Gap is 40... but sales are down.

Congratulations to Gap on its 4oth birthday tomorrow.

"On August 21, 1969, Don and Doris Fisher opened a shop in San Francisco called Gap that sold jeans and records. Now Gap is one of the most iconic brands of our time and jeans have become the foundation of everyone’s wardrobe,” said Marka Hansen, president of Gap North America.

To celebrate, there will be simultaneous acoustic performances at 700 Gap stores across the country on the evening of Thursday, August 20 (tonight), including the store at The Village at Corte Madera.

Unfortunately, there is still no end in sight for Gap's deteriorating sales performance. The retailer has now recorded negative sales growth for a staggering 20 quarters. That the company has managed to survive for so long on such poor results is due to its huge $2 billion cash reserves, plus cost cutting and inventory management that has helped to maintain profit levels.

The downside of Gap's cost cutting is the impact it has on merchandising. The group's stores are struggling to remain relevant in the face of strong competition from the likes of American Apparel and Abercrombie & Fitch.

Meanwhile, merchandise quality at Banana Republic is noticeably poorer. Right now I'm wearing shoes I bought from BR three years ago. They're Italian made and excellent quality. Similar shoes for sale today at BR are poorer quality stock made in China or India and selling for the same price. The result is improved margins for Gap in the short term, but bad news for long term customer retention.

Novato DeLano's to close

The Novato Grocery War claimed it's first victim yesterday, with news of the closure of DeLano's at Novato Square. DeLano's was always the weakest of the incumbent grocers in Novato, so no major surprise that the store was getting hit by the slowdown in consumer spending and the new competition from the Hamilton Safeway , Trader Joe's at The Village and Grocery Outlet.

Despite the DeLano's exit, there are more battles ahead for Novato's markets, with Whole Foods and Paradise Foods scheduled to open within the next few months. I wouldn't be surprised to see either of these stores postponing their opening given the current state of the economy, and in particular a lot of negative press about the viability and impact of the Whole Foods / Millworks development, which has switched from condos to apartments after only 2 of the 124 units were sold.

But if the stores open as planned, the underlying problem will remain - that with these new stores, Novato will have too much grocery space for its population, and the grocery war will surely claim another victim.