FASHION / How we fell into the Gap: Does the Gap look ordinary now? Was it just the stars who made it look great? In America the boom is over, but is it here?

THE GAP headquarters stands under a fresh, blue sky on the waterfront at the eastern edge of San Francisco. The fog rarely reaches this part of the city, so there's a long, clear view across the blue-grey water of the bay, towards the rest of the Gap-thirsty world. In Nashville and Newcastle customers are busy rumpling neat piles of pocket T-shirts in the same Pacific shades, but here all is silent. A few kids play without noise in a creche beside the modest white Gap building. Although it's well past noon, no one is having lunch in the art gallery ambience of the Gap cafeteria. In the blond-wood offices people are working their 60-hour weeks, drinking coffee out of shining blue Gap mugs, wearing informal Gap cotton at their white desks under framed Gap posters.

One particular poster series is everywhere. They're big black-and-white photographs, familiar from a new Gap advertising campaign, of people who aren't even wearing Gap clothes. Gene Kelly, Ernest Hemingway, Jack Kerouac, and Marilyn Monroe are in pale, rumpled chinos; underneath, the text reads, 'Legendary writers, actors, adventurers . . . All in their cotton khakis. Casual. Elegant. Just like those we made for you.' Ever so tastefully, the Gap is assimilating history.

In September, soon after the launch of the 'khakis' advertising, the Los Angeles Times printed a commentary on the campaign by the American novelist Christopher Corbett. 'Never mind Gene Kelly,' Corbett wrote, 'What about Benito Mussolini? He swaggered in khaki. And Adolf Hitler? . . . Khakis were big Third Reich-wear. Khakis uber alles . . .' Under a photograph of Hitler in khakis, Corbett went on to tie the Gap's new product line to every American demon from Fidel Castro to Saddam Hussein. In between, he wrote sentences like: 'Khakis are what you wear to a massacre.' The Gap withdrew its advertising from the Los Angeles Times without comment.

This incident said a lot about the Gap. It's sufficiently big (second only to Levi's in sales, with dollars 3bn last year) and unusual (making big profits as the world economy stutters) to be part of the cultural landscape, ridiculed on editorial pages. But it's a very defensive empire, one that has a minimal press office in its most successful outpost - Britain - and avoids dealing with the fashion press. Despite its apparently relentless growth and its famed in-house advertising, the Gap remains as secretive as the Ministry of Defence. 'We rarely do any interviews at all,' says Richard Crisman, the company's only, elusive, spokesman.

In Britain, little has disturbed the Gap's smooth expansion. After six years of operation there are 40 stores here, and each shop sells more (of exactly the same) clothes than those back in America. 'The Gap is still very cool,' says GQ fashion editor Jo Levin. 'People enjoy carrying Gap carrier bags. Almost everyone I know shops at the Gap for something.'

Not everyone is charmed by the small pieces of Northern California appearing on our high streets. Ashley Heath of The Face calls our embrace of the Gap's polite Americana 'the Gap disease', the chattering classes falling in love with something 'you see every couple of blocks' across the Atlantic.

But the Gap is only the latest stage of a long British cultural infatuation with America, which has given us everything from rock'n'roll to the New Right. The Gap makes us think that we can look good in plain clothes designed for tanned Americans, rather than by wearing the more daring street fashion that is much more British and much copied on the Doc Marten-covered streets of San Francisco.

And the Gap works by another contradiction: it advertises style, adventure even - you can wear what Hanif Kureishi wears - but sells tradition and caution, clothes you won't regret buying. 'I don't like fashion,' said the Gap president Mickey Drexler. The company's 1992 annual report promises 'a vacation from fickle fashion', and suggests 'whatever is currently appropriate' as an alternative. The basic squareness of the Gap, albeit polished to a hip sheen by photographers like Herb Ritts and Matthew Rolston, is probably why we tend to buy small pieces rather than whole outfits. No one actually wants to look like those Gap window mannequins with pressed denim shirts tied around their waists.

There was a time - before it came up with basics and David Bailey - when the Gap was about as trendy as the old Burton's. In the Seventies and early Eighties Gap stores in America groaned with terry-cloth polo shirts, chocolate-coloured fatigues, and T-shirts with zip-off sleeves, squeezed on to pipe rails. 'Fall into the Gap', jingled television and radio advertisements, and people did - but lured by almost continuous discounting. They bought their cheap Levi's and left. Fast.

