We shopped at Old Navy and Gap and saw why one brand is thriving as the other struggles
Business Insider/Jessica Tyler
Business Insider/Jessica Tyler
- Old Navy and Gap are owned by the same parent company, Gap Inc., but the Gap brand is struggling to keep up with its sister store.
- Gap Inc. reported flat sales in the third quarter. Old Navy reported comparable sales growth of 4%, while Gap reported that comparable sales had dropped by 7%.
- We shopped at both Old Navy and Gap and saw why Old Navy continues to carry Gap Inc.
Old Navy is spearheading Gap Inc.'s growth as its namesake brand struggles to keep up.
Gap Inc., the parent company of Gap, Banana Republic, Old Navy, and Athleta, saw flat sales in the most recent quarter, reported on November 20. Prior to this quarter, the company saw seven consecutive quarters of positive comparable sales growth.
Old Navy is the most successful of the Gap brands, reporting that comparable sales were up 4% in the third quarter. So far in 2018, Old Navy has opened 24 stores. CEO Art Peck announced in an earnings call in August that Old Navy will be launching a plus-size collection, which was previously only available online and in select stores.
Meanwhile, the Gap brand itself is struggling - comparable sales were down 7% in the third quarter. Gap discounts nearly everything in the store, threatening margins and, ultimately, making shoppers less likely to pay full-price. It also offers a lot of the same styles and quality clothing as Old Navy, but for a higher price.
"We are clearly not satisfied with the performance of Gap brand. We know this iconic brand is important to customers, and we are committed to taking the bold and necessary steps to ensure that it delivers value to shareholders," Gap Inc. CEO Art Peck said in the company's earnings release in November.
We shopped at Gap and Old Navy and saw why one store is helping Gap Inc. while the other is hurting it:
The first store we went to was Gap in the Financial District. There were two large 50% off signs in the entryway.
Women's clothing was on the first floor.
There were a lot of plain sweaters for sale ...
... but they weren't cheap. Most sweaters cost around $60, and a lot of the styles seemed to be very similar to each other.
It wasn't just the sweaters that were pricey. A pair of pants cost $70.
However, a ton of women's clothes were on sale for $20.
And many basics were on sale for even less than that.
Luckily for shoppers, nearly everything in-store was 50% off when we visited.
Although the sales are good for shoppers, they are threatening margins at Gap and, ultimately, making shoppers less likely to pay full-price when the sales go away.
The back of the first floor carried sleepwear, bras and underwear, slippers, and sweatshirts.
There was also activewear, although half of the department was just lightweight coats. There wasn't very much activewear to choose from.
There was a sale rack reading "$11.99 & up," but the first thing I pulled off the rack was $89.95.
The clearance prices didn't seem much cheaper than the original prices in most cases.
Downstairs was a men's section that had similar prices ...
... and similar sales offering 50% off, or clothes for $25.
There were some sweaters and jackets ...
... and a wall of denim. Most jeans were around $70 before the 50% off sales.
The men's section was a bit smaller than the women's, and it didn't have a ton of variety to offer in terms of style and color.
Upstairs was a children's department. The prices were almost the same as the women's clothing on the first floor.
There was a sale rack in the back of the kids' department ...
... and a few shirts for as low as $9.
While the store was pleasant to shop at, and there were a lot of sales, many products were very expensive, even after taking 50% off. Some sections of the store also felt very repetitive.
We went to an Old Navy in the Flatiron District next.
There were just as many sale signs as at Gap.
But prices were much lower to begin with.
Denim, prior to sales, was generally below $40 at Old Navy, and above $60 at Gap. Even though Gap's sales were steeper than Old Navy's, prices were still lower at the latter.
Old Navy also sold a lot of similar sleepwear and basics. However, a plain long-sleeve shirt was $15 at Gap, and just $6 at Old Navy. There wasn't a noticeable quality difference.
The activewear at Old Navy was less expensive, and it seemed more practical.
There were fewer coats and more clothes to actually exercise in.
There were hand lotions, candles, and perfumes. There weren't as many small products at Gap.
I also noticed a lot more accessories at Old Navy.
Downstairs was a huge men's department. It was about double the size of the one at Gap.
Denim was on sale for $15, but it was originally priced at $30. Even when Gap's denim was on sale for 50% off, it was still more expensive than that.
There seemed to be a much greater variety of styles available at Old Navy ...
... and the clearance sales were much better deals. Most clearance products were under $20, as opposed to being $75 or more.
Children's clothing was upstairs. Prices weren't terribly different from Gap, though most products were a few dollars cheaper at Old Navy.
The kids' styles were pretty similar at the two stores.
Overall, Old Navy had a greater variety of styles and lower prices than Gap did. Both stores had the sales that Gap Inc. is known for, but Old Navy's sales led to better prices. It's clear why the store is carrying the brand.
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