Basics instinct

If Gap is to woo back UK consumers from the budget, high-turnaround fashion retailers, it needsto re-establish its brand position, reinvent itself and be more dynamic, says Archana Venkatraman

Gap, the all-American clothing chain, is abandoning its UK design strategy for the European market just two years after introducing it. The U-turn comes as the retailer parts company with its ad agency Craik Jones Watson Mitchell Voelkel (MW last week) and posts disappointing figures.

Analysts and the industry say Gap has ceded much ground to its competition, such as Spanish clothing retailer Zara, which has overtaken Gap in terms of sales. Inditex, Zara’s parent company, has recorded a 9% rise in global sales to £1.7bn in the first quarter of its financial year. Gap, meanwhile, saw its revenues fall by 10% and recorded sales of £1.72bn in the same period.

Industry veterans claim that Gap’s positioning as a mid-market brand and its slow reaction to competition have led to its U-turn, and that its high-end price points have diverted consumers to other available options. But they add that all is not lost for the “once venerable brand”.

The company has axed its UK marketing team and European design team, and is returning to a global model in an attempt to cut costs, just two years after appointing its first UK heads of design for its menswear, womenswear and children’s collections.

But International Marketing Partners director Allyson Stewart-Allen says it is too soon to write the retailer off: “It is an exaggeration to declare Gap out. Factors like recession and consumer slowdown have hit its sales too.” According to Stewart-Allen, customer preferences in the UK are changing, and when retailers like Primark, Zara and Uniqlo refresh their inventory stocks every fortnight, Gap is hit hard.

The retailer was founded in 1969 in San Francisco, and has since gone global, operating under the Gap, Banana Republic, Old Navy and Piperlime brand names. The Gap brand includes Gap, GapKids, babyGap and GapBody, with more than 3,100 stores worldwide.

Interbrand chairman of branding Rita Clifton says Gap is going through a rough phase. It has not reinvented itself and remains straddled in the middle category. Clifton says: “Other high street vendors have moved to define themselves either as premium designer brands or volume retailers.”

Stewart-Allen says: “Gap must go back to its DNA and establish what its brand positioning should be… like Zara, with trendy and fresh merchandise on offer very often, or like M&S – reliable.”

Gap’s downfall can be traced to a £5m loss in 2001. It started losing market share and has difficulty attracting the youth in the UK. Stewart-Allen says the designs are becoming “very predictable” and that it should look to emulate sister brand Banana Republic to “woo back UK consumers”. She says it should also revise its pricing strategy and update its merchandise constantly.

Stewart-Allen says that Gap will respond and bounce back, but Clifton suggests the retailer will find it hard to move up the value chain from a middle identity.

Clifton concludes: “Gap will move into the mainstream segment in the long run. It should choose its battleground carefully and introduce speedy inventory, as well as fashionable and sexy clothes, to cater to the dynamic market.” 


1969 Founders Doris and Don Fisher open the first Gap store in San Francisco, California, US 

1987 The first Gap store outside the US opens in London, England, on George Street. Gap Inc. annual sales reach $1bn 

1992 Gap becomes the second-largest selling apparel brand in the world 

2002 Paul Pressler is named Gap Inc. president and chief executive, replacing Millard Drexler who retires after 19 years 

2003 Founder Don Fisher steps down as chairman 

2007 Paul Pressler steps down and Bob Fisher assumes the role of interim chief executive

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