Blog: Leonie BarrieA Gap for international growth

Leonie Barrie | 19 October 2009

US clothing giant Gap Inc last week revealed a number of new ideas to try to stem slumping sales at its namesake brand and regain market share, including opening its first store in China next year.

The San Francisco based firm is also planning a return to television advertising in November following a two-year absence, as well as expanding its outlet stores, and launching online businesses in Canada and the United Kingdom in 2010. It also said it intends to reduce square footage by 10% over the next five years.

The moves, which were unveiled ahead of a presentation to investors, have been spurred by the success of its Old Navy brand this year, where same-store sales rose 13% in September.

The UK’s Marks & Spencer has also been hosting its own investor day – where expanding its international operations was also hailed as a “fantastic” opportunity for growth, with plans to build its business in China, India and Eastern Europe in the next few years.

Director Kate Bostock also stuck by the company's clothing strategy and hailed the recent launch of its Indigo brand. She also said the company was looking to maintain its lion's share of the men's wear and women's wear markets in the UK, whilst trying to bring children's wear up to speed as well.

Retailers can take some comfort from forecasts that suggest apparel is set to be a bright spot in this year's holiday shopping, even though sales will be largely driven by value. But there are also worries that moves by US retail chains to cut back savagely on inventory amid falling consumer spending and the economic downturn could, in fact, be setting them up for trouble in the run-up to the holiday season.

More worries for the industry come in the form of the European Commission's reported plans to extend anti-dumping duties against footwear imports from China and Vietnam. The Foreign Trade Association (FTA) has called upon EU member states to reject the proposed 15-month extension to the measures when they meet to make the final decision on the plan later this year.

Retailers are also coming under renewed pressure to pay a living wage to the workers making their garments. While many firms say they agree in principle with the idea, one of the biggest problems has been trying to put an actual figure on the amount that should be paid. But all this could be about to change with a new Asia Floor Wage campaign that wants to see the equivalent of a $475 a month minimum wage throughout Asia.


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