American retailer Gap has confirmed it will close all its 81 stores in the UK in a phased exit and move online-only for the region.
The US fashion giant said it would close the stores in a “phased manner” between the end of August and end of September.
It comes just a few weeks after Gap announced it would close 19 stores in July whose lease was coming to an end. The company has not confirmed how many jobs are at risk – but it is estimated that around 20 people are employed at each store, which could bring the total job loss to more than 1,000.
Last year Gap launched a strategic review of the company that considered closing all of its stores in the UK and in other European countries.
Gap is also looking to offload its stores in France and Italy.
In October 2020, the company also said it was reviewing its warehouse and distribution model and its Gap and Banana Republic-owner e-commerce operations in Europe.
Parts of Gap’s European business could be transferred to third parties in a partnership model, the company said at the time.
“We believe in Gap’s global brand power. We are executing against Gap’s power plan and partnering to amplify our global reach,” the company said in a statement.
“We are not exiting the UK market. We will continue to run and operate our Gap e-commerce business in the United Kingdom and Republic of Ireland.”
‘Irreversible change’ in consumer behaviour post-Covid
Gap’s high street exit comes as a new report by global professional services firm Alvarez & Marsal (A&M) estimated that UK retailers will see profits fall by £8bn by 2025, as a result of the seismic shift to online shopping during the pandemic.
A&M’s also said that this consumer behaviour became more embedded as the pandemic went on, as their research revealed European consumers now expect to permanently shift around 20 per cent of their spending across apparel, homewares and electricals online – an almost fourfould increase from the beginning of the pandemic in May 2020.
“Covid-19 has wrought irreversible change which has left the future of many retailers hanging in the balance,” said Richard Fleming, managing director and head of restructuring Europe at A&M.
“Those businesses that will remain relevant and survive the disruption will be those that are able to realign operating models with the new normal and meet the needs of a post-pandemic consumer – but there will be an inevitable shake out of those that cannot do so before it’s too late,” Fleming added.
Lack of unique product offering
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the “Gap sized hole” in the high street that will be left at the end of September when the stores close will be hard to fill, but it has become increasingly difficult to pull shoppers in to bricks and mortar stores without a unique product offering.
“Gap was decades ahead in offering the athleisure styles which have become so popular during the pandemic. But even though revenues have surged at Gap over the past year, its own brand ranges haven’t set sales alight, with sales falling 16% in Q1 compared to 2019,” Streeter said.