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Sunday, October 23, 2011

How The Gap Can Fall Back Into Profitability

In the late 80s’ when I was a teenager everyone wanted to fall into the Gap when it came to fashion. And by the mid 1990’s the Gap was an iconic brand.

Back in the 1990’s GAP were the clothes a teen could wear to school and look cool, and an adult could wear to work and stand out as stylish. Pieces were full-cut mix-and match classic style that people could build a functional wardrobe out of.

And the quality of Gap clothing was unmatched by any other manufacturer in the late 80’s early 1990’s, Gap clothes used to be virtually indestructible and could survive years of launderings. I still own six or seven Gap shirts from my high school and college days that look practically brand new after over 100 washings.

Unfortunately in fall of 2000, The Gap decided to go in another direction walking away from its preppy clothes and classic style. As the Gap decided to discontinue mainstay products like the Big Oxford, the fleece hoodie with the words GAP on it and signature Khakis, they alienated their core audience of working class young people and families. In a serious miscalculation, then CEO Mickey Drexler thought he could win over young teens with club wear and seasonal trendy clothes.

It was a mistake that The Gap never recovered from.

 Over the past decade the Gap brand continued to decline. Instead of returning to those mix-and match wardrobe classics that established Gap as an international brand, management decided to stay on the trendy and hip path further alienating customers. Moreover, they cut corners on things like thread counts per square inch, colorfastness of dyes, and lowering the quality of their clothes making theme practically disposable. Today a Gap garment can barely stand two or three washings before the dyes run out of it or it starts to fall apart.

Unfortunately, this low quality still comes at a premium price. Which is why customers avoid the Gap and head over to competitors.

In the face of declining profits, and a tarnished brand, Gap management now plans to shutter a significant percentage of its stores in the U.S. and expand their business in China where the brand is still profitable.

I feel that’s a stupid decision and shows how incompetent Gap’s management is. Just like the U.S. consumer tired of Gap’s poor quality, the upwardly mobile Chinese customer will tire of it as well. No, instead of closing stores, and laying off thousands of people, they need to FIRE SOME EXECUTIVES who have been at the top TOO LONG. It’s clear to me Gap Inc’s management have become TOO COMFORTABE, TOO ENTRENCHED, have LOST THEIR PASSION, and are COMPLETELY OUT OF IDEAS.

Because their leadership has abandoned their relationship with the customer, the Gap Brand has no direction. Look at the embarrassing amateurish new logo design they tried to pass off a few months ago to represent their worldwide brand. Who would think that was a good idea except an apathetic group of employees who are so dead inside that they don’t care about the quality of their work.

I feel that The Gap is a solid brand and can turn itself around. It has an international reputation for classic style and iconic brand recognition. The problem is the current leadership is too comfortable collecting a paycheck to make any serious efforts towards changing things to win back the customers who fell in love with the brand almost twenty years ago.

I feel Gap’s current management lost touch with the middle class. The brand is struggling to find its place because everyone at the top doesn’t understand the needs of its middle class customers who are upwardly mobile high school students, college students, grad school students and entry level and mid-level employees in the workforce. I feel the age of a Gap customer usually is about 14-60.

An iconic middle-class brand like The Gap should be competing with high-end niche retailers L.L Bean, Bill’s Khakis (excellent quality), Lacoste, Brooks Brothers and Orvis, (again top notch quality) not lower-tiered mass-market brands like Sears and Target. That’s what Old Navy is for, and why Old Navy should be selling disposable clothes primarily to children, tweens, and young adults who outgrow and destroy clothes. And Banana Republic should be a premium brand competing with luxury retailers like Ben Silver, Paul Stuart, Tuttle, Ralph Lauren Black Label and Gorgio Armani. Banana Republic should be selling to upwardly mobile senior management types, looking to make a powerful first impression in the corporate office or a social event.

If I were running the Gap, I wouldn’t be retreating to China like a bunch of cowards. No, I’d be weathering the storm and trying to reconnect with the Gen-X and Gen-Y customers in the U.S. who made the Gap into an American institution. I’d try to win them back over to the Gap brand by bringing back those classic staples they remember like The Big Oxford, and Khakis and the classic GAP hoodie. I’d focus on a catalog of updated Classic clothes that would be mix-and-match wardrobe staples that work well in the office as well as home and promote how a good man’s or woman’s wardrobe is built on essential pieces. Along with the jeans and Khakis would be work clothes like slacks, skirts, dresses, blazers, barn coats and suits. Yes, I feel Gap should be selling suits or suit separates. People used to value Gap clothes so highly at one time they’d wear them to weddings, business meetings and other formal occasions. The quality of Gap clothes needs to get back to that level.

And to win over customers alienated by poor quality I’d increase the thread counts back to the pre 1998 levels and strive to get product made in the USA if possible. Sure the end product would cost a little more, but when I was a teenager back in the late 80’s early 90’s, people were paying the premium prices to own Gap clothes because the quality was so high. And in my Gap the fit would be full-cut traditional fit. No low-rise, ANYTHING. No, slim fit or any of that hipster crap. That stuff shelfwarms and winds up on the clearance pile everywhere I go. Low-rise/slim fit alienates regular customers who become frustrated when they go to the store, find their size in the label and find out it just doesn’t fit. Traditional fit works best for a practical for a mix-and-match wardrobe of essential pieces a working person or a student needs on the job or at school.

As for the ad campaign I’d keep it simple. Have YouTube type videos where customers talk about what Gap has meant to them over the years. Flashback to the 90’s heyday with vintage ads. For every Generation there was a Gap. And there can be a Gap for this Generation. To me the Gap customer is Middle class and upwardly mobile. The models would be clean shaven guys, and polished females. They’d be presented doing things upwardly mobile people would do. A small businessperson who works out of their apartment meeting a client. A small businessperson having a meeting at a coffee shop, or getting ready for work. Riding the train. Walking with their cell phone on the way to somewhere important. Being in a business meeting at an office. Even going to church.

I’d move away from those scruffy unshaven men and unkempt females they currently have in their magazine ads slacking and doing nothing. Those images are associated with FAILURE. People see them as LOSERS. People who don’t shave or wash their hair ARE SEEN AS BUMS and JUNKIES by customers. That’s not the image anyone wants to associate with an iconic brand like the Gap when they buy their clothes.

Clean shaven men with haircuts and polished females are associated with SUCCESS. These are the men and women people want to get to know. MOVERS. SHAKERS. These are the people customers want as FRIENDS. The people customers want identify with, relate to, and to DRESS LIKE. These images SELL CLOTHES because they make consumers FEEL BETTER ABOUT THEMSELVES.

And along with the ad campaigns I’d be bringing back a seasonal “Vintage Gap” item from the 80’s and the 90’s. Remember Sandblasted Jeans? Surfwashed Khakis? Classic Gap shirts? The I’m sure another generation would like to try the Classic Gap staples of another era if they were limited edition items.

Personally I feel The Gap is still a strong brand. With the right leadership, they can weather the storm and get a new generation of American customers to fall in to the Gap. 

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