Gap considers closing UK stores, working with franchise partners and focusing on omnichannel

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Gap is considering closing all of its directly-run shops in the UK as it responds to the fast changing retail environment. Instead, it is mulling an “asset light” approach to retailing that includes franchising stores while growing its digital sales as part of an omnichannel model. 

The Gap brand is undertaking a strategic review of its European markets that may mean it closes closing directly-operated Gap shops in the UK, France, Ireland and Italy at the end of the first half of its 2021 financial year. It is also reviewing its ecommerce operations in Europe, and may close its EU distribution centre in Rugby.

One option being considered is transferring shops to franchise partners – as it does in 35 countries where, taken together, it has 400 shops and 14 ecommerce sites.

The details were confirmed this week on the Gap Inc investor website in a letter  from Mark Breitbard, president and chief executive of the Gap brand. He said: “We are committed to sharing more as we thoughtfully work through this process. While the work is tough, we have our eyes set on leveraging our brand power to deliver Modern American Optimism to customers around the world.”

Parent company Gap Inc went on yesterday to outline its future omnichannel strategy to investors, which envisages growing digital commerce significantly, the group confirmed in an investor presentation this week. While Old Navy is Gap Inc’s single largest brand, it is Gap and Banana Republic that are better known in the UK. 

Now Gap, which turned over $4.6bn (£3.5bn) in 2019, selling to 23m active customers in 42 countries, aims to shift its business towards digital, growing its market share and partnerships. Its strategic review of its European operations will come alongside 175 store closures in North America by the end of the 2021 financial year, to focus on about 220 of its most profitable shops. 

Ga’s overall strategy is to capitalise on the opportunities thrown up by the disruption that Covid-19 has brought to the market, including a move towards “hyper’’ casual clothing, omnichannel sales and towards trusted brands. 

The brand’s figures suggest that ecommerce has already grown to about 40% of sales this year from 25% in 2019, as shoppers turn online during and after lockdowns, and is likely to keep growing in future. 

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

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Amazon already makes devices such as the Amazon Echo (pictured). Image: Fotolia
Strategy and Innovation
8 Aug 2022

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