Retailer hopes Old Navy will bridge China gap

PUBLISHED : Monday, 03 March, 2014, 3:22pm
UPDATED : Monday, 03 March, 2014, 3:22pm

When Gap began an online campaign before it launched its Old Navy label in China, the iconic US clothing retailer asked its potential Chinese customers: have you heard of Old Navy?

Only a few had.

Brand awareness is one of the uphill battles Gap faces in China as the firm looks to increase its stake in the world’s second-largest clothing market, where it lags rivals H&M, Uniqlo and Zara.

Gap, which launched its first Old Navy store in Shanghai on Saturday, plans to open five stores of the value-end chain this year as well as adding 30 Gap stores to its existing 81, Gap’s Greater China president, Jeff Kirwan, said.

“Outside North America, this is the largest opportunity for us, acknowledged by all the senior leadership in the company. This is the No 1 growth vehicle for the company,” Kirwan said.

A bastion of the clothing sector in the United States, where it has about 4 per cent of the apparel market, Gap entered China behind its rivals, setting up its first own-brand shop in 2010.

“I hadn’t heard of Old Navy before. I was just passing by and saw something going on. It was my sister who told me it was part of Gap,” said Ji Yin, 30, queuing for the flagship store’s launch in Shanghai’s up-market Jingan district.

Gap’s China team plans to invest in promoting brand awareness with local shoppers, especially online, to play into the rapid growth of China’s e-commerce sector, a segment of the retail market that is unusually large.

“We’re putting a lot of attention into e-commerce for both brands,” Kirwan said.

They might need it. Gap’s account on popular Sina Weibo, China’s equivalent of Twitter, has just 86,000 followers, a figure dwarfed by Uniqlo’s 3.6 million Weibo fans. Old Navy, which joined Weibo in January, has just 3,700 followers so far.

“If you can get a social media buzz in China it goes fast and wide, because Chinese people are very well connected. Without one, it’s difficult for a consumer brand in China. It’s almost a must, I would say,” said Nick Debnam, Asia-Pacific chairman for consumer markets at KPMG.

“I think Old Navy has a better shot [than Gap] of pushing deeper into China,” said Kirwan, referring to its potential in lower-tier cities, increasingly the engines for China growth.