded beyond
The Gap label by acquiring Banana Republic
in 1983 and launching its discount brand
Old Navy in 1994. With these, The
Gap targeted three tiers of consumers: Banana
Republic for the upscale, Old Navy for
discount shoppers, and The Gap for
everyone in between. Old Navy in particular
took off, reaching 1 billion in sales
by 1997. I was in store number one
for Old Navy and I remember walking
out, calling back, and saying
to my boss I’ve just been in
the coolest, cheapest store on the face
of the earth. And Old Navy was
back in those days. They were the fastest
retailer to go from zero dollars in
sales to a billion dollars in sales. The company
simultaneously expanded worldwide. It opened
the first international Gap store in England in
1987 and expanded to France and Japan
in the 90s. Finally, The Gap
embodied the casual-cool, basic trends of the
80s and 90s. The casualization of
the American wardrobe continued into these
decades as offices began allowing increasingly
casual attire. Where The Gap really kind
of took off was casualization in
the office. The last leg of
casualization came really when people started wearing
khakis to work on Friday. Casual Friday is the
easiest way to think about that. The Gap made improbable
clothing, like khakis and turtlenecks, cool. In 1993, it released
an ad campaign featuring dozens of
celebrities in khakis. A few years later,
actress Sharon Stone wore a Gap turtleneck with
an Armani jacket to the 1996 Oscars. Gap’s annual sales grew
from 307 million in 1980 to over one
billion just seven years later. By 2001, sales had
ballooned to 13.8 billion. When you adjust for stocks,
Gap traded for 20 cents when Drexler took
over in 1983 and peaked at 52
dollars in 2000. Wow, what a spectacular
run, with the last big leap coming from
the rapid expansion of Old Navy right before
the turn of the century. At that time,
though, the U.S. economy slowed down. The Gap’s sales grew at
28 and 17 percent in 1999 and 2000, but slowed
to 1 percent in 2001. It hasn’t hit
double digits since. But a sluggish national
economy was only part of the problem. First, by the early
2000s, Gap’s apparel had lost its cool. Casual basics gave
way to Britney Spears-esque low-ride pants
and crop tops, which weren’t
Gap’s forte. Banana Republic and Old
Navy carried the company as The Gap
brand struggled to deliver what
consumers wanted. Next, the boardroom
was in turmoil. In 2002, then-CEO
Mickey Drexler retired after two years
of sluggish growth. Drexler’s design-driven
leadership had faltered when trends changed
in the early 2000s. The company
replaced Drexler with Paul Pressler, a
former Walt Disney executive. Pressler used
the cost-cutting ethos he developed at
Disney to improve Gap’s efficiency. It seemed to work. Sales growth rebounded
to 9.7 percent in 2003. But a New York
magazine profile from the time noted that this
uptick was likely due to products that Drexler
chose before his departure. And it didn’t
last: sales growth fell back to under 3
percent the next year, then slipped into
the negatives. Glenn Murphy, former CEO
of the Canadian drugstore chain Shoppers
Drug Mart, took over in 2007. CNBC reported at the
time that Murphy planned to give the
design team creative freedom, reflecting
Gap’s continuing struggle to be
cool again. As sales in the U.S. fell, Gap again pursued
growth abroad at a much faster pace than in
the 80s and 90s. From 2006 to 2008,
the company opened dozens of Gap and Banana
Republic stores across the Middle East and
Southeast Asia. But then of course,
the Great Recession devastated Gap and just
about every other retailer. Whether The Gap
was cool or not hardly mattered. Consumers slowed or
halted apparel shopping to save money. Under Murphy’s leadership,
The Gap tried several methods to
revive sales. It embraced strategies
to integrate digital and physical shopping
experiences, like allowing customers to shop
online and pick up items in store. Gap also acquired
two new companies: Intermix, a women’s
fashion brand, and Athleta, a fitness
and athleisure brand. Athleta in particular,
capitalizing on the spike in athleisure’s
popularity, has succeeded where other
Gap brands have struggled. From 2008, when
Gap acquired the brand for 150 million
dollars in cash, to 2014, the Athleisure brand
grew from an online-only presence to
about 80 stores. Gap doesn’t break
out Athleta’s sales numbers specifically, but
the other portion of its revenue, of which
Athleta is a part, consistently posts the best
sales growth in the company. During Murphy’s leadership,
Gap’s overall sales trended upward again,
reaching a peak of 8 percent
growth in 2012. But Murphy stepped down
in 2014 and sales drifted downward
once again. The company hasn’t yet
released its 2019, earnings but sales at
Gap stores fell every year from 2013 to
2017, and Banana Republic fared just as poorly. Millennials have flocked
to digitally-native brands like Everlane,
fast-fashion giants like H&M, or even
secondhand companies like ThredUp. Fast-fashion
retailers in particular have captured
a rapid fire wardrobe replacement rate
driven by social media. And I’ve seen it dozens
of times in the mall where people are shopping
and they already own a ton of
clothing in their wardrobe. But things have already been all over social media and so they don’t want to wear it again. Old Navy and Athleta
have carried the company for the last few years. To expand on Athleta’s
success, Gap launched a men’s athleisure line,
Hill City, in 2018. Meanwhile, Old Navy
leans on its family-friendly prices
and shopping experience. They know how to
really integrate the right fashion of the moment for their customer at the right price. And I think they are doing a great job. Old Navy is of particular importance to the company, making up over
40 percent of its sales since 2014. By 2020 though, the
discount brand will become its own company. This will leave The Gap with two struggling behemoths, The Gap
and Banana Republic brands, and a mixture
of much smaller brands: Intermix, Athleta,
Hill City, and the newly-acquired children’s
clothing line Janie and Jack. Analysts point to Athleta
as the brand with the most potential to
drive future growth. I think that a lot
of people would have assumed Athleta would have
been grouped with Old Navy. It will be
the crowned jewel, it will need to carry,
it will represent the growth. But it’s also
going to be benefiting by being part of
a larger company. Gap’s current CEO, Art
Peck, said the split, which should be complete
by 2020, will help each company craft
a “sharpened and strategic focus and
tailored operating structure.” But why now,
when the retailer has struggled for consistent
success for so long? I think the reality is
it appears it’s an acknowledgment that The
Gap really isn’t going to turn as quickly
or as much as they had wanted it to. If NewCo does revive
the ailing company, it’s possible that the iconic
Gap brand itself will play a smaller role
than it did in the company’s history. Certainly going to be,
relatively speaking, a much less important part
of this business once you separate
them off. So if you can shrink
Gap and grow Athleta fast, grow Hill City
fast, those pieces are more important to
the shareholder.

