For the second time in less than five years, The Gap Inc. has announced that it will be closing massive numbers of stores, in an attempt to reduce its operating costs. It needs to cut costs because its sales have been on a prolonged slide. The reasons for these sales declines are several. First, nearly all Gap stores are located in traditional malls, whose positioning and appeal have shifted. Fewer members of Gap’s target market visit malls, or the stores within them. Second, in a related shift, the continued increase in online and mobile shopping means that operating hundreds of brick-and-mortar stores all across the world simply is too much real estate. Third, the fashions on offer have not matched up with recent fashion trends, so some buyers simply are going elsewhere. In its effort to recover and rehabilitate its brand, Gap thus is shuttering about one-quarter of its brick-and-mortar stores. It will cut hundreds of jobs from its corporate ranks, and it has brought in a new head for the design team.
Source: Suzanne Kapner, The Wall Street Journal, June 15, 2015