Gap’s China Plan: Chasing the Middle End Gap锁定中国中产阶层
US retailer Gap (NYSE: GPS) is bringing its formula for selling cheap but trendy clothing to mainstream young Chinese, with a plan that looks like a smart way to tap the nation’s growing urban middle class despite its late arrival to the market. Executives from the US chain, an early pioneer in the trendy, affordable clothing business whose image has become a bit faded lately, detailed their China plans during a trip to the region late last week for the opening of their first Hong Kong store. (company announcement; English article) According to reports from the event, the company plans to have 15 stores in China by the end of its current fiscal year, and then to triple the number to 45 within a year of that. Frankly speaking, the company’s arrival to China is a bit late, as big foreign names like Japan’s Uniqlo (Tokyo: 9983), Hong Kong’s Esprit (HKEx: 330) and Sweden’s Hennes & Mauritz (Stockholm: HMb) have all operated in the market for several years now. But that said, all these foreign chains do quite well in China, and their stores are often packed on weekends with eager young urban shoppers eager to spend their hard-earned savings on the latest trendy but affordable clothes that these companies all offer. I see no reason why another big name like Gap can’t survive in this market, especially if it can find the right clothing mix and create a marketing campaign to establish itself as a trendy fashionable brand with strong overseas roots. Of course, that might be easier said than done, as Gap’s image in the US has faded quite a bit in recent years as the brand ages and younger, trendier chains like H&M take a bigger slice of the market. Still, if General Motors (NYSE: GM) can take a nameplate like Buick, considered a stodgy older brand in the US, and make it into a popular mainstream name in China, then there’s no reason why Gap can’t draw on its years of experience to do the same thing in China, potentially building the market into one of its top global contributors in the next 10 years.
Bottom line: Gap’s entry to China, despite its lateness, could stand a good chance of success, catering to young Chinese with limited funds but who still want to buy the latest trendy clothes.
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