India’s retail giant Reliance Retail is closing in as the new India franchisee of US fashion brand Gap Inc.
Gap has been scouting for an India partner for about a year after it snapped its ties with Arvind Fashions last year.
As per a report of the leading business daily, The Economic Times, Reliance has been in talks with Gap for months and has lately emerged as the front-runner to clinch the deal ahead of Myntra that was also in talks with the Gap.
Neither Gap nor Reliance has confirmed the development.
Arvind and Gap has cited the pandemic as a reason to call off their partnership. Arvind said Gap contributed about 4.7 per cent to Arvind Fashions’ consolidated turnover, or Rs. 182 crore, in the fiscal year ended March 2020, with a loss of Rs. 34 crore before taxes.
The report quoted sources that Reliance Retail has been able to extract huge concession of manufacturing 100 per cent of all Gap products to be sold in India – up from about 70 per cent that previous franchisee Arvind Fashions was allowed to source locally.
Even after closing and pruning store sizes and increasing local sourcing for the brand in India, Arvind Fashions failed to turn Gap’s business in India profitable.
Expert believes that intense competition from global rivals like Zara, H&M and Uniqlo has impacted Gap’s business in India like in many parts of the world.
Ajio, Reliance Retail-owned online fashion platform, already sells almost the entire collection for men, women and kids from Gap.
Gap is a has-been brand and is anyway a daily brand in the US. Who in India will pay a premium for an American brand to wear their khaki, blue jeans and white shirts and polo T-shirts!
“There are enough brands that are doing business here in India including H&Ms, Zaras and the Uniqlos of the world that have taken the market from Gap even in the US?” says Harminder Sahni, Co-founder of retail consultancy Wazir Advisors.