The Gap will close in Israel, and it’s not just because of its clothes
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The Gap will close in Israel, and it’s not just because of its clothes

The American retailer never got its foot off the ground in Israel, say industry experts

Jessica Steinberg covers the Sabra scene from south to north and back to the center.

At the grand opening of The Gap in Jerusalem's Mamilla Mall, August 2009 (Abir Sultan/Flash 90)
At the grand opening of The Gap in Jerusalem's Mamilla Mall, August 2009 (Abir Sultan/Flash 90)

The closure of The Gap’s seven stores in Israel brings about the end of another US chain that didn’t make it in Israel.

Israelis, it seems, were just not that into the decades-old fashion brand.

But that’s not the whole story.

The classic American label was brought to Israel by the late real estate magnate Motti Zisser, who owned Elbit Imaging Ltd., an Israeli holding company with activities in real estate, medical imaging, hotels, shopping malls, and retail.

When he opened The Gap in Israel in 2009, it drew major interest, particularly at its Mamilla Mall location in Jerusalem, where customers mobbed the store, racking up tremendous sales in just a few hours.

Several years later, Zisser was ill, The Gap wasn’t succeeding, and he tried selling it to a number of local companies, including Israeli fashion chain Castro, Gaon Holdings, and the Hamashbir Lazarchan department store chain, but none of those deals worked out.

At a one-time, one-hour 50% off sale, when thousands crowded into the Gap stores in Israel (Miriam Alster/Flash 90)
At a one-time, one-hour 50% off sale, when thousands crowded into the Gap stores in Israel (Miriam Alster/Flash 90)

He finally succeeded with the Zara Group Israel — also known as swimwear group Gottex for having purchased the famed swimwear company — which is now owned by the Trimera Group, controlled by Canadian Joey Schwebel and Chanan Elituv.

Trimera, based out of Canada, handles retail, marketing and manufacturing of apparel, much of it swimwear and sportswear, including several brands created by the Spanish Inditex group, including Pull&Bear, Massimo Dutti and Bershka, all of which are in Israel as well.

But sales at the Israeli branches of The Gap still never took off, said Dorin Palas, an analyst from I.B.I. Investment House, who has long covered local fashion imports.

“There are some chains that succeed more and some less,” she said. “It’s more about the tastes of Israeli buyers, and prices.”

H&M employees at the opening of the Jerusalem store of the Swedish retailer, one week after the Tel Aviv store, in March 2010 (David Vaaknin/Flash 90)
H&M employees at the opening of the Jerusalem store of the Swedish retailer, one week after the Tel Aviv store, in March 2010 (David Vaaknin/Flash 90)

The Gap’s failure in Israel isn’t just about the local market.

According to financial reports from 2014 and 2015, the all-American retailer has been facing stiff competition from trendier, lower-priced retailers like Swedish H&M, California’s Forever 21 and the Spanish Zara. They’re all retail brands that are better at turning around fashion trends more quickly and cheaply for fashion-forward customers.

The Gap closed 140 of its 800 US locations in 2016.

The Gap, said Palas, ultimately had a narrow distribution around Israel — a total of eight stores — one already closed in Beersheba last year — with a relatively small selection of its casual apparel inventory in the local stores.

When it comes to exposing the Israeli market to an American brand, even one as well-known as The Gap, more is better than less, said Palas.

“It’s about distribution and presence,” she said.

Any local retailer has to be present in the Israeli shopping experience, added Palas, and offer a similar experience to what the Israeli shopper experiences abroad.

“The Israeli customer is a customer of the world,” said Keren Kurtz, executive vice president of marketing and advertising at the Fox Group. “When they buy an American brand here in Israel, the experience has to be the same. The same collections, the same purchase experience. Sure, we make adjustments for climate and the particular needs here, but that’s what gives strength to our brands.”

The flagship brand of Fox Group Israel, a retail clothing company that includes its own label as well as other franchises (Courtesy Fox Group)
The flagship brand of Fox Group Israel, a retail clothing company that includes its own label as well as other franchises (Courtesy Fox Group)

Fox, a family-owned business known for its inexpensive T-shirts and sweatshirts emblazoned with the all-capital FOX name, has become Israel’s largest fashion group.

Now there’s Fox and Fox Home, as well as the shoes and bags of Charles and Keith, soaps of Laline, trendy wear at Mango and Sacks, preppy options at American Eagle, beachwear at Billabong , sneakers at Nike, pint-size apparel at Children’s Place and funky offerings at Yanga. They are all part of the Israeli Fox Group, owned by the Wiesel brothers, whose father began as the delivery man for the Fox clothing factory.

These days, it’s hard to wander around an Israeli mall without walking by several stores brought by the Fox Group.

“Every mall is full of Fox Group brands,” said Palas.

What differentiates Fox from some of its competitors is its mix of international and Israeli brands. Fox, Fox Home, Yanga and Laline were all Israeli creations, now brought to a much wider consumer scale.

“We have our brands that grew up here,” said Kurtz. “They’re household names. And we have the mix of international brands that fit the Israeli market.”

It’s all about retail, said Kurtz, and making sure that consumers can find what they need for their lifestyle, from clothing to shoes to sports.

“It’s the whole solution, and the experience of shopping for it, and that’s what customers expect,” said Kurtz.

A screenshot of UShops, which eases online purchases in the US for Israeli consumers (Courtesy screenshot)
A screenshot of UShops, which eases online purchases in the US for Israeli consumers (Courtesy screenshot)

Finally, online shopping may also have played a role in how an imported brand like The Gap failed to succeed in its Israeli brick-and-mortar stores.

Yaron Ben Eli, the CEO of UShops, an Israeli e-commerce site designed to help Israelis buy affordably from American sites, thinks that Israelis are buying more online, specifically from sites like the Gap, which are very strong in e-commerce, given the triumvirate of The Gap, Old Navy and Banana Republic, as well as Athleta, all available from the same e-commerce site.

UShop, which has a high rate of return customers, said Ben Eli, has many shoppers buying shoes from sites like Amazon and 6pm — some 6,000 pairs a month — as well as repeat customers shopping online at the Gap, Carters and Old Navy.

“Once you buy on sale from the Gap in the US, it’s hard to pay the prices they had here,” he said. “People like to buy straight from the source without the middlemen. The breadth and variety is also different. The amount they brought here can’t compete with what they have in the US, and people know that.”

And note to Israeli shoppers, everything is 50% off, until the stores close for good.

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