Gap Inc. (GPS) is turning to its best-performing brand, Old Navy, to keep its brick-and-mortar operations afloat.
The apparel retailer said it will add 60 more Old Navy locations in the U.S. as it aims to bring the total to 1,000. Its also remodeling about 150 existing Old Navy stores this year with new fitting rooms, checkout areas and bathrooms.
Meanwhile, its scaling back on its underperforming Gap and Banana Republic locations per its plan to shutter 200 of those stores in the next two years. (See also: Amazon to be #1 in Apparel in 2018: Morgan Stanley.)
Adapting to Customer Demands
“If you think about it, the real estate we have exited tends to be clustered at some of the older … malls that the customer isn’t as excited about anymore,” Gap CEO Art Peck told CNBC. “We’ve moved to where the customer is,” he said, referring to more open-air plazas.
Peck said Gap will be focused on customer-pleasing technology with improvements to its mobile apps and loyalty program. It’s going to test a “buy online, pick up in store” policy.
Traditional retailers have been struggling with a shift in consumer buying habits toward online shopping. They’re under pressure from retail giants like Amazon.com Inc. (AMZN), which is on track to become the top clothing retailer in the U.S. this year. (See also: Retail Stocks Poised for Big Turnaround.)
Gap shares are up about 12.4% in the past year, but down 7.3% in the past month.