Gap gains ground in China

26 October 2011

BEIJING: Gap, the apparel retailer, is making rapid progress in China, and believes learnings taken from the country can strengthen its position around the world, including in the US.

Currently, between 60% and 70% of the clothing sold by Gap stores in China differs from that in America, whereas the rest is adapted or developed domestically to suit local preferences.

"There are a lot more high fashion products here than in the US because young people here spend 30% to 40% of their income on apparel," Redmond Yeung, president of Gap Greater China, said, the Financial Times reported.

Such a figure compares with roughly 8% in America, a trend driven both by rising affluence, changing tastes and cultural factors. "Here you go out more often, you don't entertain at home, so you need more clothes," Yeung said.

At present, China provides under 1% of Gap's total business, but Yeung predicted it would become the organisation's second-biggest global market in the next few years.

The firm's design team based in Shanghai also now regularly passes on suggestions to colleagues at the international level, a process which is starting to exert a meaningful impact.

"A lot of good ideas are coming out of this market," said Yeung. As an example, he stated that Gap's US range for next summer was "more sexy in the cut" thanks to insights gained in China.

Gap officially unveiled its first Chinese store in November 2010, and today runs eight outlets in Shanghai and Beijing, with plans to expand into Hong Kong later this year.

Additionally, new branches will open in Hangzhou and Tianjin, offering access to 13m and 9m shoppers respectively, as these locations are among the 110 Chinese cities housing a population of over 1m people.

Yeung argued that the firm hopes to launch two Gap stores a month in China and Hong Kong during the coming 18 months.

It similarly expects to introduce Banana Republic and Old Navy brands within "a couple of years". While the latter of these chains focuses on lower-end items, rather than the luxury goods in vogue in China, Yeung was confident about its prospects.

"An Old Navy customer can also be a Louis Vuitton customer," he said.

Data sourced from Financial Times/Seeking Alpha; additional content by Warc staff