How is Old Navy able to sell their clothes for the prices they do?

Their markup just isn't as high as other stores. It is all about the brand name and normally quality has nothing to do with what the price tag says. Abercrombie and Old Navy are more than likely paying the same amount wholesale for their clothes (we are talking a few dollars per shirt... pennies.. compared to what they charge us for the clothes). Abercrombie being the more popular choice of the two of course is going to charge more for their clothes just because people are willing to pay more.

As someone else said, overseas labor is cheap (same goes for clothing made for other brands as well). Even though they are all owned by Gap Inc, Gap and Banana Republic do have higher quality clothing than Old Navy, and the fabrics are noticeably different.

Old Navy prides themselves on being a "value" brand, while stores like American Eagle and Abercrombie are considered "specialty" stores. Old Navy has a wide range of competitors - from Walmart to Kohl's and Target, to Abercrombie, and Aeropostale, etc... Because they are a value store, they are able to open more locations in places where people can afford the merchandise (notice there are a lot of Old Navy's in strip centers - it is not necessarily a "mall store". The prices also make it appealing to come back and spend more.

Other ways the company is cutting cost:

- elimination of a manager earlier this year at stores that do not make a certain amount of money per year

- cancelled the all-store holiday meeting this year (save $ by not paying all store employees to attend)

- changing store hours (new hours went into effect this year - stores are opening at 930am instead of 9am - saves on payroll - not paying employees for that extra 30 minutes saves a ton company-wide)

- gift boxes are not free for customers

- customers that use a brand credit card (Old Navy card, Gap Card, etc.) save the company from paying processing fees for other major credit cards

I always thought Old Navy was the "cheaper" version of the Gap and Banana Republic, but recently they have been upping the look of their clothes to make them mimic what is sold at Banana Republic and the Gap, there is nothing different between the three stores any more. The clothes at Old Navy look similar to what is sold at the other two stores but cost cheaper...does that mean the Old Navy clothes are MADE cheaper? I doubt it. So good question. I'd like to see difference between the Gap and Banana Republic and Old Navy. Maybe old navy get's their clothing wholesale and that's how they charge what they do....you should ask a manager at an Old Navy and see what they say....they'd be biased though. good luck!

Old Navy Wholesale

Wholesale Old Navy

Clothing is ridiculously cheap to make. Other brands make outrageous profits, but most people (including myself) give them what they ask for. Old Navy isn'y really doing much to cut costs except for staying away from expensive fabrics and not trying to rip people off.

they are able to do this because they arn't made as good at other high in brands and they figure that if there clothing is cheap then more people will buy it and they will make more money.

I know exactly what you mean! I don't understand how they can charge those prices, the clothes aren't anything special. And I don't really see the price cuts either. I stopped shopping for myself there years ago.

all gap, inc. (gap, banana republic, old navy) companies at one point used illegal labor practices, predominately in third world countries. i dont know if this is still true.

Maybe it's bad