Gap Needs to Strike Balance Between Brand Image and Pricing Strategy in India: GlobalData
12 July 2022: India’s largest retailer Reliance Retail has partnered with Gap Inc. to bring the American fashion brand Gap to India. Reliance Retail’s formidable presence is expected to aid Gap in quickly scaling up its product distribution network in the country. However, the American specialty apparel company needs to strike a balance between brand image and pricing strategy to make a compelling proposition for the price-sensitive Indian consumers, opines GlobalData, a leading data and analytics company.
Bobby Verghese, Consumer Research Analyst at GlobalData, comments “Gap opened its first store in India in May 2015, as part of strategy to geographically diversify business away from the stagnating US and Western Europe markets. Despite being a mass-market American apparel brand and offering products at a lower price point than in the US, Gap gained little traction in India, with the country contributing less than 5% of overall value sales in Asia in 2020.”
Gap lost out to other international fast-fashion brands such as H&M, Mango, Vero Moda, and Zara, which are perceived as aspirational premium brands with more trend-led ranges. By late 2020, Gap terminated its franchise agreement with Arvind Fashions and permanently closed all stores in India.
Reliance Retail now plans to introduce Gap’s apparel offerings in India through a multichannel strategy, comprising exclusive brand stores, multi-brand stores, and online sales, including through Reliance’s direct-to-consumer (D2C) website Ajio.
The partnership with Reliance Retail will help Gap to gain a foothold in the Indian apparel market, which is forecast to grow at a 6.8% compound annual growth rate (CAGR) from $76.8 billion in 2022 to $93.7 billion in 2025 due to the rising middle class, growing urbanization, and youth affinity for Western clothing and accessories**. GlobalData’s Q2 2022 consumer survey reveals that 42% of Indian respondents typically purchase clothing & footwear products from global brands.
Verghese adds: “Gap can leverage Reliance’s manufacturing capabilities to produce goods for the Indian market instead of importing them, thereby lowering prices and reducing potential disruptions due to supply chain issues. This should enable Gap to attract the value-driven Indian consumers, as 51% of Indian survey respondents said they purchased clothing & footwear from mass-market brands in 2021, according to GlobalData’s Q1 2022 consumer survey.”
