How Instagram is killing Gap’s business

Gap elisabeth moss
Gap feels dated in the Instagram era. The Gap

Once-iconic American retailer Gap is in trouble.

The brand was once so cool that Sharon Stone wore one of its turtlenecks to the Oscars. Today, the company is closing a quarter of its stores amid declining sales.

Sales at the brand that once dominated mall retail have declined for 13 straight months, according to according to Hiroko Tabuchi at Hilary Stout at The New York Times.

Instagram and other social media outlets play a big part in its demise, the New York Times reports.

“Back in the ’80s and ’90s, there wasn’t real access to higher-level fashion,” Kate David Hudson, co-founder of online fashion magazine Editorialist, tells the Times. “It was the heyday of business casual, and stores did well selling core staples.”

“But now, everybody sees what’s on the runways on social media and on blogs, and everybody’s a critic, and shoppers want it as soon as they see it,” Hudson said. “Brands like Gap just feel very dated.”

Consumers’ obsessions with the most current fashions is helping fast fashion retailers like Forever 21, H&M, and Zara thrive.

A report by Goldman Sachs perfectly sums up why fast-fashion retailers are challenging traditional ones.

“Unlike fast-fashion retailers, which have buying teams sourcing current trending fashion from third-party vendors, traditional specialty retailers have design teams creating product they believe is going to be trending 12 months out,” the researchers write.

The risk of trying to predict fashion trends a year in advance is weighing on the success of retailers such as Gap, Abercrombie & Fitch, Ann Taylor, American Eagle, and others, according to Goldman Sachs.

If these retailers have a “fashion miss,” it means markdowns, which hurts profits.

H&M’s flagship store in Stockholm. Reuters

Zara’s unconventional business model eliminates this risk.

The company’s strategy involves stocking very little and updating collections often. Unlike brands that update only once a season, Zara restocks with new designs twice a week, Suzy Hansen writes in The New York Times Magazine.

That strategy works two ways, according to Hansen. First, it encourages customers to come back to the store often. It also means that if the shopper wants to buy something, he or she feels the need to buy it to guarantee it won’t sell out.

If Gap wants to stay relevant, it will need to update fashions more often.

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