The rise and fall of Gap, one of the most iconic and beloved American retailers

When Gap announced earlier this month that its CEO, Art Peck, was unexpectedly stepping down from the company, it became the cherry on top of yet another challenging year of sales woes and business missteps.

The sudden executive shakeup came hand-in-hand with a report of particularly disappointing third-quarter sales, including a 4% year-over-year drop in comparable sales across the entire Gap brand portfolio. Its namesake Gap brand saw the largest decline, with a 7% dip in comparable sales, while Old Navy and Banana Republic sales sank by 4% and 3%, respectively.

For decades, Gap was one of the most beloved retailers in the US and an emblematic part of American fashion and style. With its laid-back classics and iconic denim, the company became the go-to destination to obtain the effortless jeans-and-T-shirt look at an accessible price. Its vibrant marketing campaigns brimmed with catchy jingles and popular celebrities, and for a period in the 1990s and early 2000s, it was impossible to walk down the street without seeing a Gap-logo sweatshirt.

However, the retailer has been caught in an uphill battle for relevance in an era where mall brands continue to lose their luster, falling behind trendy e-commerce sites and direct-to-consumer brands. Gap suddenly went from basic to bland, and now even bright spots like Old Navy may be losing their footing.

Though Gap still remains the largest specialty retail company in the US in addition to its namesake company and Old Navy, it also operates Banana Republic, Athleta, Intermix, Janie & Jack, and Hill City whether it will be able to weather the storm remains to be seen. In the meantime, we took at look at Gap's humble beginnings of selling Levis and records, through its meteoric rise across America to its eventual fall.

Gap was started by Doris and Don Fisher in San Francisco in 1969.

BusinessInsider USA Images

Gap

The reason for starting the store was "simple," according to the Fishers Don couldn't find a pair of jeans that fit him correctly.

Source: Gap

Together, the Fishers raised more than $60,000 to open their own store on Ocean Avenue. The name is a reference to the concept of the generation gap.

BusinessInsider USA Images

Gap

Source: Gap , Culture Trip

The first Gap store primarily sold Levis and records.

BusinessInsider USA Images

Associated Press

Source: Culture Trip

Gaps popularity exploded. The next year, the Fishers opened a second store in San Jose and then established a company headquarters in Burlingame, California, in 1971.

BusinessInsider USA Images

Kevork Djansezian/AP

Source: Culture Trip

By 1973, Gap had 25 stores across the United States and expanded to the East Coast.

BusinessInsider USA Images

Reuters

Select stores began selling private-label merchandise, helping to elevate the Gap name.

Source: Culture Trip

The store became synonymous with American classics, like blue jeans and T-shirts.

BusinessInsider USA Images

Justin Sullivan/Getty Images

In 1976, Gap officially went public.

BusinessInsider USA Images

Gap

As Gap looked to grow the company, it started to eye acquisitions and developing new brands. In 1983, Gap acquired Banana Republic.

BusinessInsider USA Images

Marina Nazario/Business Insider

As part of Gaps growth strategy, it also moved into new apparel categories, including childrens clothing, leading to the launch of Gap Kids in 1986.

BusinessInsider USA Images

Associated Press

Source: Gap

Later, Gap also opened GapBody for intimates and athletic apparel and BabyGap for baby apparel.

BusinessInsider USA Images

Business Insider/Jessica Tyler

In 1987, Gap officially opened its doors overseas, with its first store in London.

BusinessInsider USA Images

Ben Pruchnie/Getty Images

Source: Gap

To help develop a more upscale identity, Gap brought on Millard "Mickey" Drexler as CEO, who oversaw the company for much of the 1990s.

BusinessInsider USA Images

Darryl Bush/Getty Images

During his tenure, Old Navy was created, initially intended as a lower-priced alternative to Gap when it opened its doors in 1994.

BusinessInsider USA Images

Reuters

Old Navy quickly became beloved across a wide consumer demographic for its playful designs and fun slices of Americana, like its annual Fourth of July apparel.