100 comments on “The Rise And Fall of Gap”

  1. Iche says:

    The Rise And Fall of ZIP

  2. MuffinREpic says:

    I work at G.a.p and trust me they are over price even with employee discounts which is 50% off it is still overpriced. I know quality and trust me uniqlo practically have the same quality to even better but way lower price.

  3. sniper60605 says:

    I bought some cool button up dress shirts from there in the mid 2000’s. The kind you could wear out on a Saturday night to somewhere cool. Not the light blue, pink, tired crap but cool white shirts with material that had a cool texture. Never saw anything like them since. Sad.

  4. Neil NJK says:

    Jim Cramer is a gross human and a terrible orator. Who thought that it would improve this video to have him deliver short lines of dialogue that the primary narrator could have delivered much better?

  5. Bughatii says:

    Mind the GAP

  6. Sublime Music Channel says:

    GAP, Old Navy, and Banana–three crappy store brands I've never been able to attach to. Their relentless–actually remorseless–marketing girl ass as a way of luring customers has also never been a draw to me, but rather a turnoff. Creepy.

  7. libertango says:

    I was buying a lot clothes for my young son from Gap. But they lost me with their kids/boys winter jackets that constantly shed feathers on the sweater even before washing. As I had to buy a new jacket year after year, I grew tired of picking up feathers after feathers. I switched to Ralf Laurent or later Guess when my son grew in size. They are more expensive but the difference in quality was huge.

  8. DAZLG says:

    Gap is the worse name brand anybody can wear that is trying to be on trend its like waking up from a coma after 25 years wearing your same gap sweater.

  9. Zoch Buppet says:

    Who the BALD DRUNK GUY, that keeps interrupting. I'm cant even understand anything he's saying.

