Gap Goes Back to Basics, Retail Is Struggling

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March 21 (Bloomberg) -- Customer Growth Partners President Craig Johnson discusses his outlook for Gap and retailing on Bloomberg Television’s “In The Loop.” Bloomberg’s Julie Hyman also speaks. (Source: Bloomberg)

Creation at gap?

She will make a real difference.

Gap was on a strong role for going on two years, but that ebbed late this fall and has had a rough couple of months since that, but the new product is terrific.

Old navy and banana is a different story, but the product at gap is different eric julie hyman -- different.

Julie hyman, how did cap lose their way?

They had a series of management changes.

They had mickey drexler bringing in the right mix of merchandise for many years, but when he left in the early-2000, the brand lost its way and was focused operationally on cutting costs and has come back under glenn murphy, the current ceo.

Really, some of the sales, and especially earnings it has gotten in recent quarters has not and so much from the design or fashion makes.

It -- makes.

It has been from the right emotional formula, the sales people want, rather than the fashion.

There is some of that, but it is not as strong.

Greg kopp -- cria -- craig, how is zara or h&m eating gap's lunch?

They are getting share.

H&m is spot on.

The great thing with rebecca coming on board at brand gap is she brings a sensibility that is situated to address the lax -- gap can be brandon g-8 -- bland.

She's bringing excitement back into the product.

You have companies like h&m, unit glow, forever 21, and they are turning inventory quickly because they are trying to capture the trend.

You say they are doing the opposite where they are trying to go to muted colors, t-shirts and jeans.

In part.

Gap wants to increase productivity and having faster inventory turnover makes sense, but gap also has -- the product has been bland and the merchandise that is now just coming on the floor in the last week or two has been a step up, and also, at banana, the smaller of the three brands, that is also picking up, but they had difficult straits for a number of months.

If i could jump in, it is a subtle difference.

Yes, gap is still looking at the classics and the basics, which is something it has done, but it is tweaking them.

They will not be h&m, they will not be fast fashion, but you can make the basics more fashionable.

One of the ironies is bringing back the iconic american brand, the job has been given to somebody that is danish in the form of rebekka bay, who has watched the brand from a far, and the fact that she has a passion and design background makes her unique in terms of the creative directors that you saved.

Maybe this industry is struggling in general.

No matter who you put into place, whether they are a genius or not, the fact of the matter is there are too many retailers out there, and somebody or some of them have to go.

Let me jump in.

Right now, retail in general has been quite soft ever since last summer.

The softest part is apparel.

There are too many apparel square feet chasing too few customer feet.

I am not saying anything will happen to gap, they are well run under glenn murphy, but there is an implant wants -- in balance of supply versus demand.

You see that rationalization on the teen side with the closure of abercrombie's, for example.

The question is where will you see it, on the weaker fringes, we'll it bleed into a corner retailer like -- core retailer like gap?

We are seeing less of that.

All i will be told once we get out of the cold while there -- a lot will be told once we get out of the cold weather.

Mall traffic is not what it once was.

You have companies like sbarro filing for bankruptcy because people are not going to the malls as much.

The mall traffic issue is one issue, but it is not like it has fallen in half.

It is down.

The traffic that is off-mall, which accounts for the great majority of retail sales, that is strong, down a point or two, but not dramatically.

The issue is that is too much apparel space.

Craig johnson, and julie hyman, thank you.

We will be back in two minutes on "in the loop." ?

This text has been automatically generated. It may not be 100% accurate.


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