Gap to close all 81 stores in UK and Ireland

clothes

International fashion retailer Gap has today confirmed it will be closing all 81 of its stores in the UK and Ireland by the end of this year.

Gap said it would close all its stores between August and September in a phased manner.

The company, which has been active in the UK since 1987, has already closed 19 stores in Engand, due to their leases expiring.

In a statement, Gap said: “In the UK and Europe, we are going to maintain our Gap online business. The ecommerce business continues to grow and we want to meet our customers where they are shopping. We’re becoming a digital first business and we’re looking for a partner to help drive our online business.

“Due to market dynamics in the United Kingdom and the Republic of Ireland, we shared with our team today that we are proposing to close all company-operated Gap Specialty and Gap Outlet stores in the UK and Republic of Ireland in a phased manner from the end of August through the end of September 2021. We are thoughtfully moving through the consultation process with our European team, and we will provide support and transition assistance for our colleagues as we look to wind down stores.”

Industry reaction

Simon Underwood, business recovery partner at accountancy firm, Menzies LLP, said: “Gap is the latest retail casualty of the pandemic and the decision to close stores in the UK and Ireland in the coming months will add to the growing number of job losses in the sector. With global sales down significantly last year, the US-owned retailer has reviewed its European operations and has been forced to take action to significantly reduce its bricks and mortar stores.

“Gap isn’t calling time on the UK marketplace altogether however. Its decision to continue its online operations in the UK and Ireland is further evidence of the shift in consumer shopping behaviour during the pandemic. The retail marketplace and shopping habits have been transformed by the pandemic and even if social distancing measures are removed later this month, many consumers will continue to gravitate online.

“With footfall and store sales down on pre-pandemic levels, many retailers are being forced to take stock and re-model their businesses for the future. By considering their options carefully, planning ahead and taking action at the right time, some high street retailers will transform successfully, but others may yet be forced to cut their losses and sell their brands to one of the fast-growing online platforms.”

A tale of two different fashion retailers – GAP exits while Primark releases a roaring recovery

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown spoke to Business Leader about the announcement.

The GAP sized hole in the high street which will be left when the US retailer closes its final stores at the end of September will be hard to fill, given the big names which have already left bricks and mortar shops behind. But Primark, one of the big fashion chains left standing, its likely to clean up from GAP’s exodus, attracting browsing shoppers whose options are dwindling. It is still turning heads on the high street, while one by one other fashion retailers fall by the wayside

In the trading update today from its parent Associated British Foods, Primark showed it is right back in the game after the pandemic closures which saw £1.1 billion wiped from its revenues.

Pent up demand amongst its loyal army of fashion fans was released as shops reopened in April, with like for like sales up 3% for the third quarter compared to the same period in 2019. That’s even with stores remaining closed for some of that time. Primark made back those pandemic losses and more, in just 16 weeks, with revenues reaching £1.6 billion.

Given that social distancing rules were still in force, limiting the number of customers in store, this surge in revenue is an even greater achievement.

A tale of two very different retailers has unfolded with GAP closing UK shops for good to go online only, while with these impressive numbers, Primark seems even more unlikely to reverse its decision not to launch a digital sales platform. Primark may look increasing like an anachronism, a bricks and mortar island fighting off an encroaching online tide, but it has shown that with a strong social media presence it can still entice queues of shoppers through its doors. Although the company notes the outlook is still uncertain, it’s been confident enough to continue with its store opening programme, with seven new shops launching around the world in the third quarter.

When GAP burst onto the British retail scene in 1987 with its brand of American style casual clothing, it was a breath of fresh air for the high street.

GAP was decades ahead in offering the athleisure styles which have become so popular during the pandemic. But even though revenues have surged at GAP over the past year, its own brand ranges haven’t set sales alight, with sales falling 16% in Q1 compared to 2019. By contrast its Old Navy line, sold mainly in the US, saw net sales growth of 25% in the first quarter, and its Athleta range saw growth of 56%.

GAP’s own brand apparel clearly needs revitalising and a fresh sense of direction, with so many other brands now competing in the casual space. Pulling shoppers into stores without a unique offering has become so much harder, particularly given that footfall in the UK is languishing at 75% in high streets and 73% in shopping centres, where so many GAP stores are based.

Shoppers have also become used to using their bedrooms as fitting rooms, and as sizing is easier to assess for casual clothes, have been sending fewer such items back.

In this changing retail landscape and with so much shopping shifting to online, shedding expensive rents makes sense for the company, particularly given the success of online-only fashion rivals. ASOS has already rifled through Arcadia’s bargain bins to take TopShop, Top Man and Miss Selfridge digital. Boohoo has scooped up Debenhams at a knockdown price for an online future.

However although the retail cards have undergone a major reshuffle, this doesn’t herald the demise of the high street. Customers will still want a human connection and retail will continue to play to this basic need. But over the longer term, the exodus of brands which used to have such pull over shoppers means those searching for style will increasingly find solace online, which could push high street footfall down even further.

So it’s likely that many remaining high street retailers will accelerate their plans to sharply reduce their high street presence and invest in digital platforms instead.

GAP’s exit exodus piles on the pressure to re-imagine our town and city centres. Council planners will have to make some difficult calls and change the use of retail spaces. Already, strict rules restricting the use of outside space by hospitality venues have been relaxed temporarily by local authorities. If made permanent, it could lead to former shopping centres flourishing longer term as restaurant quarters instead. New housing and smaller bespoke offices are also likely to take the place of former shops, providing a fresh stream of customers for the retailers that do survive.

This is going to need significant investment from the public sector with costs likely to be too high for commercial property landlords to go it alone. As campus style developments, our distressed city centres may once again find a new lease of life and bring fresh energy back into the retail ecosystem.

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