In 1983, when Mickey Drexler was hired to drive the Gap upmarket, he asked the company's designers why they never wore Gap clothes themselves. 'We don't like them. They're junk,' said Patricia DeRosa, now executive vice-president.

This cheap and cheerful Gap had been around since 1969 when, according to legend, founder Donald Fisher dreamt up the idea when he couldn't exchange a pair of Levi's at a San Francisco department store. He got the name from a remark that his wife made about 'the generation gap', and opened his first store, selling flared Levi's, records and tapes. With the hippie wave receding, he soon dropped the pop music and began advertising 'four tons of Levi's'.

For 15 years the Gap spread across America, but by the mid- Eighties its discounts were losing their effectiveness. In 1984 profits fell 43 per cent, and the newly hired Mickey Drexler, a fast-talking Bronx retail wizard, was let loose on the company. He liquidated all the 'junk'. ('I was more scared than anyone.') He gave out white cards saying 'SIMPLIFY' at meetings. He put the new clothes on tables in the stores, so customers could touch them easily. The clothes themselves were clever, both old-fashioned ('classic' American styling) and daring (rejecting conspicuous consumption for what the Los Angeles Times called 'stealth wealth'). And the marketing was even cleverer: using glitzy stars like Kim Basinger to sell ascetic white T-shirts.

After this, the Gap just repeated the winning formula. GapKids shrunk the clothes, but not the prices, to fit the kids of the thirtysomethings now thronging their stores. Baby Gap absorbed another generation of future consumers.

By the early Nineties the Gap was in every Zeitgeist-of-the-decade story. It asked Chelsea Clinton to star in an advertisement (the White House said no). Shares peaked in early 1992, and the usually modest Fisher predicted breakneck growth for another five years. In April, while looters were singling out Gap stores during the Los Angeles riots, Vogue put 10 supermodels in the same Gap outfits on its centenary cover. Gap hegemony seemed scarily imminent.

But while Drexler was claiming 'there's no secret to the retailing business', the Gap surge appeared to fade. Profits fell in 1992, to dollars 211m from a peak of dollars 230m the year before. Sales per square foot - retail's benchmark - stalled, after rising at least 10 per cent each year since the mid-Eighties. And the Gap idea stopped looking like a marketing panacea. Its relaunch of Banana Republic - acquired in 1983 as a more cutting-edge complement to existing Gap stores - didn't echo their sales. 'It has a really unsavoury name,' says Alan Millstein, a New York fashion retail analyst, 'and it's just a higher-priced Gap.'

This year, the colour co-ordinated march of the Gap's own stores has continued to falter: profits dropped 8 per cent in the first quarter, another 24 per cent in the second. 'We are not pleased with these results,' said Fisher in August; nor was Wall Street, which halved the Gap share price. 'Their salad days are over,' said Millstein.

In America, where the Gap still had most of its 1,385 stores, the market was becoming saturated. Everybody else was selling basics now, from Ralph Lauren's plain, faded dollars 12 T-shirts to, on British high streets, the revamped and plainly Gap-influenced Burton's. Gap obituaries started appearing, and the Gap stopped talking to journalists altogether.

While the Gap products and profits were starting to look more ordinary, so was its corporate image. This had been utterly righteous - using expensive organic cotton, paying employees to do community work, and giving dollars 3m in 1992 to Aids foundations, local California charities, and disaster victims. Then, in February 1992, the American press started printing stories accusing the Gap of using sweatshop labour.

According to the news agency UPI, the Gap and other American clothing retailers had been using garment workers almost as slaves on the Pacific island of Saipan, an American territory exempt from US minimum wage law. Labour contractors lured thousands of workers there from China with the promise of high American wages, then indentured them to pay off their air tickets. Living in barracks surrounded by guards and barbed wire, and working 80-hour weeks at less than dollars 2 an hour, the labourers were stitching dollars 279m in clothes a year for clean, air-conditioned American stores. The US Labor Department condemned these conditions as 'appalling', and successfully sued the Tan family, a major sweatshop owner on Saipan, for not paying wages and intimidating its workers.

In March 1992, the Gap admitted it had done 'business with the Tan family', and said this had stopped the previous summer. 'We do individual purchase orders when we want to buy something,' said the Gap. 'We don't have any relationship with these factories.' Sixteen months later, the New York Times reported that 'over the last year . . . The Gap . . . have made clothes on this island,' in a long article on the continued use of factories in Saipan. The Gap confirmed this, but say that they now only use factories 'that we have personally inspected and meet our criteria for human rights and quality standards'.

