US retailer Gap Inc has struck a deal with Europe's largest dedicated online fashion retailer Zalando to sell its core brand from next May. As Hayley Platt report it's hoping to reach more consumers, particularly in markets where it has no physical stores.
It's a deal that will help propel GAP into Europe. And add another global fashion brand to Germany's dedicated onliner Zalando. From next May customers will be able to buy Gap's core brand through Zalando's website. The US retail giant already has 200 physical stores in Europe and delivers to 24 European countries through its own website. But it doesn't have a presence in key markets such as Germany. Stephen Springham is from Planet Retail. SOUNDBITE: Stephen Springham, Senior Retail Analyst, saying (English): "Germany is a particularly hard market to crack. It always has been. So really they're really establishing a presence in that market through a low risk, relatively low capital intensive way. The returns might not be as great as if they're opening company-owned stores but the fact that it's so low risk probably out weighs that." Berlin-based Zalando started its business selling shoes in 2008. It now ships 1,500 brands to customers in 15 European countries. Gap has 3,500 stores worldwide but wants to reduce its dependence on North America. It plans to open 40 stores in India as well as strengthen its online business. SOUNDBITE: Stephen Springham, Senior Retail Analyst, saying (English): "It's a bit of a win win for both sides really. It's a pretty low risk, low capital intensity thing for GAP and Zalando it's got another global fashion brand to add to its portfolio, so it's hard to see anyone really losing out over this." Gap's biggest European rivals Inditex and H&M are also investing in e-commerce. But there's plenty of potential German online fashions sales are expected to grow to 30% by 2020 from 14% in 2012.