Apparel retailer Gap Inc. said on Monday that its electronic-commerce division, Gap Inc. Direct, would launch an online footwear business to grab a piece of the lucrative shoe business.
The unit is expected to be ready for the 2006 holiday season and will offer casual and designer footwear, the company said in a statement.
Gap Inc., which has struggled with slowing sales as competition in the apparel business has heated up, said its market analysis has shown its online apparel customers also buy shoes online. Sales of online footwear are rising by almost 15 percent annually, and the market is expected to reach $5.5 billion by 2010, Gap said, citing Forrester Research.
"Almost two-thirds of our online customers surveyed last year said that they would buy shoes online from Gap Inc.," Toby Lenk, president of Gap Inc. Direct, said in a statement.
"Gap.com, OldNavy.com and BananaRepublic.com are all consistently among the top 10 specialty apparel sites in terms of traffic, so we believe we already have an active and loyal customer base for online footwear," Lenk said.
Agreements with dozens of leading footwear brands have already been signed, the company said, though a spokeswoman declined to name those brands. The site will offer shoes primarily by other designers, but will also carry its own line that are already offered in its stores and online.
Stride Rite Corp., which owns the Keds and Saucony shoe brands but is best-known for its namesake children's footwear, is considering selling some of its brands through the Gap site, its Chief Executive Officer David Chamberlain told Reuters.
"We have not come to a conclusion on it yet, (but) we are looking at the opportunity," Chamberlain said.
Details on how Gap Inc. will obtain and sell the shoes were not yet available, a spokeswoman said, adding that more information will be released before the launch of the business.
Analyst Richard Jaffe at Stifel Nicolaus said an online business would avoid issues encountered in brick-and-mortar ventures, such as a high real estate cost, but risks still remain.
"You have very high return rates, as much as 25 or 30 percent on the Web, and that's very costly," Jaffe said. "There's also a reluctance by the U.S. public to buy apparel on the Web."
