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The Gap is humbled by those picky millennials

 
Buyers are rejecting name brands.
Buyers are rejecting name brands.
Published June 17, 2015

During its most successful run, Gap's fashion catered to children of the 1980s and '90s — first with plain T-shirts and blue jeans, then with button-downs and clean-cut khakis. Artists and musicians helped popularize the androgynous look, one that seemed to define Generation X, whose shoppers strove to fit the trend.

It was a snapshot of pop-culture. In 1993, it was used as fodder for a Saturday Night Live skit, "The Gap Girls." In 1995 and again in 1998, Sharon Stone sported Gap shirts on the red carpet.

But the idea that once made Gap so popular has become obsolete.

"Historically, Gap has had a very distinct look. It was very much about creating uniforms," said Kelly Tackett, research director and retail analyst at Planet Retail. "Millennials want to put together their own identity."

On Monday, Gap, which was once touted as the world's largest specialty apparel retailer, announced that it's closing 175 stores in North American to attempt to boost profitability. After cutbacks over the next few years, the chain in North America will include about 500 regular-price stores and 300 outlets. Stores that are being shuttered are regular-price Gap shops.

"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," chief executive Art Peck said.

The problem, experts say, is that Gap has failed to keep up with its target customers — the millennials — who have a dramatically different fashion sense from the generation before them. These shoppers are less interested in name brands and more about creating their own unique style, according to market research. They're also less willing to pump their entire paycheck into their wardrobes. That's why stores like Forever 21, H&M and Uniqlo have been giving Gap a run for its money, because they offer customers a unique appearance at a lower cost.

That's also why Gap Inc.'s budget brand, Old Navy, has kept the parent company afloat. When shoppers want the basics, they can find them at Old Navy for a much smaller price tag.

"The problem was Gap got boring," retail analyst Candace Corlett told Racked. "After the popularity of the khaki, it was an ongoing parade. How many tan khakis and white button-down shirts does someone need? They were always the old, reliable Gap but high-energy, trendy retailers were moving into the closet."

Gap's most recent attempt to revamp its brand came with a new marketing campaign, which uses taglines such as "dress normal," "dress like no one's watching" and "simple clothes for you to complicate." The idea, it seems, is to tweak Gap's once successful image to make it more relevant, tapping into the normcore fashion trend that has popularized average-looking apparel. But Gap sales fell 10 percent in the three months leading up to May 2, according to the Wall Street Journal.

Many large American retailers are "overstored," meaning they have more locations than they need during a time when regional malls are competing with online shopping. Also, younger shoppers have more expenses competing for their paycheck such as entertainment, technology and dinners out, which are "winning a greater share of the wallet from teens and young adults," Tackett said.

But she said the real problem for Gap is its products. Similar stores such as American Eagle, Aeropostale and Abercrombie & Fitch — once popular for their recognizable brands — have taken a hit as well, which only emphasizes the fact that the fashion industry is changing.

Abercrombie & Fitch, for instance, announced last year that it was reducing the size of its logo and adding more variety to its women's line to appeal to millennials who want to stand out. "They no longer want to be a walking billboard of a brand," Abercrombie spokesman Michael Scheiner told Reuters. "Individualism is important to them, having their own sense of style."

Tackett said that's a lesson worth learning. "You always need to stay close to the customer you're designing for," she said.

— Washington Post