Gap plans to do two things to reverse tanking sales: make clothes that more people want to buy, and sell them in fewer locations. The company plans to close 175 of its stores in North America over the next few years, most of them by the end of January. That's around a quarter of its stores, not counting outlet stores, and analysts say it's part of a trend for major brands to reduce mall locations. "Your biggest competitor used to be your neighbor in the mall," a retail analyst at Nomura tells USA Today, but "right now your biggest competitor is the infinite number of random start-up websites. You just don't need as many [brick-and-mortar] locations." Gap also plans to axe around 250 corporate jobs.
An analyst at Merchant Forecast tells USA Today that while "increasing the scarcity" of Gap stores may help, there's no "major creative design force behind the collection" since Danish Creative Director Rebekka Bay was fired in January and the position was eliminated. CEO Art Peck agrees that design failures have been a major issue. He tells the New York Times that the problems include "a lack of femininity," as well as "a lack of optimism in the brand, which shows up as a very tight and muted color palette, and a lack of print and pattern." Gap recently raised the minimum wage for all its workers, including those at Old Navy and Banana Republic stores, which will not be affected by the closures. (Read more The Gap stories.)