Gap bucks retail headwinds with massive China expansion amid localisation drive
Amid widespread store closures by foreign fast-fashion players in China, US apparel brand Gap is defying industry headwinds. It plans to open 50 new stores in mainland China this year and return to Hong Kong by year’s end, following a localisation overhaul that has attracted more Chinese consumers. This expansion comes at a time when the world’s second-largest consumer market faces sluggish…
Facing a decline in sales due to the closure of many foreign fast-fashion stores, US clothing retailer Gap is making strides in China by launching 50 new stores this year. This expansion is part of Gap's strategic "China-for-China" localisation drive, which has seen the brand return to Hong Kong by the end of the year after a series of store closures in the country.
Gap's efforts have been successful, with a 20% increase in same-store sales in China during the first quarter of the year, marking a record high. The apparel brand, which struggled with contraction and store closures in the past, is now aiming to rebuild its growth trajectory in the Chinese market. With the support of Chinese e-commerce operator Baozun, who took over Gap's operations in the country in early 2023, Gap has achieved its first profit in the fourth quarter of the previous year.
Baozun reported opening 10 new outlets in the second quarter, with plans to continue expanding across various Chinese cities, including third-tier cities and the Tibet autonomous region. Industry analyst Wang Tianshi emphasized the importance of radical and structural localisation for foreign companies in China, suggesting that they should flatten organizational structures and empower local teams.
This includes tailoring merchandising to meet the tastes of county-level markets and specific consumer segments in China, reducing uniform global procurement, and aligning with the evolving preferences of Chinese consumers. Meanwhile, US premium apparel brand Ralph Lauren has also seen a significant surge in China sales, with a 40% year-on-year increase in the first quarter of its 2027 financial year.
The company's regional revenue in Asia, including China, grew by 24% compared to the same period last year. Ralph Lauren's success is attributed to its signature products, which have struck a balance between recognizability and broad appeal, catering to the middle-class consumers' demand for quality. The brand's premium lifestyle offerings have further reinforced its image, turning product purchases into an identity affirmation for Chinese consumers.
As Chinese consumers become more rational and discerning, fashion brands must focus on building irreplaceable value within niche segments rather than solely relying on scale.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
