The long, slow suffocation of American mall retail stores continues. The latest victims of changing shopping trends appear to be Gap and Banana Republic. According to CNN, these brands are closing about 200 locations, though it’s uncertain where and when at this point.
The brands have been hurting for some time. So, many have expected this ten-percent belt-tightening for some time now. In a statement, Gap CEO Art Peck called the losses at Gap and Banana Republic stores “significant and acute.” He added that his company made some “creative missteps” in trying to address lagging sales.
There is some good news for Gap, though. Two of its brands, Old Navy and Athleta, appear to be doing very well, especially in the current consumer climate. Are they offering more of what consumers want, or have style preferences just shifted to what these stores sell? It appears to be a bit of both. While you can, essentially, buy the same thing at these stores as you could years ago, the merchandising has followed certain trends to keep things, at least relatively, current.
Pricing has helped. With the economy still pushing more people to select lower-cost clothing, Old Navy is right in the sweet spot for people who still want “mall clothes” but don’t want to pay “mall prices.” As Gap sales fell by 1 percent and Banana Republic dropped by 5 percent, Old Navy sales went up by 5 percent.
So, what is the secret to Athleta’s success? Getting its finger on the pulse of a trend. Athleta sells athletic wear, which is hot for everyone, but especially popular for mall shoppers. Customers like the quality and selection enough to buy there rather than at the big box athletic stores.
Building on the success of its discount and athletic brands, Gap also plans to increase online sales. Mobile and digital business has been up, delivering double-digit sales growth. So, if Gap can make it easier and more accessible for people to shop online, there could be some profit there they are currently leaving on the table.
It’s a crucial line to walk. Gap doesn’t want to undercut its brick and mortar business so much that the stores can’t be sustained before they have enough online business to close the gap. That’s the tightrope all traditional brick and mortar retailers are walking these days. It appears that all the trends favor online retail and less physical stores. But finding that sweet spot to appease all customers can be challenging.