Gap's strategy gaffe sends Old Navy packing in Japan

TOKYO - US clothing retailer Gap is learning the hard way that it takes more than low prices to keep customers coming back for more. It would do well to take cues from companies that are thriving thanks to innovative concepts rather than just cheap threads.

Gap announced on May 19, US time, it was closing all 53 of its Old Navy shops in Japan by the end of January next year. Just four years after entering the country, the chain has found itself in trouble, unable to attract shoppers with its low-end offerings. The blame goes to Gap, whose sole strategy for the chain seemed to hinge on low prices.

In a country where more than a decade of deflation has made many people take low prices for granted, Gap and other apparel companies need to come up with fresh ways to get shoppers to open their wallets.

On Friday afternoon, a woman shopping at an Old Navy store in the Tokyo suburb of Musashino was told that the label was pulling up stakes Japan. "I just popped in for a look, but I will check out other stores because the design and quality of this brand aren't as good as those of rival brands," she said.

Gap does not disclose the sales of its labels in Japan, but CEO Art Peck said the consumer spending environment in Japan is tough. He said Gap will cope by shifting its focus to China and other markets.

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