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Gap Inc invests in virtual fitting to reduce returns as its business continues to grow online

Getting the online size right will matter more as Gap closes all of its UK stores

Gap Inc has acquired a new virtual fitting room business as it looks to help shoppers order the right size first time – and reduce returns. The acquisition of Drapr comes as the retail group reports a 65% rise in online sales across the group, compared to pre-pandemic 2019, and net sales 5% up on the same period. But sales at its Gap and Banana Republic brands, which have historically had more of a UK presence, were both down as the retailer closed stores and rethought its European strategy. 

Getting the size right

Drapr works by helping customers to create 3D avatars so that they can try on clothing virtually. It aims to ensure that customers get the right size for their body shape and style, and so reduce returns.

“Fit is the number one point of friction for customers and, through their advanced 3D technology, Drapr has shown it can help shoppers efficiently find the size and fit they need,” says Sally Gilligan, chief growth transformation officer at Gap Inc. “We plan to leverage Drapr to help Gap Inc. improve the experience for our customers and accelerate our ongoing digital transformation.”

Drapr co-founder and chief executive David Pastewka says: “Most people either don’t know their exact measurements or are looking for a specific type of fit that numbers alone can’t tell them. Drapr has proven effective and we are excited about the impact we can have on customers at scale as part of the Gap Inc. family.” 

Its acquisition, for an undisclosed sum, was led by Gap Inc’s strategic growth office, headed by Gilligan, which has also recently invested in digital fitness platform Obé Fitness for its Athleta brand. As a result, a new AthletaWell community platform will be designed to boost brand engagement, working together on clothing, content, events and innovative shopping experiences.

Online drives Gap Inc sales growth

The news comes as Gap Inc. boasts its highest second quarter sales, to the end of June, for more than 10 years. Net sales of $4.2bn (£3.1bn) were 29% up on the same period in 2020, and 5% up compared to pre-pandemic 2019. Like-for-like sales were 12% up against 2019. Online sales drove growth, growing by 65% on 2019 to account for a third of sales. Gross profits of $1.82bn (£1.33bn) were 17% up on the same period in 2019. 

Sonia Syngal, chief executive of Gap Inc, says: “Our talented teams delivered our highest second quarter net sales in over a decade. Our strategy is driving growth as evidenced by continued strength at Old Navy and Athleta, Gap Brand’s second consecutive quarter of positive two-year comparable sales in North America and momentum gaining at Banana Republic. Stepped-up marketing investments, improved brand management and technology enhancements are paying off as our brand power cuts through.”

The fastest growth in net sales came at Gap Inc’s Athleta (+35% on 2019) and Old Navy (+21%) brands, but sales fell at the more UK-focused Banana Republic (-15%) and Gap (-10%), which have been gradually closing international stores in recent years before in July taking the decision to close all its remaining 81 UK Gap stores and to find store franchisees in other European markets.

Previous Gap store closures led to an estimated 14% fall in sales through that sales channel, while Covid-related temporary store closures added another 1% to the decline. At the same time, however, ecommerce sales across Gap Inc were 65% up on the second quarter of 2019, and accounted for a third (33%) of its business. 

In context

In March Gap Inc signalled a shift to becoming a digital-first business after the retailer’s online sales grew by 54%in 2020, and accounted for 45% of total sales, up from 25% a year earlier. Today’s figures suggest that its online sales seem to be settling somewhere between those two points, as shops reopen and trading starts to return to more normal patterns. 

Looking ahead, Gap Inc now expects net sales to grow 30% in 2021 compared to 2020, and plans to continue opening Old Navy and Athleta stores, adding between 30 and 40 in North America, while closing about 75 Gap and Banana Republic stores there. 

Katrina O’Connell, executive vice president and chief financial officer at Gap Inc, says: “Our strong second quarter performance, demand for our purpose-led, billion-dollar lifestyle brands, and ongoing strength of the customer gives us confidence to raise our sales and earnings outlook for the second consecutive quarter. As we fuel profitable growth for the back half and beyond, we are focused on strategic expansion of addressable markets to take share, building customer lifetime value and launching new initiatives to digitally transform Gap Inc. for the future.” 

Gap is a Top250 retailer in 2021 RXUK Top500 research, while Banana Republic is ranked Top350. 

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