January 30, 2023

Great Indian Mutiny

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Gap ends deal with Reliance and returns to India

American fashion multinational Cape, considered to be the largest specialist in the industry in the entire US, is returning to India. The market where it ceased operations by mutual agreement, an agreement to exploit its brand through the retail channel it had with Indian conglomerate Arvind Fashions Ltd by the end of September 2020, and an agreement for the same. Purpose has announced the signing of a long-term agreement with Indian retailer Reliance Retail Limited.

Founded in 2006 as part of the Reliance Industries Limited group, it now stands alone as the largest retail company across India, playing its role as the parent company of supermarket chains such as Reliance Smart or fashion chains such as Trends. and Project Eve., Reliance Retail and Cap have signed a long-term franchise agreement. This will allow Reliance Retail to introduce and sell all CAP collections across all distribution channels within Indian borders.

The terms will see Reliance become Cape’s reference partner for India, thereby making available to the Indian consumer a diverse offering of men’s, women’s and children’s collections. Reliance Retail, with its presence in multi-brand stores, is expected to make its entry into the Indian company’s own stores with a view to making them available to the Indian public through a combination of online trading platforms. , as well as single-brand companies operating under the Cape brand. The first of these stores are expected to open their doors next fall of 2022.

The signing of the agreement does not come in response to the strategy maintained by the American multinational aimed at “developing the business of Gap in key international markets”, explained Adrien Gernand, General Director of the Department of International Licensing, Global and Wholesalers. Interval Group, through reports disclosed by the American company itself. “Partnering with local experts like Reliance Retail in India allows us to deliver our relevant, purpose-driven brand to customers around the world, while continuing to diversify our business portfolio through our partnership-based model.”

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“At Reliance Retail, we pride ourselves on bringing the latest and greatest to our customers,” says Akhilesh, “so we’re delighted to announce the addition of the iconic American brand Cape to our fashion and lifestyle portfolio.” Fashion & Lifestyle segment of Reliance Retail. “We believe Reliance and Gap complement each other to bring industry-leading fashion products and retail experiences to their consumers.”

Grow in an ownership model

From a broader perspective, by signing this new contract, Gap continues to advance in its strategy to give wings to a greater internationalization of the group, but they want to implement it as part of a studied road map, in any case, the assumption of risks that can affect the profitability of the company can be assumed. Some of the economic benefits that have already been affected, in light of the recent financial results reported by the company, and in adapting to the epidemic from the gap they tried to preserve permanently by launching all kinds of initiatives.

In this regard, CAP presented its strategic plan “Power Plan 2023” at the end of October 2020 as part of its decision to try to minimize its operating costs. The set of measures they came to completely restructure their business model, in short, their decision to close all international businesses in charge of directly managing multinational corporations, to put it in their hands. of third parties. An act that not only de-risks, but also ensures income through contracts with local partners to manage and open CAP stores under franchisees for the rights to exploit its brand, depending on the terms of each contract.

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A practice already operating in India through an agreement with its previous local partner, Aravind Fashions Ltd., is the textile supplier for its collections and is the one that governs the norms. Its new tie-up with Reliance, as well as its operations in other key regions for the company such as Europe. Mainly affected by the restructuring of its business model, Continental ended up transferring its business in France to the holding company Financiere Immobiliere Bordelaise, its franchise partner in Italy to OVS, and the United Kingdom. Despite the closure of its entire retail network and the creation of a joint venture with Next, it has allowed Gap to re-enter the British physical channel alongside its own space already located within the Oxford Street Next flagship. shop. At the beginning of September 2020, after signing an agreement with Calceran Group, Gap already anticipated all its international business, which they will try to promote and coordinate their internationalization. In Spain.

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