Gap Inc is looking at emerging economies for growth as it struggles to arrest the decline in comparable sales and faces intense competition from fast fashion brands in the domestic market. A year after it entered the Indian market, the company will now sell its products online in the country, exclusively on Arvind Group’s fashion portal NNNow.com.
E-commerce in India is growing at a fast pace and tier II and tier III cities in the country are contributing significantly towards this growth. Most foreign brands do not have stores in these cities and the online channel is the only way for consumers to acquire these brands.
With growing disposable incomes of the semi-urban population in India, demand for foreign fashion products is increasing. The online foray will give Gap an edge over other foreign retailers such as H&M and Zara in India and allow it to tap into the growth outside of metro and tier I cities in the region. This strategy should drive overall growth for Gap in the region making it a revenue driver in the long term. With competitors such as Zara and H&M focusing on store expansion, Gap’s strategy to foray into the Indian online retail market can give it a competitive edge.
According to a report by Edelweiss Broking, the branded garment’s segment in India will grow to 48 per cent in 2019 of the overall ready-made garments market in the country from the 35 per cent level of 2014. The Indian branded apparel industry is estimated to be $10 billion in size and growing at 10-12 per cent rate per annum according to the report.
