Gap "irrelevant in Europe" says analyst
As Gap contemplates exiting directly operated retail in Europe and the UK, analysts said its problems are largely of its own making.
GlobalData said the firm has offered “uninspiring product ranges” while its reliance on heavy discounting leaves it “irrelevant in the European market”.
The criticism comes after reports that the retailer is considering closing all company-owned stores across Europe, as well as a logistics hub in the UK.
Gemma Boothroyd, Apparel Analyst at GlobalData, said this comes as no surprise “given its undistinguishable product offering and failure to capitalise on growing demand for casualwear”.
The company’s problems in recent years have come despite its core competency — casualwear — having grown increasingly dominant, and especially so in 2020.
Boothroyd added: “Despite comfortable clothing being in demand this year as European consumers have spent more time at home, it was too late for Gap to leverage its existing product lines, with its reputation already damaged by years of lacklustre ranges.
Many European brands and e-tailers pivoted towards loungewear during lockdowns and found that this eased the pain of the general fashion downturn.
“Although globally Gap managed to practically double its e-commerce business to account for nearly 50% of total sales amidst the Covid-19 pandemic, this success did not translate to Europe, where second-quarter total sales ending August plummeted by 47%,” Boothroyd said.
She also said European consumers “have no patriotic allegiance to shop with the brand” and that it has lost the market share it had once carved out in Europe.
While some retailers that focus on occasionwear and other formal pieces have suffered as clothes for going out and office work have been in low demand, Gap should have been in pole position to capitalise on the furlough/work-from-home period in the spring and summer.
But Boothroyd said rivals like Fast Retailing’s Uniqlo made more of the opportunity with “reliably timeless styles rather than short turnaround trends”. She added: “Uniqlo has thrived by maintaining a clean and simple, appealing product offer. Comparatively, Gap has spread itself too thinly, and even with consistent and heavy product discounting it has been unable to capture European shoppers’ interest.”
While that may seem to be a harsh assessment, there’s no denying that the fashion sector has a long history of brands not successfully crossing continents. And the failure rate between the UK/Europe and North America reflects that. Brands that do well on one continent can struggle on another. This was seen relatively recently when the UK’s Topshop scaled back its North American expansion plans and then exited the region.
Now Gap looks like it could be about to repeat that in the other direction.
Copyright © 2020 FashionNetwork.com All rights reserved.