Reliance Retail is closing in as the new India franchisee of US fashion brand Gap Inc., two people familiar with the development, said. Reliance has been in talks with Gap for months and had lately emerged the front-runner to clinch the deal ahead of Myntra that was also in talks with the American fashion apparel brand.
One of the persons quoted earlier said Reliance Retail has been able to extract huge concession of manufacturing 100% of all Gap products to be sold in India – up from about 70% that previous franchisee
was allowed to source locally.
A spokesperson for Gap in the US said the company cannot comment on “rumours or speculation.” Reliance Retail did not respond to an email seeking comment. Gap has been scouting for an India partner for about a year after it snapped its ties with Arvind Fashions last year.
Arvind Fashions failed to turn Gap’s business in India profitable even after closing and pruning store sizes and increasing local sourcing for the brand in India.
Analysts said intense competition from global rivals, including Zara, H&M and lately Japan’s Uniqlo, have impacted Gap’s business in India like in many parts of the world.
“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?” asked Harminder Sahni, co-founder of retail consultancy Wazir Advisors. “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.”
Then a wrenching Covid-19 pandemic forced retailers to close their outlets for months altogether in 2020 as India observed lockdown to curb the spread of the virulent virus.
Arving and Gap has cited the pandemic as a reason to call off their partnership. Arvind said Gap contributed about 4.7% to Arvind Fashions’ consolidated turnover, or ₹182 crore, in the fiscal year ended March 2020, with a loss of ₹34 crore before taxes.
Reliance Retail-owned online fashion platform Ajio already sells almost the entire collection for men, women and kids from Gap and is one of the largest stockists on Ajio.