Gap Signs Deal With Next To Run Its UK Business

Four months after Gap Inc. announced plans to shutter operations in the U.K., the company has struck a deal with Next to revive its business in the country.

The two companies are entering into a joint venture; wherein Next will host Gap branded concessions at select physical store locations as well as the company’s online business through the Next Total platform. Next will own a 51 percent stake in the venture, while Gap will own the remaining share.

The deal is the latest in a series of ventures Next has invested in over the past several months. In March this year, the company entered into a long-term partnership with fashion retailer Reiss in a deal valued at $273 million, which gave it a 25 percent stake.

Over recent years, Next has established itself as a successful and tech-forward retail player — an attribute that will be key to Gap’s success in the country. Gap has maintained its presence in the U.K. market since 1987 but has struggled to run a profitable business in recent years, finding itself stuck in a permanent cycle of offering discounts.

According to retail analyst Natalie Berg of NBK Retail, the deal is Gap’s “best shot” at reviving its business.

“The Gap brand might have lost its way, but it’s still a brand with a lot of heritage,” Berg told BBC. “The uncomfortable truth is that they had way too many stores.

“What Next is doing featuring it, as a shop within a shop, does generate excitement and make consumers want to go into the store.”

Berg added that the partnership between the two companies is ironic since they are both mid-tier brands that have competed for the same demographics of shoppers over the years.

“The pandemic has created strange bedfellows — who would have thought Next and Gap would have come together a few years ago?”

Originally published at https://retailbum.com on September 20, 2021.