BusinessInsider USA Images

Robert Alexander/Getty Images

However, after a 29-month period of slumping sales attributed to over-expansion, Drexler was asked to step down in 2002. This was the first sign that Gaps fortunes could turn.

BusinessInsider USA Images

Rob Kim/Getty Images

Drexler later went on to become the CEO of J.Crew.

Source: New York Magazine

Though trouble was brewing behind the scenes, the late 1990s and early aughts led to some of Gaps most iconic advertising campaigns.

BusinessInsider USA Images

J. Vespa/WireImage

In 1998, it won several awards for its "Khakis Swing" commercial, and became known for its use of celebrities and whimsy themes.

Source: Gap

Gap began to focus on charitable initiatives and in 2006 it launched its Product (Red) initiative.

BusinessInsider USA Images

Justin Sullivan/Getty Images

Source: Gap

Also in 2006, Gap was among the retailers implicated in a series of labor rights protests after reports surfaced alleging poor working conditions at factories overseas.

BusinessInsider USA Images

Justin Sullivan/Getty Images

Source: Slate

Looking to the future of retail, Gap embarked on a series of failed experiments including launching Piperlime in 2006.

BusinessInsider USA Images

Barry Brecheisen/WireImage

The online retailer served as an attempt to get ahead of the growing e-commerce space, but was later shuttered in 2015.

In 2007, Gap shuttered its retail concept Forth & Towne after just 18 months. The store was intended for women 35 years and older.

BusinessInsider USA Images

Tim Boyle/Getty Images

Learning from its mistakes, Gap turned instead to smart acquisitions and purchased Athleta in 2008.

BusinessInsider USA Images

Bethany Biron/Business Insider

Despite accounting for a relatively small piece of the business, the Athleta brand consistently performs well.

Despite its struggles, Gap still managed to garner buzz during this period, including high-profile moments like a visit from President Barack Obama.

BusinessInsider USA Images

Thomson Reuters

Still, Gap brands began to feel the weight of dwindling foot traffic in malls and the push toward e-commerce. In October 2011, the company announced it would close 189 stores in the US by 2013.

BusinessInsider USA Images

Justin Sullivan/Getty Images

As Gap continued to struggle in the following years, it turned its sights back toward acquisitions and other growth areas.

BusinessInsider USA Images

Irene Jiang / Business Insider

In 2013, Gap acquired the designer clothing company Intermix, adding a hint of luxury to the portfolio.

BusinessInsider USA Images

Mark Sagliocco/Getty Images

In 2018, Gap looked to capitalize on the growing menswear market by launching its own company, Hill City.

BusinessInsider USA Images

Hill City

In 2019, Gap acquired the childrens wear company Janie & Jack from Gymboree.

BusinessInsider USA Images

Facebook/Janie + Jack

It also experimented with technology, including integrating mobile payments in stores.

BusinessInsider USA Images

Gap

Still, sales continue to suffer and performance at Gaps namesake brand remains especially bleak.

BusinessInsider USA Images

Irene Jiang / Business Insider

In February 2019, Gap announced that it would spin off Old Navy as an independently run brand.

BusinessInsider USA Images

Drew Angerer/Getty Images

However, just a few months later, the brand posted its first sales decline in three years in the second quarter of 2019, with a subsequent drop in the third quarter.

Source: Business Insider

Adding fuel to the fire, Gap announced CEO Art Peck would be stepping down from the company, effective immediately, in November 2019.

BusinessInsider USA Images

JP Yim/Getty Images

Peck had worked at the company for 15 years and had been CEO since 2015. Board member Robert Fisher is currently acting as interim CEO in Peck's absence. The company did not provide a reason for Peck's departure.

Source: Business Insider

Peck leaving, paired with bleak sales across the brand portfolio, was followed by an immediate drop in the companys stock price.

