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February 4, 2006 Story

Gap Has Fallen From its Fashion-Fave Pedestal

Gap's financial issues are proof that we are at the end of a fashion era: America has moved beyond Gap. The company's end-of-year profits are expected to fall about $300 million from the previous year. I never thought I'd see the day when Gap needed to freshen up its game.

Gap opened in the 1960s as a West Coast company that sold jeans, mostly Levi's, and other bohemian wear. By the 1990s, there were more than 3,000 Gap stores; yearly sales approached $16 billion. By the time I reached my teens, the store was a destination, a must-stop in any mall. Its kitschy khakis and dependable white shirts dictated fashion for non-designer shoppers for decades. It was Gap - not Calvin Klein, Liz Claiborne, or even Tommy Hilfiger - that kept us middle-class kids fashionable. How can one forget "Reverse Fit," or their pastel paisley button-down shirts? Comfy gray sweat suits were a coveted Christmas present (much as A Bathing Ape hoodies were this Christmas).

Those days are over. In the last few years, Gap has been replaced by other specialty stores, whose styles were very similar to Gap's. Abercrombie & Fitch and American Apparel offered the same basics, but their advertisements featured waiflike models in often-provocative poses. American Eagle, Aeropostale and Hollister also borrowed from Gap's all-American look, but instead of staying with oversized polos and pleated khakis, designers dropped the waistbands on the slacks and slimmed them through the legs, and shrank the polos.

Gap was truly a "first mover," explained David Morrison, president of TWENTYSOMETHING Inc., a Philadelphia-based market research firm that studies the spending habits of teenagers and twentysomethings. A "first mover" defines the market and dominates at least 65 percent of the market share for at least five years, he said.

"But over time the competition takes what works and the company can find itself behind the eight-ball... . Competitors took Gap's model, refined it, and fragmented the market accordingly," Morrison said. In the last seven years, Morrison added, teens became value shoppers, spending their dollars at Target, Forever 21, Zara and H&M. At the same time, teens searched out higher-end labels such as Nanette Lepore, BCBG Max Azria, Betsey Johnson, and Coach. And let's not forget the $200 (and up) denim craze.

Brett Gilson, 15, a sophomore at Council Rock High School South in Holland, Bucks County, shops the Gap only when he's looking for something to give his parents. "The atmosphere just doesn't appeal to me," Gilson said. "I feel more comfortable in Aeropostale, J. Crew, Hollister. [Gap's] clothing is just too dressy." Even preppy kids aren't making Gap their first fashion stop. Kristy Ragbir, 15, of Wissahickon High School, prefers the vintage look and discount prices of Joyce Leslie and Mandee.

"I go to those stores for my fun clothes, my party tops," Ragbir said. "I may buy a pair of jeans from Gap, but how many pairs of jeans do I need?" It's not that the company isn't trying. There have been celebrity campaigns and commercials offering the latest in jeans and hoodies. About two years ago, Gap used fashion It Girl Sarah Jessica Parker in a jeans campaign, promising denim that would fit every woman. (Some of the jeans fit, others didn't - in my opinion, they all needed a little stretch.)

Late last year, the company became a major player in the Go-Red campaign, a fund-raising effort to fight AIDS in Africa. Tank tops, striped surplus shirts, and denim were all shown on actors such as Chris Rock, Penelope Cruz and Don Cheadle. The drive has gone global: In mid-January, Gap announced that its clothing would be available in South Africa. Still, Gap is missing an edge that could separate it from all the companies that pinched its style.

Instead of scrambling to keep up with the newcomers, it's time for the granddaddy of prep to find another gap in the fashion market.

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