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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.


Canada: Gap store closures part of demise of women's mid-range clothing retailers

Friday, June 19, 2015 > 09:09:18


Newer brands find niche as upscale or cheap chic retailers to entice customers

The graveyard of women's fashion retailers continues to grow. Gap's looming mass store closure is part of the demise of primarily women's fashion retailers selling normcore, moderately priced, average-looking clothes.

More normcore outlet casualties are expected, as retailers pick extreme sides in the battle for women's shopping dollars: staggeringly cheap, disposable clothes or high-end luxurious pieces.

"Retailers that are focusing, that are going after a specific cluster or segment of people are having a lot of success," says Sasha Poljsak, Fusion Retail Analytics director. "While retailers that are just kind of sitting in the middle are basically stagnating and being picked apart."

Mid-range retailers close doors

Gap plans to close about 175 of its North American stores over the next few years, the company announced this week. Gap started heading down this path years ago, steadily decreasing its footprint on the continent.

In January 2004, Gap had 1,747 stores spread over North America, Europe and Asia. Together they boasted more than 16 million square feet stocked with the company's bread-and-butter of neutral coloured khakis, logo-bearing T-shirts and classic denim jeans.

By this February, the company had whittled its real estate down to 1,432 stores, covering 10.1 million square feet. After the upcoming closures, Gap will have fewer than 800 stores in North America, and about 470 international locations.

Gap is just one in a series of casual, mid-priced women's clothing retailers feeling the pinch.

In February, ripped and distressed jean maker Parasuco filed for bankruptcy, planning to shutter its seven Canadian stores. A month earlier, Jones New York readied to close its 127 shops.

Last year, women's clothing chain Jacob decided to close its 92 stores in Canada, Dutch womenswear retailer Mexx declared bankruptcy and Reitmans started the process of closing or renaming all 107 of its Smart Set sister stores.

Focus on cheap or expensive goods

This wave of closures is partly because women are spending their discretionary income on things other than clothing, says Kelly Packett, a Planet Retail research director in the U.S.

"Whether it's eating out... whether it's services — getting your hair done, getting your nails done — watching a movie," she says.

Women are also keen to own the latest technological gadgets, like FitBit activity trackers, she says, which historically has been considered an area where mostly men spend their money.

When women decide to spend their money on clothes, they're heading into a competitive landscape, crowded even more by online retailers.

Over the past decade, new retailers have captured extreme sides of the retail landscape. Customers can buy whole outfits for under $20 at stores like H&M and Joe Fresh. Curated outlet shops like Winners and Marshalls promise designer brands at affordable prices. 

[Companies] just really need to find out what they want to stand for and just focus, focus, focus.– Sasha Poljsak, Fusion Retail Analytics director

On the opposite side of the spectrum, women can drop hundreds of dollars on a single item at upscale boutiques. Some stores, like Hudson's Bay, have shifted their focus to high-end products, selling designs by Elie Tahari and Diane von Furstenberg.

Shoppers have so many options, says Poljsak, that they don't have to settle for the middle ground Gap occupies.

"If they're looking for the cheap chic, there'll be someone that does that better than the Gap," he says. "If they're looking for a specific brand, a high-end brand, someone's gonna do that better than the Gap."

It's not enough anymore to straddle the middle ground, he says.

Proving his point, the company's two sister brands, cheap chic Old Navy and more expensive Banana Republic, seem to be faring better. Since January 2004, Old Navy has grown to include 173 North American stores and 43 in Asia; while Banana Republic now has 175 more North American stores and 55 in Europe and Asia.

"[Companies] just really need to find out what they want to stand for and just focus, focus, focus," he says. "Do you want to go cheap? Do you want to establish yourself as more of a designer brand?"

Successful companies, like H&M, Joe Fresh or Hudson's Bay have found a niche and taken a stand closer to one of those extreme price points, he says, rather than spreading themselves too thin by trying to appeal to everyone, like the Gap.

Consumers demand compelling products

But price isn't everything to a consumer, says Packett. Many of these companies, like Gap, are closing shop because they're not selling interesting products with compelling stories.

Gap's selection "was easily substitutable with what was being sold in the store right next door," she says. "There was no personality behind it."

Merchants selling a look struggle, she says, while those selling a lifestyle can flourish. Women want the stores they frequent to embody the lifestyle they desire, Packett says.

J. Crew, which fell a little too in love with its look, is seeing sliding sales numbers, she says. Meanwhile, its sister brand, Madewell, is doing a great job curating its pieces.

Anthropologie similarly offers shoppers the pieces needed to create a specific persona, she says.

"Somebody who owns this T-shirt looks like they might also be serving iced tea out of those same glasses," Packett says of the lifestyle Anthropologie curates.

Gap, meanwhile, "peddled a look, not a lifestyle."


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