Retail

Gap’s stores are closing – can Kanye West turn its fortunes around?


Gap was a high street megastar in the 90s, with British shoppers lining up to buy into its American casual wear dream of logoed hoodies and jeans.

These days the mighty US retailer is in retreat, with the group confirming this week that a quarter of its remaining UK stores will close next month, leaving about 50, amid a review of its European operation.

Like other heritage brands built on large store empires at home and abroad, Gap has struggled to stay relevant as powerful new players, such as Zara, H&M and Uniqlo moved in and sales shifted online.

But it has not thrown in the towel yet. It has instead enlisted a real-life megastar in the shape of Kanye West, to see if he can do for its clothing and finances what he has done for Adidas, where his Yeezy shoe line achieved sales of almost $1.7bn (£1.2bn) last year.

The UK closures are yet another blow for the ailing high street – more may follow as the company considers switching to a franchise model – although not a surprise, given European sales tumbled almost 40% in the year to January 2021. It recently shut one of its two high-profile stores on London’s Oxford Street. Other shops, in places such as Guildford and York, have also disappeared.

Analysts have blamed the mega slump on its generic clothing and a failure to capitalise on the growing demand for its mainstay of casual wear – even in a year when almost everyone was wearing jogging bottoms and a hoodie. The brand has also been tarnished by its reliance on discounts to pull in shoppers.

Read More   Arcadia and the failings of modern capitalism | Letters
Kanye West.
Gap has struggled to stay relevant but hopes Kanye West can change that. Photograph: Evan Agostini/Invision/AP

The coronavirus lockdowns should have been a real opportunity for Gap, says Pippa Stephens, a retail analyst at GlobalData, given it used to be renowned for its high-quality basics such as T-shirts and joggers. Now rivals such as Uniqlo are “doing it better” after deciding to focus on timeless styles rather than trends, she says.

Founded in San Francisco in 1969 by the husband and wife team of Donald and Doris Fisher, Gap started out selling LPs and Levi jeans. But it was not until the 90s that sales really took off under the then chief executive, Millard “Mickey” Drexler. In that era, Gap’s American casual became a trademark look, with its celebrity-filled ads a much talked about event. Such was the retailer’s influence it was one of the superbrands critiqued by the author Naomi Klein’s bestseller No Logo.

Quick Guide

Why are UK high street retailers in trouble?

Show

What’s the problem?

Physical retailers have been hit by a combination of changing habits, rising costs and broader economic problems as well as the coronavirus pandemic. In the past few years names such as Mothercare, Karen Millen, Toys R Us, Maplin and Poundworld have disappeared from the UK high street as a result.

In terms of habits, shoppers are switching to buying online. Companies such as Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores. 

At the same time, there is a move away from buying “stuff” as more people live in smaller homes and rent rather than buy. Uncertainty about the economy has also slowed the housing market and linked makeovers of homes. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit and the coronavirus, have coincided with economic and political uncertainty that has dampened consumer confidence.

What help do retailers need?

Retailers with a high street presence want the government to change business rates to even up the tax burden with online players and to adapt more quickly to the rapidly changing market. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges, which they say put off shoppers. Many businesses which deal with complex supply chains also want additional help with the new red tape and import charges imposed after Boris Johnson’s Brexit deal saddled them with extra costs.

What is the government doing?

In the December 2019 Queen’s speech, the government announced plans for further reform of business rates including more frequent revaluations and increasing the discount for small retailers, pubs, cinemas and music venues to 50% from one-third. It has also set up a £675m “future high streets fund” under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.

Photograph: Matthew Horwood/Getty Images Europe

Thank you for your feedback.

However, major structural change in the retail industry has chipped away at that power, with successive Gap bosses opting to shutter stores amid the struggle to reinvigorate the chain. Its clothes are described as being “indistinguishable” from other retailers, Stephens says. “Gap has spread itself too thinly, and even with consistent and heavy product discounting, it has been unable to capture shoppers’ interest.”

No one could say that of the bright-blue unisex puffer jacket that provided the first taste of West’s Yeezy Gap range. Indeed, the clamour for the $200 jacket crashed the retailer’s website when it went on sale in the US this week.

West has signed a 10-year agreement to design and sell clothes – but not shoes – under the Yeezy Gap label. Beyond the striking nylon puffer, few other details of the clothes have been released, although West has hinted at colourful hoodies and fleeces. Gap has described the collection as “modern, elevated basics”.

Sign up to the daily Business Today email

A barometer of the desirability and bankability of West’s fashion prowess is provided by StockX, the resale platform, where millennials and generation Z flock to trade unworn pairs of Yeezy shoes for $250-$300 a pop. West is one of only a handful of tastemakers in a resale market that is predicted to be worth $30bn by the end of the decade.

The rapper and businessman, with a personal fortune put at $1.8bn by Forbes, has a large, young fanbase willing to consider buying “pretty much anything that he puts his name on”, explains Jesse Einhorn, a senior economist at StockX.

“This is the power of his persona. If you’re a brand like Gap you’re essentially getting a massive young audience which is incredibly engaged and loyal.”

However, West, who is divorcing his reality TV star turned entrepreneur wife, Kim Kardashian West, is also a force of nature, lest we forget last year’s failed tilt at the US presidency. There have been several skirmishes already; last year he demanded a seat on the Gap board and also threatened to quit.

Even if it is a bumpy ride, the prize for Gap is huge, with the Yeezy brand, which is wholly owned by West, recently valued at $3bn-$5bn by analysts. When the deal was announced the share price rise boosted Gap’s depleted market value by $700m.

Gap is thought to have high hopes for the Yeezy Gap clothing line, with a recent Bloomberg report suggesting it expects sales to top $150m in 2022, the first full year of sale, and potentially to exceed $1bn by the end of 2023.

Young Britons already queue up at dawn outside sports shops to buy the latest “drop” of Yeezy trainers. The challenge will be convincing them to give their custom to a shop that has a greater resonance with their parents.

The Round Jacket hoping to create a Gap

The Kanye West Gap Round Jacket.
The Round Jacket – the first design seen from Kanye West’s collaboration with Gap. Photograph: Yeezy/Twitter

Rarely has the launch of one single item of clothing been treated with such deference. But the reveal of the Round Jacket – the first design seen from Kanye West’s collaboration with Gap – prompted the American brand to delete the entire contents of its Instagram account this week, and replace it with one post: a film of the jacket directed by Nick Knight. It’s a move showing how Gap are positioning this collaboration as a gamechanger; one that makes everything else irrelevant. So far, the post has been liked more than 406,000 times.

The puffer jacket is made from recycled nylon in a bright Ikea-ish blue. It is a rounded cropped shape, and – as fashion commentators point out – features no fastenings. Highsnobiety, the website dedicated to streetwear, deliberated on just how to wear an item that “isn’t the easiest thing to make work”.

This is more a conceptual design rather than one to keep its wearer warm on a winter walk. West probably isn’t the go-to person for practical concerns. He lives the life of the super-rich, where weather is an irrelevance. He was, in fact, seen wearing the Round Jacket in Los Angeles last week despite the hot weather.

With its shiny texture, the Round recalls 80s skiwear. On social media, it has been compared to designs by Norma Kamali and Charles James. Available for American customers to pre-order this week – with a European launch expected – it costs $200 and arrives in the autumn. The satisfaction and prestige of owning what is being touted as a piece of fashion history comes free with purchase.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.