  10. Zoch Buppet says:

    Why Gap is dying:
    1. Didn't change the idiotic "advertise free for me", label branding on everything from the late 80's and 90's when the whole market was already changing by 2001, and absolutely no one was doing it.

    2. FAST FASHION. GAP clothing was higher quality, and the stuff was made to last, but it was more expensive
    Enter the mid 2000's and H & M, fast fashion and manufactured in China and Bangladesh for 1/4 the price that LOOKS similar to the higher quality clothes.

    Yes I will buy that $60 clothing item when I get a similar item for 25. Most people wouldn't do that, even if the quality was much better.

  11. VuqarIE says:

    beside the design, quality also sucks

  12. 640 says:

    2:08 damn that guy has some serious junk in the frunk.

  13. Kao Nashi says:

    Malaysia..twice? lol

  14. santiago carreño says:

    2:08 someone has a huge one

  15. ottomated says:

    Did everyone forget the horrific gap logo that came out in 2010?

  16. Bach YouTube says:

    The idiots managing Gap risk canceled my $860 order for no real reason and simply lost the sales. Assuming this what happened to another 10,000 users, that’s a loss of many millions for idiotic recruitment of corrupted KYC and online fraud services. It’s just a question of time before GAP is fully bankrupt.

  17. John K says:

    GAP sucks.

  18. cbracamonte says:

    Lets blame Britney

  19. ademir pasinato says:

    bruh in my school here in brazil lots of people still wear gap jackets

  20. Yap Gim Kwee says:

    The gap stores in my cities have gone missing.

  21. Jimpot Cheung says:

    Thats a big GAP

  22. Gambit771 says:

    First I heard of gap was in the late 2000's.
    Haven't heard of the other companies until now.

  23. Julian potatoe says:

    Overpriced junk.

  24. kathurtado13 says:

    So what it means is that old navy inc will be the only survivor.

    ☹😢 sad, I love BR and Gap.

  25. Pablo Escobar says:


  26. Andre Crespo says:

    This voice is so annoying!

  27. Yt Yt says:

    They need more managers like Chris Farley in drag

  28. Wasabi Kawasaki says:

    Abg Neal just bought bought -Gap

  29. The Hood Philosophical says:

    Mickey Drexler A.K.A. George Costanza

  30. Christopher Ashford says:

    Wait. you mean, no Banana Republic stores in Central and South America?

  31. Magnelan1 says:

    I think that the main gap problem is their quality. I remember my mom used to buy it for me and my brother because it was clidren resistant and easy to wash. It used to have a certain quality. I still have some of these old items, they are used up but how many times was it used? Nowadays gap items just reach that state after a few washing. Nowadays and with vintage clothing being fashionable, people see how much of a waste of money it is. If casual clothing is not good quality ot looks lame. people don't want to look lama. Why does not gap slow down a little on fast fashionning, and be more reasonable? It wood be good for their image, and therefore for their buisness.

  32. Michael Tobin says:

    The separation of GAP and Old Navy was supposed to happen in 2001, the separation was started and was brought almost brought to conclusion except the GAP wasn't paying contractors. GAP would have failed by the end of 2001 so they stopped the separation because they needed the money. Banana Republic was failing as was GAP unlike what this article states

  33. Grim Reaper says:

    Too expensive.
    Too white.
    Last time I bought something from the GAP may have been when I was in high school. That was +15 years ago. The only brand worth something is Old Navy. Banana Republic is garbage too. Too expensive. Not worth it.

  34. houchi69 says:

    I haven't bought any of those brands in like more than 20 years…

  35. houchi69 says:

    2:08 That's some serious bulge…

  36. houchi69 says:

    2:08 That's some serious camel toe…

  37. Alan says:

    I found GAP style outdated since 2007 and their price are expensive for those outdated style and quality

  38. QuietStormX says:

    In History you can see the GOP are bad for the Public and Businesses the like for them. Effects you pay to lower too.. ;-(

  39. gravilo pricip says:

    I visited the States and went to old Navy And was so excited by the deals…..till I went to try the clothes on and a Small there was an extra large in Europe!! I bought from the kids section (I’m 35)

  40. LCalvertJD says:

    that's because the quality of the banana republic and GAP products has dropped, I don't shop there anymore, if you buy a GAP t-shirt it lasts two washes and then starts to pill

  41. Billy Leung says:

    Uniqlo kills it cause it’s quality 👌

  42. Sunset Rider says:

    Good and interesting content, but you need a less robotic narrator.

