Gap Inc. is franchising to bridge cultures and bring its American clothing and accessories to markets around the globe.
A new agreement with Dubai-based Al Tayer Group will bring Gap Inc. (NYSE: GPS) into five Middle Eastern counties: Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. Al Tayer expects to open about 25 Gap and 10 Banana Republic stores by 2010. The first Gaps will open by the end of this year; the first Banana Republic store will open in 2007.
Their young, affluent populations make these countries particularly attractive said Kris Marubio, a Gap spokeswoman.
Gap Inc. signed its first-ever franchise agreement in January with Singapore-based F J Benjamin. That opens the doors for up to 30 Gap and Banana Republic stores in Singapore and Malaysia by 2010. The first South East Asian stores will open around the same time as the first Middle Eastern stores.
Franchising is an effective way to skirt local laws against opening foreign-owned stores. The right franchise partner also helps a retailer tailor its merchandise to local tastes.
Al Tayer Group operates franchises for Gucci Group, Michael Kors, Giorgio Armani and Harvey Nichols, among others.
F J Benjamin operates about 100 stores throughout Asia for brands like Valentino and Guess?.
While franchising will help grow Gap’s brands gloablly, international remains a small percentage of Gap Inc.’s overall business and doesn’t address some of Gap Inc.’s recent problems, including slipping sales, in its home market.
Andrew Rolfe, the former president of Gap International who began the company’s decentralization of international operations in 2004, left Gap in February 2006. The company did not replace him.
Gap Inc. had 2005 sales of $16 billion and operations in five countries: the U.S., Canada, U.K, France and Japan.
No comments yet.