Monday, August 24, 2009

Gap - Israel

Traveling in Israel next year and worried you'll have a casual wardrobe crisis?
Have no fear! Announced just today, the Gap - and it's higher end sub-division, Banana Republic - are slated to open in the Holy Land in the Fall. Here's the report from JTA:

JERUSALEM (JTA) -- Gap Inc. has signed an agreement to bring its Gap and Banana Republic stores to Israel.

The corporation announced Monday that it had inked a franchise agreement with Israel's Elbit Trade & Retail Ltd.

The first Gap store in Israel is scheduled to open in the fall. The first Banana Republic store is slated for the spring of 2010.

Gap Inc. also has signed agreements to open stores in Egypt and Jordan. Stores already are located in Middle East countries such as Qatar, Saudi Arabia, Turkey and the United Arab Emirates.

But will Israeli's buy it? Here's a fun little article written up last week on which might answer the question. The interview is with Arik Ben-Zino, CEO of Elbit Trade & Retail. He of course thinks this thing will fly with the average Israeli consumer.

Elbit Trade and Retail Ltd. CEO Arik Ben-Zino is relaxed, as the man behind the signing of the exclusive franchise agreement with Gap Inc. (NYSE: GPS). He is also CEO of the Mango fashion retail chain, and he thinks he got a good deal. He is unconcerned that Gap suffers from fading sex appeal, boring fashion sense, and plummeting sales, including a 7.4 percent drop in revenue in the first quarter of 2009 compared with the corresponding quarter of 2008.

In an exclusive interview with "Globes" monthly magazine "Firma", Ben-Zino said, "Are Gap Kids and Baby Gap in decline. No." To explain his marketing rationale, he adds, "70 percent of the clothes in closets of most Israelis are basic brands. When we created focus groups, we found that the concept of basic was deep-rooted, so we thought that a brand that is entirely basic, basic American clothing, would have a bid advantage and be real news. It's possible to find different basic items in all kinds of stores, but as a concentrated general experience -- there is no such thing in Israel."

Ben-Zino added, "We've been in the market long enough to understand this power. On this playing field, we're quite alone with the concept. The brand itself is the largest in terms of numbers in the retail sector in the world. The brand is upgrading. We can choose from an immense collection. If it's possible to fill a 5,000-square meter store in the US, I can fill a 600-square meter store in Israel. Besides, we think that the Israeli market has a very special connection to this brand; a strong emotional connection. It's our job not to ruin that."

Elbit Trade is a wholly-owned subsidiary of Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT), which owns the malls where Gap stores will open.

Well, at least the logo should be pretty concise in Hebrew: Gimmel, Peh. What do you think?


josh said...

One less reason for not making aliyah.

Blintzkrieg said...

Depends on what you think of the Gap. Personally, I find them kinda "m'eh."

Still, good for Israel to have more major brand stores open up. Makes the country more tourist friendly.

josh said...

Blintzes, what's with the m'eh lately? LOL

Gap making aliyah so late in the game, the company will need to be very creative to sell much. The 'American Gap look' has been copied long ago and for cheaper. The local carbon company casual FOX sells similar designed chinese made clothing for dirt cheap and the quality is not bad at all. I wonder if Israeli Gap will try to play the snobby upscale market or swamp the market with affordable clothes.

Blintzkrieg said...

Josh, you're right. I've been on a "m'eh" kick lately. I'll shelve that expression for awhile.

As for Gap and the upscale market... I've never seen those words used in the same sentence. But who knows? Israeli business savvy being what it is, maybe the Gap will turn to some sort of hi-tech, future clothing line.

Anonymous said...

Here's an inside scoop from Jerusalem. I had the misfortune of walking past the Malcha Mall on GAP's opening day. If you are looking for stupendously overpriced and horrifically boring clothes made in sweatshops then the GAP is the place for you. Elbit is a major contributor to the banalization of Israeli society that has seen an explosion of malls and crappy fast food joints open up everywhere.

As for me? I don't shop in malls, I eat at little Ma and Pa places and luckily Israel has not one but two American Apparel stores, one in Jerusalem and one in Tel Aviv. The Tel Aviv store is one of the company's most successful and NONE of the clothes are made in sweat shops. Oh and the owner of the company is a nice Jewish boy from Montreal.

F the GAP.