Gap Shares Tank, Raising Questions About Its Identity
*By Carlo Versano*
The middle is falling out of retail.
Stores that don't have a distinct identity in an era of direct-to-consumer marketing are getting crushed. For the latest example, look no further than Gap, which reported a 5 percent drop in sales at its namesake brand, even as its other outfits displayed strength. Old Navy sales were up 5 percent in the same period.
It's another indication that Gap's status as an iconic, wholly American brand is not enough to compete in an apparel market dominated by high-end experiential stores (Nordstrom), value-oriented stalwarts (Target), and fast-fashion, inexpensive trendsetters (H&M). And, of course, Amazon looms over everything.
"It's not quite clear what Gap's identity is," Quartz fashion reporter Marc Bain said. Bain wrote an article earlier this year, ["Gap Inc. Should Just Be Renamed Old Navy Inc."](https://qz.com/1220104/gap-inc-should-just-be-renamed-old-navy-inc/), and the latest earnings report may prove his point.
But Gap's results don't detract from retail's financial health after a prolonged period of turmoil, Bain said Friday in an interview on Cheddar.
For years, retailers had too many stores and built them too big. A contraction in brick-and-mortar locations is just now paying off.
"Companies are shrinking to succeed," Bain said.
Bain cited redesigns of Nike and Adidas flagships as examples. He added that Walmart's strategy of partnerships and acquisitions with e-commerce stars is another bright spot in the ever-changing retail landscape.
And then there's Target. Fresh off a stellar quarter ー digital sales were up 40 percent and same-store sales up 4.5 percent. CEO Brian Cornell [said](https://www.cnbc.com/2018/08/22/target-ceo-credits-strong-growth-with-the-best-consumer-environment-hes-ever-seen.html) Wednesday that consumer environment of today is "perhaps the strongest I've seen in my career."
President Trump mentioned those comments in a [tweet](https://twitter.com/realDonaldTrump/status/1032929824900370432) Friday morning, telling his followers that the economy is alive and well.
For full interview [click here] (https://cheddar.com/videos/how-gap-compares-to-sister-brand-old-navy-after-earnings).
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