The Gap, Inc.
Donald Fisher, with his wife, Doris, created the popular and ever-expanding chain of Gap clothing stores. The Gap began as a jeans store selling a wide selection of Levi's, but gradually shifted to feature only its own private label of casual apparel for men, women, children, and infants. Old Navy and Banana Republic are also a part of the Gap empire, which has extended its all-American look to Europe and Japan.
Donald George Fisher was born in 1928. He and his wife, Doris Feigenbaum Fisher, have three sons, Robert, William, and John. Fisher graduated in 1950 with a bachelor of science degree from the University of California at Berkeley, where he was a swimmer and a star player on the water polo team. Presidents Ronald Reagan, George Bush, and Bill Clinton have all appointed him to the Advisory Committee of Trade Policy and Negotiations. In 1998, he and his wife pledged $25 million to a foundation which helps the San Francisco area public schools. The foundation planned to hire a for-profit firm, the Edison Project (of which the Fisher's son John owns four percent) to reform the city's traditional and charter schools. Fisher has been described as a "tall, professorial man, balding and white-haired" by Sylvia Weiland Nogaki in the Seattle Times.
After graduating from college, Fisher entered the real estate business, first with his father in M. Fisher & Son, and later as president of Fisher Property Investment Company. In 1969, a shopping experience altered his fate. When he tried to exchange a pair of blue jeans, he found that most stores did not carry a good selection and were very disorganized. He and his wife, Doris, came up with a solution. In August of 1969, they opened the first Gap store near San Francisco State College, with Fisher acting as chairman and chief executive officer (CEO).
The Gap was named after the so-called "generation gap," and was meant to be a place where college students could try on trousers until they were happy with the fit. The store carried a wide selection of styles and sizes of jeans, and initially also stocked a record department, although they dropped it after five months to concentrate on clothing. The casual styles were a hit with the younger crowd, and soon new stores were opening. By 1972, the Gap had expanded out of California, and in 1974 began producing its own private-label clothing and accessories.
Though the Gap began as a jeans retailer, Fisher soon added brightly-colored sportswear to its shelves to pair with the pants and round out the selection. The Gap eventually began producing its own T-shirts and tops, and also added activewear to appeal to older customers and working women. For many years, the company relied heavily on Levi's jeans for its profits, but by 1982, only 30 percent of their stock was Levi's. In 1991 the Gap announced it would begin carrying only its own brand of merchandise.
The Gap's stock went public in 1976, and since then, business reports have followed the rise and fall of the retailer closely. It has experienced fluctuations in its price, but Fisher has ridden the waves with the company and helped it recover when things looked bleak. In the early 1980s, to improve sales, he expanded the size of the store (previously only 4,000 square feet) in order to broaden the merchandise line and sell more product, adding 50 percent more room to some stores and creating "Super Gaps" (three times the size of a regular store) at other sites. As he told Howard Rudnitsky in Forbes, however, "When you shop in Super Gap or a remodeled Gap, the jeans image will still predominate. All we are doing is widening the assortment of items we already carry."
With 550 Gap stores under his belt, Fisher, in 1983, acquired Banana Republic, a pair of stores in San Francisco known for their popular catalog. He built up a chain of Banana Republics, mainly in downtown business districts of large cities such as New York, Chicago, and Seattle, in addition to some mall spaces. Over the next decade, the company completely revitalized the store's style, transforming its image from a silly safari style to an upscale casual chic, meant to be versatile enough to wear to the office or out to dinner. According to Banana Republic CEO Jeanne Jackson, there were 295 stores open throughout the country by 1998. Though this growth was healthy, it still left the company with additional room for expansion.
The same year Fisher took over Banana Republic, he hired marketing guru Millard (Mickey) Drexler to take over as president of the Gap. Drexler, noted for his outstanding success with the Ann Taylor shops, proved to be a good catch for the Gap. In 1986, after deciding that children needed stylish, casual, and comfortable clothes that would also appeal to their parents, Drexler opened GapKids, based on the same styles that grown-ups were wearing. In 1990, along came BabyGap as a part of Gap-Kids, featuring infant and toddler apparel.
Despite the ever-crowding casual market, the business was booming, and Donald and Doris Fisher in 1986 made their debut on the Forbes 400, the magazine's list of the nation's 400 richest citizens. Doris Fisher is active in the business as the merchandising consultant, and two of the Fisher's three sons also have their hands in the firm. The first Gap store outside of the United States opened in the London area in 1987, marking the first of a chain of international sites.
Chronology: Donald Fisher
1950: Entered real estate business with father.
1969: Opened first Gap store with wife, Doris Fisher.
1972: Opened first Gap store outside of California.
1983: Acquired Banana Republic stores.
1986: Opened first GapKids store.
1989: Introduced first BabyGap store.
1976: Began selling The Gap's own brand exclusively.
1994: Opened first Old Navy store.
1995: Stepped down as CEO of Gap, Inc.
1998: Pledged $25 million to an educational foundation.
