US fashion brand Gap felt like a breath of fresh air when it came to the UK in 1987. Clean, bright interiors and chic preppy fashion ranges provided a clear point of difference when compared with homegrown competitors.
But nearly 35 years is a long time in retail. Fashions change, and Gap – which is to close all 81 of its UK branches by the end of September – ends its time on UK high streets as a store where few shoppers would consider buying at ticket price. The brand’s discounting habit meant another sale would always be along soon, if it wasn’t already underway.
“The move to close stores is part of a wider, necessary repositioning of the brand,” says Brand Finance associate Annie Brown. Brand Finance estimates the value of the Gap brand globally is $1.4bn (£1bn) as of January this year, well below the $3.2bn (£2.3bn) valuation of sister brand Old Navy.
The value of Gap has decreased by an average of 5% each year since 2008, while rival H&M’s value saw average growth of 10% every year over the same period, says Brown. According to the Brand Finance Global Equity Monitor 2020, based on consumer research conducted in October 2020, Gap was better known by shoppers than Zara but less well known that Primark, H&M and Next.
With some careful curation and brand positioning Gap could rebuild that brand and we could see it back on the high street again.
Gap began a review of its European operations last year as part of its 2023 Power Plan. Its overarching objective was to find more cost-effective ways to maintain a presence in Europe. In France and Italy this will see the company offload its physical stores to partners who will run them; in the UK it is to shutter its stores but maintain ecommerce operations.
Other markets are seeing changes too, with 175 stores in the US due to close by the end of this year. The retailer plans to increase its online penetration globally, a goal which it has advanced towards during periods of enforced store closures due to the Covid-19 pandemic.
According to data from YouGov, Gap faced competition from rivals such as Primark and Uniqlo, but it was also struggling with its own brand image.
“Gap scores highly among shoppers for quality, brand impression and customer satisfaction, meaning the brand is well known for a good customer experience and well-made products, but struggles with its reputation, recommendation from customers and value for money perception,” says YouGov research director Richard Moller. But he notes that in the last three months Gap’s quality, impression and satisfaction scores have started to drop significantly.
Moller also warns that bringing in new customers may become difficult for Gap without a presence in physical stores.
“Since the pandemic many high street brands have made the move online to reflect the nation’s behavioural switch,” he says. “While any loss to the high street makes shopping harder for those who dislike browsing online, want to see and try on products before they buy or just enjoy the event of shopping, the loss of Gap won’t necessarily be felt by current customers but by potential new customers.”
Nearly two-thirds (61%) of Gap’s existing customers say they prefer to buy things online rather than in store versus 44% of the general public, according to YouGov data.
“Without large spending on advertising Gap may find it struggles to grow its customer base without a presence on the high street,” adds Moller.
“It’s a tremendous fall from grace when you think about what it had,” says Marketing Week columnist and Passionbrand founder Helen Edwards of the store closures. She describes Gap in its heyday as a brand that cracked the code to provide desirable basics in a way that many rivals envied.
She too cites the factors that combined to make Gap less desirable: increased competition, an over-reliance on discounting and fall in standards of presentation that came from squeezing too much discounted stock into stores.
“But it’s not over until it’s over. With some careful curation and brand positioning it could rebuild that brand and we could see it back on the high street again,” says Edwards , though she says it would require a sustained effort to change the way customers feel about Gap.
“I believe there might be enough residual equity in what Gap was originally all about for it to build back.”
A move online could remove the need for constant discounting by reducing overheads and allow space for some brand management and realignment, says Edwards. “With good management it feels like a brand that could be revitalised,” she says.
“People need to rethink Gap and see it as a brand for them. Often the way through is to come back with a really iconic single item that gets people to look. It can’t just go online and bang out a good ad. It has to go online, have a very special online experience, have a well-designed and curated collection, and maybe have one iconic product that really gets talked about again.”
If that doesn’t happen, it may be down to another retailer to fill the gap in the market.