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 overall retail sales, with brands such as Zara and H&M scaling back their number of stores.With Gap having gone through a period of contraction and store closures, the American fashion brand is striving to rebuild its growth track in China. Since Chinese e-commerce operator Baozun took over Gap’s mainland China, Hong Kong and Macau operations in early 2023, Gap has pursued its “China-for-China” localisation strategy and recorded its first profit in the fourth quarter of last year.Gap posted 20 per cent same‑store sales growth in China for the first quarter, a record high. Its plan to open 50 stores this year – from first-tier to third-tier cities, as well as in the Tibet autonomous region – has been steadily advancing, and 10 outlets were expected to have been opened in the second quarter, Baozun said in its first-quarter earnings report in late May.“To establish a solid footing in the current business environment, foreign companies must carry out radical and structural localisation,” said Wang Tianshi, an analyst at the Shanghai-based LeadLeo Research Institute. “They need to flatten the organisational structure and devolve decision-making power to local teams.