Gap is closing a quarter of its 675 North American stores. What happened? Here's everything you need to know, in four paragraphs:
"American mid-market fashion has lost its way," said Hiroko Tabuchi and Hilary Stout at The New York Times. "Once the master of casual," Gap recently announced that it would close a quarter of its 675 North American stores amid a steep slump in sales. J.Crew, whose same-store sales are down 10 percent from last year, this month eliminated 10 percent of its corporate workforce and fired its head of women's design. Brands including Ann Taylor, Abercrombie & Fitch, and Banana Republic are all reporting similar struggles. Shoppers "increasingly want deeply discounted clothes over classic logos and status," said Ashley Lutz at Business Insider. Millennials in particular are happy to "shell out for items like iPhones and Netflix," but the notion of paying full price for staples like sweaters and jeans just isn't in their DNA.
Meanwhile, cheap and chic retailers from overseas — like Sweden's H&M, Japan's Uniqlo, and Spain's Zara — "are running circles" around their American competitors, said Tanya Dua at Digiday. H&M plans to open 65 new stores in the U.S. this year, and Zara will open at least a dozen. Gap and J.Crew simply can't "keep up with quick-changing trends" the way their fast-fashion rivals can, said Hilary Milnes, also at Digiday. They are struggling with quality declines too. Both Gap and J.Crew have been battered on social media in recent months by once loyal shoppers complaining of poor craftsmanship and unflattering styles. Gap's attempt to cash in on "normcore" fashion with a widely derided "Dress Normal" campaign just showed "how tone deaf the once trend-setting company had become."
It's obvious these companies' executives have never seen "the battlefield of the retail sales floor," said Bree Davies at Racked. I worked at Gap on and off for seven years and witnessed its decline firsthand. In the glory days before 2008, my store in a luxury mall was packed with shoppers year-round. Then the recession hit, and Gap started making decisions that "made no sense." Customer service suffered as our knowledgeable staff dwindled. There were "embarrassing bargain-basement-style sales" that changed every day. Shoppers were bombarded with "equally manic and confusing" coupons. Even when Gap had a winner, like colored denim, it took weeks to get restocked. By then, customers had already headed over to Forever 21 or H&M to buy their jeans.
Gap and its ilk are stuck in the middle of an "extremely polarized" fashion industry, said Véronique Hyland at New York. Just as low-priced retailers are thriving, so are luxury brands, "fed by the wealth of the growing super-rich class." The challenge for mid-tier retailers is that even customers who can afford slightly pricier sweaters are shopping downmarket, and they've been trained to wait for full-priced inventory to go on clearance. When shoppers do pay full price, they want investment pieces. Gap and brands like it won't ever be as fast as H&M or Zara, "but by refocusing on quality and fit, they may be able to work their way back into people's wardrobes — especially when the ultracheap sweater that seemed like such a deal falls apart in the wash."