For years, Gap has been unable to get the mix right among its major brands: Banana Republic, Old Navy and Gap. It considered breaking up the company based on brands. That did not work. It has a revolving door of chief executive officers. Over the years, it posted waves of store closures and layoffs. Now, it will fire more people as its fortunes spiral downward. (These industries are laying off the most workers.)
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The hundreds of people who will be fired are mostly corporate employees. The excuse given was one often used by companies. It is best to make the organization flat and have fewer layers of management. Decisions can be made faster and passed down the ranks. One has to wonder if this style is so good, why was it not employed years ago. “Our goal is to flatten the organization, increase spans of control to create more robust roles and individual empowerment, and decrease layers to remove bottlenecks and make better, faster decisions,” wrote Bob Martin, board chair and interim chief executive, according to The Wall Street Journal. The gibberish does not mean a thing.
In the most recently reported fiscal year, Gap sales fell 6% to $15.6 billion and the company lost $202 million.
Gap management has to face the fact that it may shrink toward obscurity, which would put tens of thousands of people out of jobs. Is it the next JCPenney, Sears, Kmart or Bed Bath & Beyond? Gap sells different merchandise than these failed retailers. However, it has not been able to arrest its sales decline, so one has to wonder how it can place a safety net under what is a falling turnaround.
Gap is another iconic retailer brand in deep trouble. It is easy to blame its problems on e-commerce. It is the old retail management excuse that Amazon.com has started to overwhelm it. However, Gap is just poorly run and cannot get its inventory mix right. That is even worse than being badly damaged by competition.
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