How the Gap Went From “Levis, Records, and Tapes” to Worldwide Domination

The origins of American success stories.
Oct. 16 2013 7:30 AM

There’s a Gap for That

How the retail giant made fulfilling your needs its business.

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Despite the origin of the name, the gaps that Gap Inc. has always plugged haven’t been generational. For the most part, the gaps haven’t been aesthetic, either. They’ve been gaps in access. Historically, those Grandma-sweater department stores did little to help the budget-conscious feel as though they were shopping somewhere with a sense of presentation or brand identity. The same was once true for parents looking for cute clothes for their kids. Which brings us to Gap Inc.’s great diversification surge of the late ’80s and early ’90s—a shift that saw the birth of Gap Kids (1986), babyGap (1990), and the crucial 1994 launch of a down-market arm, Old Navy. This last endeavor proved particularly visionary. Old Navy peddled its radically inexpensive merchandise in stores with personality: display cases that resembled school lockers, big bulbs that guided customers to checkout lanes. Old Navy had wit, panache. Budget-conscious consumers didn’t have to feel as though they were back-to-school shopping in a dollar store.

Old Navy—which topped $1 billion in annual sales over its first four years of operation—was part of Gap Inc.’s decadelong push to attract the clothing buyer at every stage of life. One can spend her youth in babyGap onesies and Gap Kids sundresses, graduate to Old Navy jeggings as a teen, wear henleys from the Gap proper as a twentysomething, and transition to Banana Republic pantsuits after she lands her first job. The Gap Inc. empire can conceivably clothe consumers from the delivery room to the boardroom.

But Gap Inc.’s recent history has been volatile for perhaps exactly the same reasons it was once the leader in its category: It lacks an essential vision. The anodyne, denim-rich chic of the Gap, with its familiar celebrity ads and old-reliable selection, is all fine and well—but have you seen the gauzily romantic fall line at Anthropologie, or those brocade pants and chunky rhinestone necklaces they’re peddling at J. Crew? Or the tons of great stuff at H&M and Target, at lower prices than the Gap offers? The Gap’s simplicity of design, which felt fresh 15 years ago, now feels like stasis amid a crowded field. In 2011, after a nose dive in profits, Gap Inc. announced the impending closure of 189 American Gap stores by the end of 2013, which will slash the store’s U.S. presence by more than 20 percent.

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Companies watch what we do intently, and based on what they observe, they course-correct. Few companies have done that as slavishly or successfully as the Gap and its brands. That give-them-what-they-want approach has always been Gap Inc.’s guiding principle. But the company’s ability to read us has been waning for some time. It’s no longer as simple as it was in the ’60s, when all the Gap needed to be was a place for hippies to buy the groovy jeans nobody else carried.

Katie Arnold-Ratliff is the author of the novel Bright Before Us, and a senior editor at O, the Oprah Magazine.

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