Reliance Retail is the newest Gap franchisee in India

13th October 2021, Mumbai:

Reliance Retail, India's retail behemoth, is set to become Gap Inc.'s new India franchisee. After cutting relations with Arvind Fashions last year, Gap has been looking for a new India partner for nearly a year.

According to The Economic Times, Reliance has been in discussions with Gap for months and has now emerged as the front-runner to seal the deal ahead of Myntra, which was also in talks with the retailer. Neither Gap nor Reliance has commented on the news.

The pandemic was mentioned by Arvind and Gap as a cause for terminating their cooperation. Gap contributed roughly 4.7 percent of Arvind Fashions' consolidated sales in the fiscal year ending March 2020 or Rs. 182 crore, with a loss of Rs. 34 crore before taxes, according to Arvind.

According to the article, Reliance Retail has gotten a major concession from Gap to manufacture 100% of all Gap items sold in India, up from roughly 70% that former franchisee Arvind Fashions was permitted to source locally.

Arvind Fashions was unable to render Gap's business in India viable, despite shutting and cutting shop sizes and improving local sourcing.

Experts think that Gap's business in India, as well as in other areas of the world, has been damaged by fierce rivalry from global rivals like Zara, H&M, and Uniqlo. Gap's men's, women's, and children's collections are already available on Ajio, a Reliance Retail-owned online fashion portal.

Gap is a bygone era brand that is still popular in the United States. Who in India will pay a premium to wear khaki, blue jeans, white shirts, and polo T-shirts from an American brand?

"Are there enough companies doing business in India, such as H&Ms, Zaras, and Uniqlos of the globe, that have stolen the market away from Gap even in the United States?" Harminder Sahni, Co-Founder of Wazir Advisors, a retail consultancy, agrees.

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