Gap might increase prices due to tariffs on Chinese goods. While most of its products are from Vietnam, about 22 per cent still come from China. As the retailer plans to continue moving away from China and expand sourcing to other nations, but there are certain items — like sweaters — where China has a strong advantage. And this will ultimately be a tax on the consumer.
The trade dispute is just one of the challenges facing Gap. The company has struggled with declining mall traffic, operational missteps and disappointing growth. The Gap brand, in particular, has fallen short, and the company is increasingly relying on its Athleta and Old Navy chains for growth. The company’s success with its Athleta brand inspired its new men’s brand, Hill City, which fuses sportswear with everyday apparel.
Over the next five years, Gap plans to ramp up its acquisitions, using Athleta as a model. Gap will eye other companies with a similar profile that don’t have a lot of stores and could benefit from Gap’s platform. The company will also seek to boost e-commerce, hoping online sales make up as much as 60 per cent of sales by 2023. The company may have the same amount of stores by then, but they’ll be smaller and with more technology enhancements.