Gap Had No Real Estate Strategy

How could this have happened?

The largest apparel retailer in the US didn’t really plan where it was putting stores, according to Chairman and CEO Glenn Murphy. “We’ve never had a clear real estate strategy,” Murphy said. “We now have that information, and it will allow us to make quick decisions.”

Now, after an analysis of its stores, management plans to cut square footage by between 10% and 15% over the next three to five years.

Of course, for years industry observers have made disparaging remarks about Gap’s exuberant expansion. We find it overly candid and a bit strange that the retailer’s CEO would say something like this outright. But we like it. We wish more heads of business (and politicians) would be as forthcoming. That being said, Murphy has only been on the job for a year, so it might be an easy thing for him to say.

Is this just the beginning for Gap’s newly found awareness of site selection, and will we be hearing more announcements about store closures?


5 Responses to “Gap Had No Real Estate Strategy”

  1. 1 MikeF August 22, 2008 at 8:51 am

    Not to mention, no buying strategy, no long term marketing strategy, no store staffing strategy, no store layout strategy, no graphic tee so we don’t lose all our customers to American Eagle Outfitters strategy and so on, and so on and so on…..

  2. 2 James August 22, 2008 at 12:18 pm

    Without Chapter 11 you have to start the break the lease negotiation somewhere. So maybe a great big “OPPS, but now we are enlightened” approach will work.

  3. 3 KB August 22, 2008 at 6:14 pm

    I’m not defending Gap’s real estate strategy, but it is easy to criticize real estate decisions. Every store that performs well does so because of outstanding management, products and marketing. Every store that under-performs is caused by bad real estate.

  4. 4 Reunion Resort August 22, 2008 at 6:54 pm

    Where is the end? 1, 2, 3 years more? How is your area doing?

  5. 5 Billycreilly August 25, 2008 at 5:07 pm

    What bunk, no real estate strategy in the past. I doubt it. They’ve had so many qualified real estate people at Gap flying in and out the doors, that it’s hard to fathom their current statements. It’s just a way of marketing your own current new regime, “when I took over, it was just a mess” blah, blah, blah. Anyone seasoned exec can see through that flimsy position.

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