In 1994, the Gap opened another division, called Old Navy. Drexler was involved in this as well. Though Gap sales had been outstanding, increasing from $480 million in 1983 to $2.5 billion in 1991, they began to slow in the early 1990s. Fisher's son Robert told Fortune, "We were hearing from our own employees that the clothes were getting too expensive." In 1993, Drexler took Gap stores that were not selling enough items and converted them into lower-price, down-market outlets, initially called "Gap Warehouses." But Drexler wanted a more creative name. It came to him as he was strolling in Paris and saw the words "Old Navy" written on the side of a building. The name conjured just the down-to-earth, spartan image that Old Navy offered. Old Navy stores were placed mainly in strip malls or outlet centers instead of regular malls, so as not to compete with the Gap.
Apparently Fisher was pleased with Drexel's leadership, promoting him to CEO in September of 1995. Though sales in the first five months of 1997 lagged, the Gap picked up the pace. A stronger focus on women's fashion and an upbeat $20 million advertising campaign in 1998 probably helped. Fisher remains chairman of the Gap, Inc.
Social and Economic Impact
The Gap stores have become an expected fixture in malls and urban shopping districts around the country and throughout the world. At The Gap, Customers can almost always count on being able to find the right size jeans in a variety of styles at a more reasonable price than designer labels. The Gap's high-quality, classic designs have remained wardrobe staples for youthful customers, older shoppers, and their children, bridging that "generation gap" that gave rise to the store's name. The company's growth, targeting a greater variety of consumers around the world, was awe-inspiring.
By the 1990s, The Gap had become a pop-culture icon. In 1994, the store was featured prominently in the hit movie Reality Bites, starring Winona Ryder and Ethan Hawke, hinting that it was becoming an integral part of Americana. Also, Saturday Night Live for a while ran a hilarious skit featuring David Spade, Adam Sandler, and the late Chris Farley in drag portraying the "Gap Girls," a trio of catty retail salespeople for whom the mall was the center of their world. In addition, on David Letterman's late night talk show one night, he quipped that one of the signs that the rodent population of New York had surpassed the human population was the new "Gap for Rats" stores popping up on every corner.
From the late-1980s into the 1990s it seemed as if new Gap stores were appearing at an astonishingly rapid rate. Microsoft Investor (http://investor.msn.com) in 1998 reported that stock prices were up 57 percent. That same year, the Gap boasted over 2,100 stores in the United States, United Kingdom, Canada, France, Germany, and Japan, with sales of more than $4 billion. Sales figures are not broken out among the various divisions of the Gap, but Microsoft Investor reported that overall, the Gap enjoyed a 20 percent growth in retail sales for 1997, when other sellers saw an average of three percent.
Perhaps the greatest key to the Gap's success has been Donald and Doris Fisher's ability to satisfy customers with classic as well as new styles without succumbing to wild fads, and to hire talented people like Drexler to help them along. The 1990s saw a resurgence of khakis encroaching on the jeans market as American's legwear of choice, and the Gap either followed the trend or helped create it, depending on the viewpoint. Its ad campaigns have generally been simple but effective. In 1993, it began promoting khakis using the images of Gene Kelly, Marilyn Monroe, and Ernest Hemingway. The Gap replaced its "fall into the Gap" jingle with a snazzy set of television spots in 1998, featuring slick direction and the music of Crystal Method ("Khakis rock"), Bill Mason ("Khakis groove"), and Louis Prima ("Khakis swing"), featuring a cadre of young dancers and skateboarders having fun in the loose-fitting pleated pants.
The Gap, like other corporations, is involved in "giving back" to the community. Through its Community Relations program, a portion of its pre-tax profits is doled out to charities based on suggestions from employees. According to the company's web site (http://www.gap.com), in 1995 the Gap donated more than $5 million to groups involved in the arts, the environment, and health and human services.
Sources of Information
Contact at: The Gap, Inc.
One Harrison St.
San Francisco, CA 94105
Business Phone: (650)952-4400
Caminiti, Susan. "Competition: Will Old Navy Fill the Gap?" Fortune, 18 March 1996.
Forbes, 17 October 1994.
"The Forbes 400 Richest People in America." Forbes, 1996. Available from http://www.forbes.com/richlist.
"The Gap." Hoover's Online, 1998. Available from http://www.hoover's.com.
The Gap, Inc. Company History. San Francisco, CA: The Gap, Inc. Available from http://www.gap.com/company.
"Gap's 1st Global Ads Confront Dockers on a Khaki Battlefield." Advertising Age, April 1998. Available from http://adage.com.
George, Melissa. "Gap Founder Steps Down as CEO, Replaced by President." Reuters Business Report, September 12, 1995.
Gibbs, Nancy R. "Falling into the Gap: A Leading Specialty Retailer Takes a Dive on Wall Street." Time, 5 October 1987.
Rudnitsky, Howard. "Widening the Gap." Forbes, 13 September 1982.
"Ruling Banana Republic." CNNfn (CNN financial network web site), 11 February 1998. Available from http://www.cnnfn.com.
"Time to Go Shopping?" Microsoft Investor, 6 April 1998. Available from http://investor.msn.com.
Toch, Thomas. "Sugar Daddies for Charters." U.S. News & World Report, 27 April 1998.
Weiland Nogaki, Sylvia. "Banana Republic Opens to Rave Reviews in Heater."The Seattle Times, 19 November 1994.
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Willis, Clint. "Wall Street: Board These Stocks at the Bottom and Soar 14 Percent to 65 Percent." Money, 1 October 1992.
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