By Leonie Barrie | 15 October 2010
While righting its domestic business and turning top line growth into market share is seen as a priority for Gap Inc in the years ahead, another major focus for the future is international and online expansion.
The San Francisco based company is opening stores in China and Italy this year, helping triple its distribution to more than 80 countries in the space of 12 months. And it expects international and online sales to account for 27% of its revenues by fiscal 2013 – up from 16% in 2007 and 21% forecast for 2010.
“While never losing sight of our goal to gain market share in our North American businesses, our strong portfolio of brands combined with several powerful platforms such as outlet, online and franchise give us significant global runway,” chairman and CEO Glenn Murphy said in an investor meeting in New York.
“We’re operating in a $1.4 trillion business around the world, but we’re not in markets like China, India, South America or western Europe,” Murphy explained.
“So there are still lots of opportunities for us to take our diverse brands and multiple channels into a lot of countries that we’re not in today. And more importantly, to get to capacity in some of the countries we’ve just entered.
As well as getting a platform for its business in markets likely to see growth for many years to come, the company is also seeing a shift in the tools and channels that will generate this growth.
Four flagship stores will open in Beijing and Shanghai next month, there will be a website to sell its clothes to Chinese consumers, and outlet stores are planned in the country for 2012. Significantly, the move is seen as the stepping stone to a long-term, multi-channel strategy that will involve more stores in major regions, including Hong Kong.
Gap will also begin selling product online in Japan in 2011, and intends to expand its Piperlime online store to include more apparel, exclusive collections and men’s fashion, as well as testing another store next year for its Athleta athletic apparel brand.
The company is also exploring opportunities to open Old Navy stores outside North America. And it plans to double the number of franchise stores from 200 to 400 by 2015 as a key way of entering other markets.
“We’ve demonstrated in the last three years we can deliver even under tough circumstances; this is a bit of a shift in strategy,” Murphy noted.