NEW YORK Gap gets casual again about success

The company is shifting back from the super-trendy garments that put off its customer base.
NEW YORK -- The revitalization of Gap depends on a few stitches along the collar of a man's oxford shirt. On having just the right percentage of spandex in a lamb's-wool crew neck. On the judicious placement of a waistband on boot-cut jeans.
A brand that once epitomized wholesome cool and the safest kind of scruffy-bearded rebellion has suffered terribly in recent years. Sales fell for almost three years. Competition was squeezing it from all sides. The corporate parent's longtime chief executive and onetime creative visionary, Millard Drexler, stepped down last year. Last week he was named chief executive of J. Crew -- a Gap rival.
The company was founded in 1969 as a purveyor of jeans, and even now there is a wall of denim in every store, piled high with carefully folded dungarees organized by cut, color and size. Over the years, Gap blossomed into a nearly $7 billion company whose sole purpose was to sell jeans and things that went with jeans.
Customer reactions
Yet it was a dependence on low-rise denim -- as well as every cropped top or peasant blouse to swish down a runway -- that ultimately pushed Gap into a financial abyss. The company saw its fortunes fade because it believed in bared midriffs and derri & egrave;re cleavage, and its core customers did not. The brand lost its soul.
"A year or two ago, I stopped going there because their clothes got strangely faddish. It was as if there was a big demographic shift and I felt terribly old, and I'm 32!" says Laura Schmitt of New York, who was a loyal customer. "It was so noticeable. It felt like a decision had been made, like they made a philosophical shift. I felt alienated."
Over time, industry observers began to talk of Gap as a fallen Goliath. Gap customers -- those in their late 20s to 40s -- complained about the quality of the merchandise, disparaged the video-queen jeans, found the service lackadaisical and ultimately shunned the store.
At its worst in April 2002, same-store sales, which measure how well stores do from year to year, had declined 26 percent.
"If you go back to that time and look at what was happening in the market -- ultra-low-rise jeans, Britney Spears was everywhere -- it was easy to get too narrow, to focus on 18-to-24-year-olds. But if you were over 24, you said, 'This isn't my Gap,' " says Marka Hansen, the new executive vice president of merchandising.
In its 2001 annual report, the company issued a mea culpa: "After disappointing our customers and our shareholders in what was a very humbling year, we've learned a lot -- and we've got a lot to do."
Making the changes
Gap now seems to be coming to its senses. The company brought in a new chief designer from its sister chain Banana Republic, and last fall there was a sudden, obvious aesthetic shift: cotton peacoats striking in their simplicity, bright red mackintoshes reminiscent of rainy grade-school days, fine-wale corduroys with a smidgen of spandex.
Gap, once so terribly off track, so distracted from its fundamental philosophy of casual basics, so cowed by its competition, began to find itself.
In December, same-store sales were up 2 percent.
Jerome Jessup, Gap's new executive vice president of design, defines his mission as "taking the things people love about casual American sportswear and making it new and exciting."
"It's like the difference between tap water and bottled water," Jessup says. "We strive for bottled water."
The distinction between what flows from most kitchen faucets and a bottle of Voss water, which is sold in an etched-glass cylinder with a silver top, is merchandising.
Attention to detail
Gap has always depended on subtlety for its appeal, and as much as people say they don't notice the details, they do. They care about the sliver of a white T-shirt that will be visible beneath a sweater. So Jessup spends much of his time thinking in terms of millimeters.
He's been "putting up guardrails" so the brand doesn't swerve into a ditch again.
Since fall 2002, Gap merchandise has looked familiar. And that's been good. Men in their late twenties and thirties have praised the loose-fit jeans over more expensive brands such as Gucci and Giorgio Armani. Gap jeans are roomy but not sloppy, flattering to the derriere but not snug like a European-style cut. And they're only $49.50.
Over the holidays, the company sold out of its "crazy stripe" scarf, no easy feat considering there are more than 1,000 Gap stores nationwide.
Gap tumbled into a deep hole. It hasn't climbed out yet, but at least it has stopped falling.

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