Gap Inc is planning to roll out stores globally under its Janie and Jack and Athleta banners via a franchise model.
The US-listed fashion giant already has about 500 franchised Gap, Banana Republic and Old Navy-branded stores operating in 40 markets around the world with local partners, including in Asia. Now it sees an opportunity to boost sales by franchising its fast-growing domestic labels.
Athleta is a yoga-influenced sportswear brand which is competing with Canadian brand Lululemon. Janie and Jack is a childrenswear label it acquired from fellow US apparel company Gymboree which went into liquidation earlier this year.
Gap has learned from past experience that the best business model to launch in new overseas markets is through a local partner.
“We’ve come to realise there is local expertise that frankly we don’t have,” Roy Hunt, the senior VP of Gap Inc’s global franchise and strategic alliances division, told CNBC in an interview. “But we go through a lot of different steps to make sure we have the right partners. … For the most part, we are very selective.”
The company plans a multi-channel approach to overseas markets when it launches Janie and Jack and Athleta, with brick-and-mortar stores to be supported by websites, also operated by the franchise partners.
“Given the premium, gift-worthy children’s looks of Janie and Jack and the versatile, sustainable women’s performance apparel of Athleta, we feel the two brands will resonate with customers in new and existing markets internationally,” Hunt said in a statement.
He believes there is a “huge opportunity” for Gap in markets such as Asia, Europe and Central America.
“If you think about it, the primary benefit we have in doing this is that we are not investing our own capital … the partner is investing capital to build out the business,” he said.