BusinessInsider USA Images

Associated Press

Source: Markets Insider

As the business continues to slide and its stock price falls, the Fisher family is feeling the heat the family has reportedly lost $1 billion in 2019.

BusinessInsider USA Images

Gap

Source: Forbes

Looking to the future, the fate of beleaguered Gap remains unclear.

BusinessInsider USA Images

Bethany Biron/Business Insider

The rise and fall of Gap, one of the most iconic and beloved American retailers

Gap was started by Doris and Don Fisher in San Francisco in 1969.

Together, the Fishers raised more than $60,000 to open their own store on Ocean Avenue. The name is a reference to the concept of the generation gap.

The first Gap store primarily sold Levis and records.

Gaps popularity exploded. The next year, the Fishers opened a second store in San Jose and then established a company headquarters in Burlingame, California, in 1971.

By 1973, Gap had 25 stores across the United States and expanded to the East Coast.

The store became synonymous with American classics, like blue jeans and T-shirts.

In 1976, Gap officially went public.

As Gap looked to grow the company, it started to eye acquisitions and developing new brands. In 1983, Gap acquired Banana Republic.

As part of Gaps growth strategy, it also moved into new apparel categories, including childrens clothing, leading to the launch of Gap Kids in 1986.

Later, Gap also opened GapBody for intimates and athletic apparel and BabyGap for baby apparel.

In 1987, Gap officially opened its doors overseas, with its first store in London.

To help develop a more upscale identity, Gap brought on Millard "Mickey" Drexler as CEO, who oversaw the company for much of the 1990s.

During his tenure, Old Navy was created, initially intended as a lower-priced alternative to Gap when it opened its doors in 1994.

Old Navy quickly became beloved across a wide consumer demographic for its playful designs and fun slices of Americana, like its annual Fourth of July apparel.

However, after a 29-month period of slumping sales attributed to over-expansion, Drexler was asked to step down in 2002. This was the first sign that Gaps fortunes could turn.

Though trouble was brewing behind the scenes, the late 1990s and early aughts led to some of Gaps most iconic advertising campaigns.

Gap began to focus on charitable initiatives and in 2006 it launched its Product (Red) initiative.

Also in 2006, Gap was among the retailers implicated in a series of labor rights protests after reports surfaced alleging poor working conditions at factories overseas.

Looking to the future of retail, Gap embarked on a series of failed experiments including launching Piperlime in 2006.

In 2007, Gap shuttered its retail concept Forth & Towne after just 18 months. The store was intended for women 35 years and older.

Learning from its mistakes, Gap turned instead to smart acquisitions and purchased Athleta in 2008.

Despite its struggles, Gap still managed to garner buzz during this period, including high-profile moments like a visit from President Barack Obama.

Still, Gap brands began to feel the weight of dwindling foot traffic in malls and the push toward e-commerce. In October 2011, the company announced it would close 189 stores in the US by 2013.

As Gap continued to struggle in the following years, it turned its sights back toward acquisitions and other growth areas.

In 2013, Gap acquired the designer clothing company Intermix, adding a hint of luxury to the portfolio.

In 2018, Gap looked to capitalize on the growing menswear market by launching its own company, Hill City.

In 2019, Gap acquired the childrens wear company Janie & Jack from Gymboree.

It also experimented with technology, including integrating mobile payments in stores.

Still, sales continue to suffer and performance at Gaps namesake brand remains especially bleak.

In February 2019, Gap announced that it would spin off Old Navy as an independently run brand.

Adding fuel to the fire, Gap announced CEO Art Peck would be stepping down from the company, effective immediately, in November 2019.

Peck leaving, paired with bleak sales across the brand portfolio, was followed by an immediate drop in the companys stock price.

As the business continues to slide and its stock price falls, the Fisher family is feeling the heat the family has reportedly lost $1 billion in 2019.

Looking to the future, the fate of beleaguered Gap remains unclear.

JOIN OUR PULSE COMMUNITY!