Gap strikes deal with Zalando

Gap Inc has agreed to a deal with Zalando, the largest dedicated online retailer in Europe, for sale of its main brand, commencing May next year.

This has been done in a bid to reach more customers, especially in areas where it does not have physical stores.

The US-based company already trades with 24 countries within Europe via its website, and it has in excess of 200 stores within Europe, but has no representation in top markets like Germany.

Zalando, based in Berlin and recently listed on the Frankfurt stock exchange, commenced business by selling shoes during 2008.  It is now responsible for shipping 1500 brands to consumers across 15 European countries.  Its newest big-name addition is Top Shop in Britain.

In a bid to reduce its over-dependence on the North American market, Gap has plans to open around 40 stores within India, as well as build on its online presence.

Art Peck, the head of digital business at Gap, is to step into the position of chief executive during next February.  This comes after the sales in his division grew by 21% during the 2013 financial year, to reach $2.3bn, making up a percentage of 6 of total sales. The group’s larger rivals in Europe, H&M and Inditex, are also investing in its online presence, but via their own websites, rather than on Zalando.

Gap’s international business head, Stefan Laban, said the company has to have a presence where their customers are.  He said Zalando is the site with the highest number of fashion visitors in Europe and Gap hopes to become the biggest brand on this site.

Strategy&, a consultancy firm, stated that e-commerce will experience a growth to 30% of overall fashion sales in Germany, by 2020.  This is a 16% increase since 2012. Although this initial deal highlights the main Gap brand, Laban stated that the company may consider extending it to other brands, such as Old Navy.

Zalando is due to report figures for the third quarter on Wednesday.  It increased its first-half sales by 29.5% to reach €1.047bn.

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