The Gap is still a lot like a family business. Fisher, his wife and his sons own more than a third of the shares. Decisions are highly centralised, with standard store layouts dictated to managers from San Francisco every few months. Drexler visits stores constantly, asking employees what they use to clean the floors and checking the sobriety of window displays. 'We expect our people to question our methods,' says the annual report in bold type, but Gap stores in Britain and America seem eerily similar.

At the Gap in Berkeley a lot of time is spent rearranging the clothes and shelves according to a large manual. The staff don't like you to look at its artful diagrams, and say so politely, within seconds. New staff are patiently instructed in the use of each shelf of the storage cupboard. And all customers are subject to the GAP-ACT: 1. Greet customer within 30 seconds. 2. Approach and ask, 'Can I help you?' 3. Provide product information. 4. Add-ons: suggest more buys. 5. Close sale honestly: if it looks bad, say so. 6. Thank customer.

Staff are kept on their toes with secret callers from headquarters, and by folding. Constant folding. Keeping those precise cotton stacks just right, whenever there's a spare moment, is the recurring, overwhelming memory of ex-Gap staff. 'I complained to my manager about it,' says Anna Lisa, a student who worked at the Gap for the summer, 'because I thought customers were afraid to touch them and mess them up. I didn't get a good reception.'

At headquarters there's no folding; there's stress instead. 'It's extremely competitive,' says someone who works in budgeting and doesn't want her name used. 'People are only out for themselves . . . they have this small company mentality. You would like to have a normal week one time or another.' But Gap employees do get secure jobs, good benefits, and great discounts. They don't think that Gap clothes are 'junk' any more; khakis and pocket T-shirts fill the corridors and offices.

The company is almost totally self-sufficient, controlling design, manufacture, marketing, and sales. It does not hand out franchises; it hands out memos. GapKids stores are told to have rounded corners, to prevent toddlers injuring themselves.

Of course, not every Gap idea is as unadulterated as its cotton says it is. Like every other clothing giant, the Gap is always watching its smaller, hipper counterparts. Last September at the International Jeanswear Show in Miami, the Gap was 'all over' the small designers, says the show's director Marshall Lester. 'Companies like the Gap go along to a hot company, and say, 'Do us a collection of four pieces, and we'll put our name on it.' '

This autumn, that strategy may have restored the Gap's momentum. It has stuffed stores with plaid shirts, woolly hip-hop hats, ribbed tops, even 'Grunge Boots', soled just like Doc Martens - and third-quarter profits have shot up 27 per cent, albeit compared to an abysmal third quarter last year. By producing smaller quantities of more adventurous clothes, and avoiding the need to discount them, the Gap has outflanked its imitators, says a New York retail analyst, Karen Sack. Meanwhile, she says GapKids and Baby Gap remain 'dynamite'.

But this year's profits are still well below 1991's - earned in the pit of recession with a lot fewer stores - and have been magnified by cost-cutting measures such as a reduction in advertising. And the new strategy of less advertising and more fashion is a risk for a company built on beautifully photographed blue jeans.

The record of the Gap's other recent innovations has been mixed. Hemisphere, a sportswear offshoot, lasted two years in the late Eighties. GapShoes started last year as a chain of its own like GapKids, only to be scaled back to a department in existing Gap stores. And this year's new Gap Warehouse chain - 40 of the worst-performing American Gap stores turned into discount outlets - is not planned to expand in 1994.

The Gap Warehouse in San Leandro, south of San Francisco, is just another discount store in a discount shopping centre. 'With quality first', says its new logo a little defensively. The floor is pitted concrete, not the usual polished wood. The clothes are in slightly untidy piles. Their labels say things like '60% Cotton. 40% Polyester. Made in Hong Kong'. None say just 'GAP'. Some customers aren't sure that this is a Gap store.

Back at headquarters, they are still planning more stores, this time in more countries. In March, the Gap held talks in Japan, with the investment firm that introduced McDonald's and Toys 'R' Us. And it has tentatively opened a store in Galeries Lafayette in Paris - the first Gap outside the English-speaking world. 'That's a test,' says Crisman's less guarded assistant.

But plans to expand further in France have been halted. The Gap can't even promote itself there. A Swiss sportswear company with a subsidiary called Gap Star is claiming it owns the Gap name. Meanwhile, the Gap is trying to stop a Jerusalem store called 'World Of Gap' selling Gap clothes under its own World Of Gap label. The view from San Francisco across the bay is only long on a clear day.-

(Photographs omitted)