Gap: American slump, European bounce?

Earlier this year, the Business of Fashion visited a Central London outpost of the Gap, one of America's most well-known high street retail chains. We left sorely disappointed with the product, the slow pace of change of collections (the opposite of 'fast fashion'), and the deep discounting that created detrimental expectations in the minds of Gap's core consumer base. Then, a few weeks later Paul Pressler was booted out of the CEO suite, a swift reaction to the  financial results achieved under his tenure.  To say the least, things have been looking pretty dismal indeed.

The bad news continued when the Gap reported yet another decrease in overall same-store sales today across its three brands, dropping 7% versus last year and failing to meet analyst expectations. This is the equivalent of a death knell for a public company. But, it seems there may be hope for the Gap yet.

A visit to the same Central London Gap store on the weekend was like visiting a very different store. The place was rammed with shoppers and the product was much improved. The sophistication and simplicity of the designs stood out and the positioning of these new designs as redefined classics was very much in tune with Gap's core market and what consumers expect of this venerable chain. The deep discounting was still there, but apparently not on the European-designed collection.

And the evidence is implied by the financial results reported today. International sales, a part of which includes the European business, were only down 2%. So, what's behind this apparent bounce? Earlier this year, a new design team was put in place to drive a product customised to European tastes. It is clear evidence of how strong design can go straight to your bottom line and how design is increasingly important at all levels of the industry.

Perhaps the Gap should look at figuring out how to roll out part of its European assortment to America and other international markets. A leading New York-based fashion stylist told me in Paris last week that a stop at the Gap in Europe was on the must-do list for many American fashionistas visiting London and Paris for the S/S collections. While Patrick Robinson (formerly of Paco Rabanne and Giorgio Armani) is leading design for the American business, his efforts have clearly not yet had the same impact on the US business.

Comments

[rollergirl]

Interesting. I'm v happy with my Gap jodhpurs, one of the first Gap things I've bought in ages. I have a lot of time for Gap, dunno why, I just feel loyal to the brand. Having said that, I'm always in there but rarely find anything I like enough to buy it. I'm very picky and most things just 'aren't quite there'. I hope things continue to pick up for them.

[Queen of Suburbia T-Shirts]

One thing I would say about Gap is that they rarely have the quality issues that so called "fast fashion" retailers suffer from.

[Addy]

The thing with Gap is that all the clothes look stunning in the ad (worn by models or celebrities) and then in real they're not even half as nice. The fit is usually quite bad and one can see it from the back of the mannequins as there're pins everywhere to make the clothes more fitted. Why don't they solve the main problem with their clothes first :the fit? Fabricwise, it's usually acceptable, but the cut!!! I think they really need some good pattern makers and designers with a better sense of fitting to improve their sales!

[Liberty Girl]

I spoke to one of the UK Gap press office girls back in Sept when I was on an appt, and she told me that the US buying team were coming to London to buy the European collection as from now...

[The Business of Fashion]

Liberty Girl -- thanks for the scoop. That's very wise of them, because the US product seems to completely lack a design point of view.