Keeping the price low was actually the initial drive to start the brand Old Navy. In the early 1990's, to keep competitors from undercutting Gap on their prices, Gap created Old Navy, being the marked down version of itself. This business decision was highly successful at first, drawing consumers in with Old Navy's promise of Gap style and quality with low prices and warehouse selection. Their rugged but fashionable store layouts were a hit in the working-class neighborhoods where they opened. Sales reached one billion within four years that being the fastest rate at the time for any retailer. Afterwards Old Navy stores were opening all around at a growing pace.
Around 2000 Old Navy's industrial expansion started taking some hits, about the time that H&M opened its first store in the United States. H&M sold a variety of clothing that was not only cheap, but also right off the fashion runways. So H&M started their conquest of the market with high fashion and cheap prices. As for Old Navy, their clothing line defined poverty in comparison to H&M's line of clothing. The recession almost killed retail spending, even for the low end Old Navy. Gap's sales dropped by one billion dollars from 2006 to 2008. Mr. Larsson decided to hire the architect of brand makeovers at Converse and Cole Haan, Ivan Wicksteed. Mr. Wicksteed started off his new job by bringing life into the company's old sluggish headquarters in San Francisco. He redecorated with pop photography and upbeat music and stated that "It looked like a doctor's office You have to start from ground zero. You have to start with the employees. If you cant get your own people to want to get on board and change direction, then you'll never persuade you own customers to do it." Jill Stanton, the former head of apparel at Nike was also hired to help the company. Instead of having Old Navy buy clothes from higher-end brands, Ms. Stanton helped build Old Navy's new design strategy called "fabric platforming".