  43. Jonathan Strange says:

    If the CEO of Gap read these comments and listened, the sales would come back.

  44. Mekka Abdul says:

    Fail to keep up with today’s fashion

  45. TU nguyen says:

    70$ per jean no ty

  46. Jerry N. says:

    Gap is very basic, but vintage edgy fashion is in style right now I feel like. It's kinda ironic.

  47. Doan Trinh says:

    When they got hot and heavy with Banana Republic, they started to adopt the pricing of Banana Republic. Old Navy is like the old Gap but it’s so cheeky and literally catered to Mom’s buying clothes for their kids two weeks before school starts. Gap needs to get back to it’s roots – cool neutral design, reasonably priced, and easy going.

  48. fresc007 says:

    Also, the quality don’t match their prices. At least that is why I stopped buying at Gap lingo ago. And Banana Republic and Old Navy, this last one was specially bad quality

  49. thomas ling says:

    written malaysia twice…lol

  50. stayseaLY says:

    I love Gap and have shopped there since the 80s.

  51. elfowlkes says:

    “Fall into the GAP.”

  52. Thots_Be_Gone says:

    Why did they show his bulge at 2:08

  53. Jim The EDC Guy says:

    Forget GAP, how about CHASM??

  54. Shuu秀修 says:


  55. NikName ! says:

    There‘s a hole in your hoodie!
    Oh wait it‘s just a gap

  56. Marvin Olvera says:

    I love the Gap

  57. rob1248996 says:

    When GAP discontinued Levis, I discontinued GAP. I just didn't like their jeans.

  58. The Matadore says:

    It's sad but the store display feels like a second-hand store warehouse now and the employees look and act like exhausted single-moms (no hate to single moms you kinda get the image though). Don't get me started on trying to check out without being held up to sell you on that God-forsaken GapCard. Everything about it feels drab and tired and annoying.

  59. Being American says:

    Like any retail company, and having worked for them, they rely so much on people signing up for the credit cards associated with the store. Its really smart analytics because people tend to carry balances on their credit cards and the company makes money from interest rates. You'd be amazed the amount of pressure they put on associates to sell the credit cards and how much talk about them everyday you'd hear, "sell, sell, sell those credit cards." Was working for the Gap brand horrible? Not necessarily but the store that I worked at was highly unorganized and the backrooms made it impossible to find items.

  60. EpicPlayer says:

    Whenever I saw kids wondering around on Parisian streets with big letters GAP on their sweaters, I knew immediately they were tourists from the US.

  61. egypt thompson says:

    Stop making clothes just navy blue and maroon

  62. profscarlett says:

    1. The Gap doesn’t carry plus sizes. 2. Their clothes are boring, all solid pastel and neutral colors.

  63. Ignacio Bares says:

    how can you say a company that makes 16b a year is struggling?? haha it makes no sense that's the opposite of struggling

  64. Clarence M says:

    Where are people going to buy classic pieces of clothing? Like straight leg jeans? lol

  65. De Cnijf Kris says:

    It can't be the fault of the friendly vendors though

  66. De Cnijf Kris says:

    tune's good

  67. Sacshell Polk says:

    they never have your size. check the website. they lost a lot of customers because of that.

  68. David Mecatron says:

    I'll tell what they need: adds,adds and more adds, specialy in movies and vlogers from youtube. People buy what you tell them to buy, that simple.

  69. laurel jade says:

    Love Gap but their stuff is a little stale and overpriced (but you get some diamonds in the rough).

  70. Jorge Castro says:

    If champions can turn things around then so can the gap.

  71. ruzzell907 says:

    Uniqlo is the go-to place for good clothes now.

  72. Bob Bowie says:

    Too expense for what you get.

  73. Chika Suemi says:

    No one wants to deal with fast fashion anymore and you know what? Good riddance!!

