Gap Experiencing Rapid Growth in China

By Sam Gopal | 11 Mar 2015

US-based apparel brand Gap Inc. is among those retailers benefiting from a booming Chinese economy, as the latest Internet Retailer 2015 China 500 reveals 59 percent growth in online sales.

According to the latest Internet Retailer 2015 China 500 publication, the 500 biggest online retailers in China have increased sales by 59 percent in the last year, and international retailers like US-based apparel brand Gap Inc. are among those benefiting in the Asian market.

Featured at number 207 in the Internet Retailer China 500, stats reveal that traffic to Gap.cn increased more than 154 percent in 2014 and sales grew 131 percent from 2013. Gap’s total sales reached US$300 million in China in 2013 and the retailer aims to hit US$1 billion in 2016.

It makes China the second largest market for the brand outside of the US, and has led the company to invest heavily in an aggressive e-commerce strategy. Gap has also pushed a physical presence in China, opening more than 100 stores in the last five years.

The brand is also investing in its omnichannel operations, deploying technology to tie together its online and offline stores. Gap is testing ‘virtual wall’ technology that allows consumers to order products from online inventory while shopping in bricks-and-mortar stores in China.

“We continue to be excited by the response of Chinese customers,” says Jeff Kirwan, President of Gap Global in an interview with Internet Retailer yesterday. “Both Gap and Old Navy have been warmly embraced, giving us confidence to continue our expansion. We want to lead the way in bringing omnichannel to life in China.”

Chinese company, Shanghai Yi Shang Network Information Co., leads the charge when it comes to managing Gap’s own e-commerce site, Gap.cn, plus the retailer’s stores on popular Chinese web marketplaces including Tmall.com and JD.com.

Other US retailers are showing similar signs of growth in the Chinese market, with five fast-growing US-based retailers in the 2015 China 500 reporting an average growth in online sales of 98 percent over the previous year.

The China 500 database is an interactive resource that provides 154 financial and operating metrics for each of the 500 retailers profiled, including:

  • 2014 and 2013 web sales
  • monthly web traffic
  • conversion rates
  • average ticket
  • social network affiliations
  • payments and performance statistics

The online market in China grew more than three times faster in 2014 than the US or Europe, with online shoppers spending US$449.12 billion on retail sites, an increase of 49.7 percent from 2013, according to China’s National Bureau of Statistics. In contrast, the online market in the US only grew 15.4 percent to approximately US$305 billion, and Europe at 15 percent to US$316.90 billion.

Fuelling the rapid growth is a booming Chinese economy, which has experienced steady growth during the past three decades. According to the National Bureau of Statistics, China’s gross domestic product grew 7.4 percent last year, the highest growth among major economies, and personal incomes grew eight percent in 2014. This has led to rising incomes of China’s middle class, who now find themselves with a greater level of disposable income and able to capitalise on the growing online space.

The strength of Gap in China will help offset some otherwise disappointing sales figures for Gap Inc., with the company reporting its full-year profits were down 1.4 percent to US$1.26 billion in 2014. With the strength of the Chinese economy behind it, Gap will look to capitalise on further opportunities for growth and development in the market during the year ahead.

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