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Thinking Out of Its Box, Gap Explores New Roads For International Growth

Gap Inc. wants to boost its international presence and has a new president of Gap International to explore alternative growth paths, like joint ventures.

NEW YORK — Gap Inc. is looking to break its mold.

The retailer, which has built a global reputation on operating wholly owned stores, said Monday it is considering alternative growth avenues for its international business, including joint ventures, franchising, stores-within-stores and licensing.

At the same time, Andrew Rolfe, a retail operations executive who has experience in bringing brands across borders but none in apparel, was named president of the $1.7 billion Gap International division.

The 37-year-old Rolfe will join Gap in late January. He will be based at Gap’s San Francisco headquarters and will report to Paul Pressler, president and chief executive of the $14.5 billion Gap Inc. He also will be a member of the company’s executive leadership team. Rolfe left last March as chairman and ceo of Pret A Manger, a London-based food retailer one-third owned by McDonald’s Corp., with operations in the U.K., New York, Hong Kong and Tokyo.

Gap said it may soon test other operational models to further international growth, which this year is virtually on hold. At most, five stores will open, but in 2003 so far, there have been no openings. Still, Gap International is the only division that could show an increase in the store count. As part of its ongoing turnaround, Gap has been rationalizing its real estate, and this year will show a 2 percent drop in square footage, and a less than 1 percent drop in concept locations, which are where Gap operates more than one retail format. A Gap, for example, often operates side by side with a babyGap, GapKids or GapBody.

Of Gap’s total of about 3,000 locations running 4,200 store concepts: 261 units featuring 467 concepts are in Germany, France, the U.K. and Japan. The first Gap store outside the U.S. opened in London in 1987. The company does not operate any formats other than the Gap concepts outside North America.

Included in the total store count are the 107 locations in Canada, amounting to 16 Banana Republics, 29 Old Navy units and 187 Gap concepts. The Canadian operations report to Gary Muto, president of Gap U.S.

“At this point, we obviously feel we have significant opportunities to expand internationally, especially with Old Navy and Banana Republic,” a Gap spokeswoman said. “With that said, we are considering strategies that vary by country and could use different business models that work for specific cultures. We will apply some of the lessons we have learned over the years internationally.”
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