Business has been brutal for Gap Inc. The retailer’s sales were supposed to bounce back this spring. It’s just not happening. To recharge growth, the company now apparently is considering a new tactic: selling through third parties, including Amazon.
“To not be considering Amazon and others would be—in my view—delusional,” Art Peck, Gap’s very outspoken CEO, told shareholders at the company’s annual meeting yesterday (May 17), according to Bloomberg. “We are always considering all of the opportunities beyond our traditional mix of channels and stores. Amazon is certainly one, and there are others as well.”
It would make sense. Gap struggles with the same issues hurting other American retailers. Foot traffic in malls is declining, and Gap has too many underperforming brick-and-mortar stores. Many of its customers are buying online instead, often on Amazon.
The e-commerce monster is likely to become the largest clothing retailer in the US by next year, according to financial firm Cowen and Company. John Blackledge, a director and senior analyst at Cowen, believes sales are high for “replenishment” items, such as t-shirts and underwear. Those are also the types of items Gap could presumably sell on the site.
Gap’s own e-commerce sales, meanwhile, are dismal, at a time when online sales are booming. Sales of its basics could get a boost if they were available alongside all the other products on Amazon, where tens of millions of customers are shopping already. Getting in front of the estimated 54 million Amazon Prime members, who a recent Morgan Stanley survey found to be 5.5 times more likely than non-Prime customers to buy clothing “frequently” on the site, would also help.
That still doesn’t guarantee that Gap’s products, which are fighting competition from cheaper, trendier fast fashion, would sell better on Amazon. But Gap has to get something going. Peck is right: Not to consider a deal with Amazon would be delusional.