  74. Laura Brooks says:

    Horrible voice computer generated voice prints when people talk. And that financial analyst guy. I can't understand a word he was saying

  75. Lonee Bazemore says:

    They need an early teen option. After my daughter turned 13 she was super bummed she couldn’t fit anything but leggings from the kids section. The women’s side is a bit boring for her. We’ve moved on from their children’s clothes. So now we’re trying figure things out. A&F, old navy, justice, north face and Nike are our go to. But she’d prefer something girlie with matching shirts/pants and accessories. Good quality and long lasting.

  76. Caitlin Mah-Soeung says:

    Gaps clothing is too basic for the younger generation, no one wants GAP emblazoned on their chest except for my mom… I know it’s ‘their style’ but keeping the same design for 10+ years is a bit of a stretch- if they want to make that trendy agin maybe stop making it for 30 odd years then if their revenue increases bring it back as a ‘vintage’ or ‘throwback’ item and see if social media picks up on it

  77. Sukh Dhillon says:

    Guy @2:07 is packing 😝

  78. Bob Bulat says:

    I for one am glad these slavers will go under

  79. Big Seb19 says:

    Gap outlet is life

  80. Wilshire says:

    Maybe because they've been making bland clothes for the past 15 years. I've still got a bright green sweater from when I was younger that I feel like you would never find in gap today.

  81. heyJustephan says:

    10 years ago when I enterd for the first time a GAP store I felt like I enterd the 90s. I left buying nothing and never turned back.

  82. TexasDragon 1995 says:

    "Be better than the GAP"

  83. christy nichole manuel says:

    Wow i only get old navy,gap and banana republic at “ukay-ukay” shops here in the philippines 😂😂😂 im so poor

  84. Beast from the East says:

    I used to shop at gap and old navy. I get my clothes from Costco now. You can get a jeans for $12 at Costco and their shirts are cheap too.

  85. mk toohtwo says:

    I have to admit, I’m loving the slow and agonizing death of retail. All the corporate strategies and stock market hopes and dreams are never going to save it either. Retailers are trying so hard to recapture their former relevance as they circle the drain, but the truth is…it’s over for all of them. It’s just a matter of time.

  86. Doyun Kim says:

    ABG Neal bringing it back cuh

  87. I K says:

    When I started high school, wearing gap hoodies were a thing because they were expensive.(It was 4 years ago and gap is considered a luxury brand in my country because of its price tag. I’m not sure but I think they left the country.)

  88. statistical gem says:

    I think the 1969 looking Gap would do pretty well in 2019. Definitely looks like something that would attract Gen Z.

  89. John Iii says:

    I don’t think I would look good in a Britney crop top

  90. Vet Doc says:

    Remember Zuckerberg in the old GAPhoody? Long time ago…..

  91. K B says:

    Why do people say, “the gap”

  92. Sylvia Park says:

    The only memory I have of GAP is seeing GAP in the mall but my mother always saying they're to expensive… :/

  93. NEWdansuyume says:

    Frankly Gap sells the same styles they did ten years ago. Old Navy is rather like Gap was in the early days: fairly good basics at an ok price.

  94. Sergio B vazuez says:

    Get a new design team, people with fresh ideas. Every year is the same colors,patterns and designs.

  95. טניה says:

    We have an H&M where our GAP used to be in our mall and I would rather much have the GAP back. 😰

  96. tahj677 says:

    Did they really just zoom in on that guy’s bulge at 2:08? 🙈😂😂😂😂

  97. basebrat64 says:

    i have not gap for 15 years. their clothes suck. and banana republic sucks now too. not surprised.

  98. Ruben R. says:

    I have a light weight Jersey cardigan from Old Navy from 2007! Still in great shape and works with anything. But I also haven't shopped there since…..

  99. Matthew Laker says:

    I think also it was the price of their clothes mixed with boringness.. my mid 2000s wardrobe was all h&m bc they were interesting and cheap! 24.99-35.99 for pants. . 12.99-29.99 for tops. Old Navy was like 50 bucks for a dumb shirt. I'm speaking from a 2008 experience.

  100. CrazyBeautiful says:

    I don't really shop at GAP much but I think if they were smart and still want to make money like Old Navy they would make some newer looking clothes or try and make things like Forever 21.

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