Gap, Inc: Demonstrates Strong International Growth

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Gap Hong Kong Store Opening November 2011

 

 

 

 

 

 

 

 

 

Gap, Inc. (“Gap” or “the Company”) released an announcement detailing its plans to build upon the current momentum of its international growth strategy. Gap reaffirmed its goal of growing total sales outside of North America and online to about 30% by the end of its fiscal 2013. Moreover, the Company plans to bring the first store of its Old Navy brand outside of North America to Japan within the next 1-2 years, and plans to “nearly triple” the number of Gap stores in China from 15 to about 45 by the end of 2012.
So, what is Gap’s marketing strategy when entering new markets such as Japan and China? According to the press release, Gap typically enters the new market with brand-building “flagship” stores, followed by outlets and other smaller stores in outlying areas. Once these stores pick up, the Company may decide to apply a franchise model to increase expansion in the regions. Personally, I think this model is solid because it mitigates risk. By opening just a few flagship stores early on, you sort of test the waters of the market without having a huge investment. If the flagship stores fail, the Company can reassess its decision to fully commit to entering that particular international market.
What are your thoughts on this strategy? Is Gap being too cautious by slowly entering these markets at first or are they pacing themselves appropriately given the risk?

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1 thought on “Gap, Inc: Demonstrates Strong International Growth”

  1. I think they are using the right amount of caution especially since at the same time they announce their foreign expansion they also announced the closing of 200 stores in North America in an attempt to regain ground here. Entering with a flagship allows for people to get to know the brand better and I think it is also good for oohs and ahhs by making the brand seem grand. I find it interesting that the next step is to open outlet stores.

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