Physical retail is a tough business, and online sales have certainly been taking their toll on a lot of brick & mortar businesses (Sears, Macy’s, etc). Clothing giants usually did well, since people tend to like to try on items first, but now because of all the online “try before you commit” style shops, now you don’t even have to leave your house for a perfectly-fitting pair of jeans.
And that’s been affecting a lot of clothing shops, but this story is about Gap and Banana Republic. Gap Inc. actually owns 5 businesses, Banana Republic, Old Navy, Intermix, Athleta, and of course the Gap store. Headquartered in San Francisco – they’re NorCal people. Anyway, Gap and Banana Republic stores have been underperforming, costing the company money, simply because they can’t get people into the stores to shop. Whether it’s pricing, styles, or some other variable, sales have been down, about 1% of Gap’s and 5% of Banana’s sales were down last year, while Old Navy’s sales were up about 5%. They’re closing up the Gap and Banana Republic stores, but the good news for staff is that they’re also planning to open about 270 Old Navy stores, so there should be an easy transition for workers.
The closures will happen gradually over the next 3 years, but the move will save the company, even with opening the new Old Navy stores, about $500 million.