Retailer Gap Inc. Closing Stores in North America, Heading Overseas

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Gap Inc. currently has 3,100 company-operated stores and 200 franchise stores in 36 countries. (Photo: Gap.com)
Gap Inc. currently has 3,100 company-operated stores and 200 franchise stores in 36 countries. (Photo: Gap.com)

BUSINESS

  • Gap Inc. to close almost 200 stores in North America
  • Plans underway to triple Gap stores in China to total 45 by 2014
  • Retailer to shake up business casual clothing

Gap Inc. plans to close almost 200 stores in North America by the end of 2013 due to increased competition from specialty retailers and a turbulent sales environment. The store closures will bring the total number of Gap stores in North America down to 700, a 34% drop from four years ago.

Art Peck, President of Gap North America said: “Over the next 26 months, we’ll look store by store at our specialty fleet and determine which stores meet the standards we’ve set for our brand. This is a continuation of our work since 2007.”

North American Gap Inc. stores that have been open for at least a year have seen sales drop by at least 5% in six of the last seven years, and this year was no exception, with revenue falling 2% in the second quarter. Banana Republic announced a 2% drop in revenue, and Old Navy posted no growth.

International Targets: China, France, Japan

Gap’s CEO Glenn Murphy said in a statement that the company’s global strategy puts it in a position to expand its reach worldwide into the top-10 apparel markets.

International expansion is exactly what the company intends to do, with Gap Inc – which owns the Gap, Old Navy and Banana Republic chains – planning to have 45 stores open in China before 2014, which will nearly triple its presence. The first Gap flagship store will open in Hong Kong in a few weeks.

Other international destinations are to follow, and Paris will see its first Banana Republic store open in late 2011. Over the next 18 months, Gap Inc. also plans to expand Old Navy outside of North America into Japan.

In a statement to analysts, Gap Inc. said: “The company is making progress on its goal of reducing square footage in North America and is on track to achieve a 10% reduction in overall store square footage by fiscal year 2012, when compared to 2007.” By the end of 2013, Gap plans to earn 30% of its sales outside of North America and through its online store.

Gap Inc. currently has 3,100 company-operated stores and 200 franchise stores in 36 countries, with online orders shipping to 90 countries.

New Style, New Branding

In addition to expanding overseas, Gap Inc. is shaking up its usual business casual offerings by introducing colors into its denim collection as well as animal prints and leggings, which have all sold well. Old Navy is adding more active wear, and Banana Republic’s holiday line highlights clothing for women in the workplace and formal occasions.

This year, the US-based retailer brought in a new brand president, chief marketing officer, design director and ad agency in an attempt to support its business. It also launched a Global Creative Center in February.

Key Statistics – US Retail Market Outlook (source: National Retail Federation)

  • Holiday retail sales for 2011 are forecast to increase to $465.6 billion (up 2.8% on last year).
  • In comparison, holiday retail growth in 2010 saw an increase of 5.2%.
  • Over a ten-year period, US holiday retail sales have steadily increased by 2.6%.

By Stephanie Lagopoulos for
Based in Toronto, Stephanie Lagopoulos is a freelance journalist covering lifestyle, travel and technology. She also works in the advertising industry.

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