Zara vs Gap Essay Example

Zara vs Gap Essay Example Zara vs Gap Paper Zara vs Gap Paper A Zara store in China. The chains owner, Inditex, surpassed Gap Inc. as the worlds biggest specialty retailer in the second quarter. But the lead may already have vanished. Image: epa/Corbis Based on first-quarter results, Zara International of Spain has closed the gap on Gap Inc., becoming the worlds largest fashion retailer by revenue, the Daily Telegraph points out today. Inditex, Zaras parent company, said first-quarter revenue rose 9 percent to 2.2 billion euros, or $3.46 billion at the time, while Gaps sales drooped 10 percent to $3.38 billion in the same period. Gap is certainly one of the mall-based retailers that has taken the hardest beating over the past year, posting double-digit declines in same-stores sales during many months as cash-strapped Americans cut back on discretionary purchasing. Zara, on the other hand, has continued to make good. Consumers are responding to the retailers fast fashion approach of translating runway looks into retail items at lightning speed, which has meant an ever-changing assortment of cheap, fashionable items in stores. The ability to offer inexpensive and à ¼aut;ber-trendy looks to consumers is still relatively new, and is changing the game for anyone looking to get a share of a young womans wallet. Gap hasnt adapted to the sea change all too well, having stubbornly stuck to its once-popular practical basics approach for too long. When times are tough, those are exactly the apparel items for which people are likely to start trading down to Walmart. Maybe its just Olympics fever talking, but were feeling particularly patriotic today, so here are a few reasons why Gap should keep its chin up: 1. The bulk of Zaras 3,900 stores are outside the U.S., where the consumer-spending environment has been significantly stronger during the first half of the year. Gap is unfortunate enough to do more than two-thirds of its business in North America. 2. An $80 million victory over Gap in sales can easily be explained away by the weakness of the dollar against the euro. Gap reports its results (not to mention, sells most of its inventory) in dollars, while Zara has the benefit of dealing in euros. (Indeed, the recent bounce in the buck would have Gap back on top if the figures were converted at todays rate.) 3. While Zara might have perfected the formula for attracting fashion-forward young women, its mens offerings are still nothing to write home about. New research shows that menswear is beginning to be the locus of retail growth, as a shift in mainstream mens fashion has made it essential to buy new basics. Meanwhile, women are tending to put off buying trendy items until the economy improves. So Zara, dont be so quick to dance on Gaps grave, okay?