Case 31 — Gap Inc. · Mickey Drexler · 1994

Someone is going to sell Gap quality at half the price. Do you let them, do it inside Gap, or build a separate brand to do it to yourself?

Gap is the most admired specialty retailer in America. You have spent eleven years turning it from a jeans discounter into a brand — private label only, basics made to feel like a decision — and it is doing about $3.7B a year at margins nobody in the mall can match. A discount chain has let it be known that it intends to open a Gap-like store selling similar clothes at roughly half the price. You have tested a stripped-down format called Gap Warehouse in a few strip centres and it sells. Your merchants are worried that anything cheaper with Gap's name on it will teach the customer that Gap is overpriced. Don Fisher wants an answer.

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