Is Athleta’s Canadian expansion a stretch for the Gap-owned chain?
Gap Inc.’s Athleta business is on a roll. The women and girl’s athleisure clothing chain, which is coming off a successful 2020 in which it passed $1 billion in annual sales, will open in the Canadian market for the first time later this year. The move will mark Athleta’s initial foray outside the U.S.
Athleta is looking to add 20 to 30 stores a year across North America over the next three years as it grows its locations to over 300. Its parent company announced last year that it would expand the chain’s footprint and that of Old Navy while closing 30 percent of the locations operating under its namesake banner as well as Banana Republic. Athleta, which was originally founded as a pure play e-tailer before Gap acquired it in 2008, opened its first stores in 2011. It currently contributes eight percent of the Gap’s total revenues.
The retailer’s initial approach to building its customer base was to follow the lululemon playbook. Athleta opened stores in close proximity to those operated by its yoga-inspired clothing chain rival. It also engaged in me-too activities such as offering space for classes in its stores and giving its merchandise to local yoga instructors to promote, while doing so at lower prices. With its move north of the U.S. border, Athleta appears to be following lululemon, which is based in Canada.
“International expansion is a key component of our growth strategy to reach two billion dollars in net sales by 2023, and we are very proud to introduce Athleta to customers in Canada,” said Mary Beth Laughton, president and CEO, Athleta, in a statement. “As a purpose-driven brand, we are excited to expand our community of empowered and confident women and girls to Canada and bring them a differentiated and inclusive offering in the performance lifestyle category.”
Athleta is looking to build on its digital heritage as it moves into this new market. A Canadian-specific website will take online orders, fulfilled in the country via a distribution center in Ontario. The retailer pointed out that online sales, as in the U.S., have risen dramatically in Canada in recent years and accelerated as the novel coronavirus pandemic hit. Athleta’s e-commerce sales were up in double digits last year in the U.S., with 60 percent of the chain’s total generated online.
- Athleta Announces Entry Into Canada – Athleta/Business Wire
- Gap Inc. Fourth Quarter Highlights by the Numbers – Gap Inc.
- Can Gap prosper without mall stores? – RetailWire
- Athleta Hot on Lululemon’s Tail – RetailWire
DISCUSSION QUESTIONS: Will Athleta’s business model in the U.S. translate to the Canadian market? Do you see the chain’s comp sales growth continuing at near its current pace once life in the U.S. and Canada return to some semblance of pre-pandemic normalcy?