Gap's Founder and its Future

The Wall Street Journal recently reported that business leader Donald Fisher died of cancer on Sunday (“Don Fisher, Founder of Gap, Dies at 81,” Section B3, 9/28/09).  Mr. Fisher was the influential founder the Gap Inc.  According to the article “Gap became known as an iconic brand that made it the most popular clothier in the U.S. during the 1990s...(and) today…is one of the largest apparel retailers in the world, with 3,145 stores and $14.5 billion in sales last year.”  Gap Inc. also owns the Old Navy and Banana Republic brands.             

            Mr. Fisher was no longer running the show at Gap, having quit as chief executive in 1995, and then as chairman in 2004.  These days the company he created has suffered from declining sales for some time now.  “Total sales have fallen 11% in the last five years,” reports the Journal.  In fact, at a dinner party I recently attended, the subject came up, and a neighbor asked me if people even shopped at the Gap anymore.  I told her that they did, with some authority, standing there in my Gap jeans. 

            Gap is still one the retail’s giants, and their stores can be found at just about every mall in America.  Initially they appear fairly well diversified, with Old Navy serving cost-oriented consumers; Banana Republic serving the higher end; and Gap itself, naturally in the middle.  But it is always alarming when you see a trend that clearly indicates a company is sliding backward.  Gap is now in a position that many big companies find themselves—a dominant brand becoming less dominant by the day.  It will be up to the leadership to reverse this trend.  In my view this will probably take further emphasis on shoppers looking for bargains.  Gap sought to address this issue of value with its Old Navy brand, which it opened in the 90’s.  I recently went to Old Navy, and to Gap, knowing I would be writing this piece.  Upon my visit there I realized one thing—they’re basically the same store.  Old Navy is a little lower end, and obviously cheaper, but they basically sell identical clothing.  If shoppers find themselves alienated by the pop-trendiness of these stores then they will need to go elsewhere for their clothes.  Perhaps if Gap really wanted to grow, it would look to expand its customer base toward markets it is not currently servicing with another type of brand.  This would allow them to better diversify, and expand market share.

            Whatever they do, Gap will certainly need to figure out how to reverse their decline if they want to remain an industry leader far into the future.  Back in the 80’s, Donald Fisher found a way to reinvent Gap and turn it into a worldwide phenomenon.  Today’s leadership will need to do the same thing in order to keep it one.