Gap Stores to Open By Holiday Season

bloombergRussia will be the 17th country to host Gap and Banana Republic outlets.
At long last, Russian women won't have to make an extra trip to France, Germany or Japan to dress American.

Gap Inc. said Tuesday that it struck a franchise deal with Turkish bank Fiba Holding to bring its popular Gap and Banana Republic brands to Russia.

Under the agreement, Fiba will open Gap and Banana Republic outlets over the next five years, Gap Inc., which is based in San Francisco, said in a statement. Financial details of the deal were not disclosed.

Fiba will open the first Gap stores this year, in time for the holiday season, the statement said.

Gap markets itself as offering "iconic American style, including T-shirts, hoodies [and] great-fitting pants." Banana Republic, which sells dressier and higher-end clothing, accessories and shoes, should open its first Russian store by late 2009.

Fiba Holding, Turkey's ninth-largest bank, already operates Gap and Banana Republic franchises there and is described by Gap Inc. as a company with "a proven track record in franchise operations in Russia."

The company has the franchising rights for British retailer Marks & Spencer, according to Fiba's web site, with a total of 13 stores in the country by the end of 2007.

The current deal makes Russia the 17th country with Gap and Banana Republic franchises, the statement said.

"With 80 franchise stores around the world, we've learned a great deal about how well our Gap and Banana Republic brands resonate," Ron Young, senior vice president of international strategic alliances for Gap Inc., said in the statement.

"We're very selective in choosing our franchising partners. It made perfect sense to expand our work with a strong existing partner to take our brands to the vibrant shopping areas in Russia."

When it debuts in the country's saturated fashion market, Gap Inc. will need to compete with more-established brands, such as Benetton, Zara, and Lee & Wrangler.

Benetton, for instance, already has 300 retail outlets in the country, including one in Grozny.

Marco Riflettivo, Benetton's commercial director, said that despite the presence of many players and growing travel opportunities, the domestic fashion market "is growing exponentially."

"Gap and Banana Republic venturing into Russia will give a positive impulse to trade in fashion by giving more choice to consumers," Riflettivo said.

Analysts, however, say Gap's brands may have trouble securing a foothold as a late arriver to the market.

Varvara Nekrasova, a Moscow-based fashion analyst, said the company's Russian thrust was long overdue.

To boost Russian sales, she said, Gap may need to re-tailor its trendy styles to suit the peculiarities of locals' taste, as well as the country's erratic weather.

"Russian women, including housewives, love to be smartly dressed," Nekrasova said. "When Louis Vuitton was seeking to gain a bigger market share, they designed shoes specifically for Russian consumers called Moskva-Louis Vuitton," Nekrasova said.