Daily Dose of iQ: Gap to Close 175 Stores Across North America

Jun 17, 2015 — Allan Pulga

Back in March, we blogged about the challenges facing Gap's then-new CEO Art Peck, as he looks to return the brand to the prominence it enjoyed 15-20 years ago.

This week, news broke that Gap is closing 175 of its North American stores in an attempt to reduce costs and turn the company around. About 140 closures will occur over the next 12 months, with most likely to close in January following the holiday rush.

In reducing its store footprint, Gap appears to be focusing less on discount shoppers and more on the affluent.

"In the past two years, Gap North America has already shuttered roughly 106 stores," wrote The Street's Brian Sozzi (June 15). "After its latest store closing campaign, which was not hinted at on the company's first-quarter earnings call on May 21, it will operate 800 Gap stores in the U.S. comprised of 500 Gap locations and 300 Gap outlet stores. That is a far cry from Gap's white t-shirt and khaki selling heyday in the early 2000s, when it operated over 1,400 stores in the U.S."

Sozzi speculates that Gap is narrowing its store focus to become a "niche retailer that focuses on the affluent," which relies less on discount strategies to lure buyers in. This is a similar strategy employed by Macy's, which expressed plans to invest primarily it its 150 best-performing stores, he added.

It's weird for Gap to close stores, though, ahead of back to school and in light of stated omnichannel priorities.

However, Sozzi noted, Gap's announcement comes at an odd time because a) back to school selling season kicks off in July and b) Peck and his predecessor at CEO Glenn Murphy have talked about the importance of using stores as omnichannel fulfillment nodes.

It will be interesting to see how these stores closures ushers in a major shift in strategy for Gap.

Topics: Retail Operations, Mobile Industry, Customer Experience

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