If you were like me and wanted a signature look in the 1980s and 1990s, you went to the mall to shop at the local Gap store. The retail chain helped define the American casual look, focusing on khakis, tees, and white shirts.
Gap was so popular that it became a mall staple nationwide and expanded overseas. By 2000, there were 2,548 Gap store locations, including 529 international stores, making it one of the largest retail chains.
Nowadays, the retailer looks very different. A series of missteps, including a failed logo change in 2010 (aka ‘Gapgate’) and surging competition from low-cost rivals like H&M and big box retailers like Walmart, coupled with declining foot traffic at indoor malls has take a toll, resulting in the company closing over 2,000 locations to refocus on other brands, including Old Navy.
The Gap struggles as customer behavior shifts
The Gap’s first store opened in 1969 in San Francisco. Over the years, it’s seen its fair share of apparel trends come and go, forcing it to pivot.
Scott Olson/Getty Images
For instance, the retailer initially focused on selling Levi’s jeans to young adults aged 13 to 25. However, its approach changed dramatically in the 1980s under CEO Millard “Mickey” Drexler, who shifted The Gap’s lineup to the khakis and shirts many of us wore in the 1990s.
Drexler was considered a retail visionary at The Gap. He oversaw a major expansion that increased The Gap’s store count from about 1,100 in 1990 to 2,548 stores in 2000. He also launched the highly-popular Old Navy and Banana Republic retail store brands to appeal to shoppers of different ages and incomes.
Arguably, the Drexler period was the apparel giants’ heyday. It’s been far more of a struggle since he left in 2002.
A series of new leaders have proven unable to capitalize on shifting clothing trends to fend off rivals, many of which offered lower-priced clothes designed to look similar to clothes sold at The Gap. The Gap also had to contend with big-box department stores like Walmart and Target, both of which made big pushes into apparel over the past twenty years.
The company’s botched attempt at a major rebranding that included ditching its iconic blue square logo in 2010 is emblematic of the company’s struggles to reimagine itself.
Worse, The Gap’s situation has been further complicated by shifting spending trends by consumers who have embraced online shopping and abandoned many indoor malls, where most of The Gaps stores were located.
Indoor mall traffic delivers big blow to The Gap
The Covid pandemic delivered a significant blow to indoor malls in 2020, but many indoor malls were struggling before that, largely because of Walmart’s major expansion in the 1980s and 1990s to become a national chain.
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Walmart’s rise contributed to mall anchors like Sears and Kmart closing thousands of stores before they went out of business (Kmart merged with Sears in 2005, and the merged company declared bankruptcy in 2018).
The trend away from indoor malls to stand alone and outdoor malls had firmly taken root by 2019, when, according to Placer.ai data, annual indoor mall visits were essentially flat before collapsing 41.1% in 2020.
The Covid shutdown was a rip band-aid moment for The Gap, forcing it to reassess its footprint.
In October 2020, former CEO Sonia Syngal announced the retailer would close 220 of its namesake stores plus 130 Banana Republic stores to rightsize its business, citing the “hyper casualization” trend that helped spawn Lululemon’s success.
“It’s no secret 5 years ago, we were a fleet that was underperforming. I mean, significantly under a lot of pressure, and we executed a fleet rationalization that dated 2020… In 2020, we began that, and it was heavy lifting over the course of those years. We closed over 350 stores,” said current CEO Richard Dickson at a recent Goldman Sachs retail conference.
The company’s “Power Plan 2023” has repositioned it away from Gap toward Old Navy and Athleta, a Lululemon rival. However, it was only the latest in a string of restructurings that ultimately have reduced the company’s namesake store count by about 80% to 472 locations from over 2,500 in 2000.
“We had declining top line. We had brands that were losing share. We had an aging fleet. We had bloated inventory. We had a lot of margin pressure. We had bloated costs. We had low morale. So this was a portfolio of brands that were iconic and recognized. But the performance of our business didn’t reflect, if you will, the legacy and the IP value that was inherent in our portfolio,” said Dickson.
The Gap’s strategy may pay off
As tough as those closures were, they may have put the company in a much better position.
Gap-named stores represent a much smaller proportion of the overall footprint since it operated 1173 Old Navy stores and 225 Athleta stores, a Lululemon rival, in 2024, and the stores that do remain are performing better than in the past.
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According to Placer.ai data, The Gap store visits rose 1.4% year over year in the second quarter of 2025. However, that was front end loaded by April, when foot traffic at stores open at least one year rose 5.3%.
Since then visits to namesake stores have slipped, falling to a decline of 5.4% in June and 5.1% in July.
Yet, overall traffic and sales company wide have been solid. Placer.ai data shows that June and July same store visits were only down 1.9% in June and 0.7% in July, thanks to Old Navy, which saw visits fall 1.4% in June and grow 0.6% in July ahead of back-to-school season.
Overall, The Gap reported flat year-over-year sales of $3.7 billion in the second quarter and a 6% increase in earnings per share to 57 cents.
What’s next for The Gap stores?
The Gap appears more comfortable with namesake brand footprint now, and it’s making some changes to help bring more customers into its stores to rely less on Old Navy.
“The company partnered with “Linen and we did an incredible campaign with Tyla and Jungle… We followed that up with another campaign called Get Loose… We created a relevant campaign with Troye Sivan, who was very specifically chosen as a Gen Z attractive talent,” said Dickson. “We then came back again, as you see the playbook start to play out as a flywheel with another campaign with Parker Posey.”
Dickson also says it’s making a bet on low rise denim and its expanding its fragrance collection.
It remains to be seen if those moves pan out, but the moves show that while there are fewer The Gap stores today, management isn’t giving up on the brand.
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