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Instagram is killing Gap's business more than ever

Jan 8, 2016, 03:29 IST

The GapGap feels dated in the Instagram era.

Gap Inc. is in trouble.

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The company announced yet another month of poor results today.

In December, comparative sales were down at every single one of Gap Inc.'s brands (-5% overall for the entire company).

Comparative sales for Gap fell -2% for the month December (compared to rising 1% last year), and they were down -9% for the ailing Banana Republic, compared to flat results last year.

Most terrifying of all for the brand is Old Navy's set of results. Comparable sales for the month of December were down -7%, compared to a 8% increase last year.

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Old Navy has been Gap Inc.'s saving grace, amid Banana Republic's and Gap's troubles. (Arguably, Old Navy's newfound turmoil might have to do with the departure of Stefan Larsson, who left his post as Old Navy's Global President in the beginning of October to replace Ralph Lauren as CEO of Lauren's namesake company.)

But another reason to blame for this consistent struggle might be something bigger than that - it could be social media.

Instagram and other social media outlets play a big part in its demise, the New York Times has reported.

"Back in the '80s and '90s, there wasn't real access to higher-level fashion," Kate David Hudson, co-founder of online fashion magazine Editorialist, tells the Times. "It was the heyday of business casual, and stores did well selling core staples.""But now, everybody sees what's on the runways on social media and on blogs, and everybody's a critic, and shoppers want it as soon as they see it," Hudson said. "Brands like Gap just feel very dated."Consumers' obsessions with the most current fashions is helping fast fashion retailers like Forever 21, H&M, and Zara thrive.

A report by Goldman Sachs perfectly sums up why fast-fashion retailers are challenging traditional ones.

"Unlike fast-fashion retailers, which have buying teams sourcing current trending fashion from third-party vendors, traditional specialty retailers have design teams creating product they believe is going to be trending 12 months out," the researchers write.

The risk of trying to predict fashion trends a year in advance is weighing on the success of retailers such as Gap, Abercrombie & Fitch, Ann Taylor, American Eagle, and others, according to Goldman Sachs.

If these retailers have a "fashion miss," it means markdowns, which hurts profits.

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ReutersH&M's flagship store in Stockholm.

More importantly, with Instagram, consumers have front seats to the runway. They want the looks they see on Instagram instantaneously.

However, Banana Republic has come up with a solution to hopefully mitigate this condition.

For February's New York Fashion Week, Banana Republic will the newly launched clothes online as soon as they debut on the runway.

This appears to be taking a cue from Zara, which churns out runway styles rapidly.

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But first, Banana Republic will have to make sure that the clothes they're serving up to consumers are actually stylish and weather-appropriate. A walk around the store this fall showed every way that the retailer was misfiring.

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