Consumers are ready for a little luxury. Despite cutting back in other areas, such as dining, they are showing a clear preference for select high-end apparel brands, such as Gucci, Louis Vuitton and Burberry.
The Gap has suffered for some time as retail rivals J. Crew and Abercrombie & Fitch continue to steal market share. Sales have fallen every year for the last five years, and though Gap has made headway into foreign markets like Japan, the bulk of its fortunes are tied to a shrinking U.S. market.