You're reading: Gap jumps into market with Kreshchatyk store

Global casual wear giant Gap enters Ukraine's fast growing clothing retail market.

After three years of eyeing the Ukrainian market, global casual wear giant Gap opened its first store in the nation on June 8. The U.S.-based company picked a prime retail spot on Kyiv’s main street of Khreshchatyk.

Amid stagnating sales in the highly saturated North American market, Gap has been repositioning its brand internationally by modernizing its signature look amid plans to close 200 stores worldwide by 2013. It plans to convert some to discount outlets, leveraging these with expansion of international and online sales.

It’s an exciting time for Ukraine …and Ukraine has a very fashion-conscious consumer culture.

– Stefan Laban, franchising manager for Gap’s international unit.

Ukraine, with 45 million people, represents one of the largest and fastest growing retail markets in Europe.

With few international players present, Gap’s market entry appears to be timed well for its international strategy.

“It’s an exciting time for Ukraine …and Ukraine has a very fashion-conscious consumer culture,” said Stefan Laban, franchising manager for Gap’s international unit.

“One reason why we came right now is having the right real estate and right store, which makes a statement.”

Ukraine’s total retail market sales in 2010 were $66 billion, with $8.5 billion in Kyiv alone, according to NIKO Asset Management, based in the capital.

Laban said that he has received “really good feedback” from Ukrainian online consumers who he said appear drawn to the American aesthetic of modern laidback wear.

Two more Gap stores are lined up, another one in Kyiv and one in Dnipropetrovsk by the end of the year.

While Gap’s domestic stores are struggling – the company’s net sales in 2010 were down $1.3 billion from 2006 – it has emphasized more trendy products in addition to its perennial pieces that include chinos, jeans and white shirts.

In recent years, it has participated in high-end collaborations with renowned designers to push the brand’s offerings in new directions.

It has had dresses designed by Roland Mouret, and last season it worked with Italian couture house Valentino, where signature Gap khakis were embellished with ruffles and zips.

The 836 square-meter store in Kyiv has the mainstay khakis and white shirts plus more trendy “black pants”, a “perfect trouser” to go with women’s lingerie and sleepwear, the latter of which Gap doesn’t offer in many of its North American stores, said Laban.

Although Gap usually targets the 25-to 30-year-old demographic, Laban said Gap offers something for everyone.

The store also has baby and kids clothing that Laban said should appeal to consumers with their “entirely new colors, design, look and competitive pricing.”

The franchising manager said Gap offers competitive prices in comparison to other clothing retailers in Ukraine.

According to a late 2010 Gfk Ukraine market study of Kyivans, 16 percent of respondents said they purchase clothes or footwear in brand-name shops.

In the same study, 39 percent said they prefer Collin’s, 28 percent prefer Columbia and 24 percent prefer Sela, all casual wear retailers.

Last year international and online sales made up 22 percent of Gap’s $14.7 billion in sales.

It plans to make up 30 percent of that share by 2013 and plans to reach 400 franchised stores by 2012, up from the current 180.

The Kyiv Gap store is franchised to Turkey’s Fiba Holding A.S., which also manages the company’s locations in Turkey (Gap and Banana Republic) and Russia (Gap brand).

The reason for Gap’s growing overseas success, experts say, is that the product and stores appear new and novel to consumers abroad.

Started in 1969, the San Francisco-based company has 3,100 company-operated stores and 180 franchise stores. It has 520 stores in 32 countries.

Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].