Gap could shutter even more US stores after closing 81 in the UK, analysts warn. 'We're in for some radical right-sizing.'

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Gap could shutter even more US stores after closing 81 in the UK, analysts warn. 'We're in for some radical right-sizing.'
Gap is closing its UK stores. Jeff Chiu/AP
  • Retail analysts are worried that Gap will be forced to close even more stores in North America.
  • Gap said Wednesday that it's shuttering all its 81 stores in the UK and Ireland.
  • One analyst also said that Gap's new Yeezy and Walmart lines smacked of "desperation."
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New York, Paris, Milan, London: the fashion capitals of the world. The four cities are home to the flagship stores of every clothes retailer with designs on the global market.

Yet Gap, the international retail icon famed for its laid-back American style, will soon be gone from London: it said this week that it's closing all its 81 stores in the UK and Ireland. And in Paris and Milan, Gap's future is uncertain: it's in talks to offload some or all of its French and Italian businesses.

It's no secret that Gap has been closing stores in North America for years amid falling sales. There were 552 Gap stores in the region at the end of May this year - precisely half the number there were a decade earlier, company figures show. In October last year, it set out plans to shutter 350 Gap and Banana Republic stores in North America by 2023.

However, retail analysts interviewed by Insider said that Gap's drastic action in Europe this week signaled that even more stores will need to be shuttered across North America. They also said that the company needed to completely rethink what it's doing in the US.

"I don't see them closing all their US stores by any means," said Natalie Berg, an independent retail analyst. "But I think we're in for some radical right-sizing. The uncomfortable truth is they still have way too many stores."

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Berg said Gap stores were "no longer fit for purpose."

"They can't just be about selling clothes any more," she said. "You need to give shoppers a reason to ditch their screens; give them an experience they can't get online."

Insider has approached Gap for comment.

From September, Gap will be online-only in the UK and Ireland. Berg said: "Lots of clothes retailers are doing the same thing, so now you have all this competition online. You have to ask: is online becoming a digital graveyard for failing brands?"

Maureen Hinton, an analyst at GlobalData, agreed that there was "probably more to go" for Gap's store closure programme in North America.

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She said: "Gap is really struggling to find its own identity - and it has been for a long time."

Hinton said that Gap needed "a much stronger strategy" for the US, focusing on "what its brand identity is all about - who it's targeting and how it's going to do it."

"It's got Yeezy at one end and it's doing things with Walmart at the other," she said. "That sounds like desperation."

Gap is banking on a collaboration with Yeezy, Kanye West's fashion brand, to help reinvigorate its fortunes. The first Yeezy Gap product dropped last month: a limited-edition, bright blue, recycled nylon puffer jacket with a price tag of $200.

Gap's new tie-up with Walmart is less flashy. The new Gap Home line, sold exclusively in Walmart stores, features a $43 stoneware dinner set and a $20 tie-dye shower curtain.

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Shoppers in London won't get to buy any of these things.

Around midday on Thursday, only a few dozen customers were browsing hoodies, jeans, baby clothes, and other apparel on the four floors of Gap's UK flagship store on Oxford Street, the heart of London's shopping district.

Amanda, 24, who shops at the store every few weeks for herself and her three-year-old daughter, said she hadn't heard it was being shut down. "I wore Gap stuff when I was a kid - my mum put me in it," she said. "She used to come here too. That's really sad."

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