Blog: Leonie BarrieRetailers ride China sales wave

Leonie Barrie | 18 October 2010

US specialty clothing retailer Gap Inc seemed to dominate the headlines last week. On the one hand it was forced to drop its new-look logo after a large-scale backlash from consumers. While on the other, the company unveiled the latest plans to grow its business online and internationally.

Gap's disastrous rebranding efforts saw the retailer forced into a U-turn after discreetly rolling out a new logo online. The image had been due to appear in advertising campaigns and some stores starting next month, but so huge was the backlash from consumers that the retailer has now decided to abandon its new look.

In another move, the company told analysts it sees online and international growth as a priority, but admitted there is still some way to go in righting its domestic business. It is opening stores in China and Italy this year, and it expects international and online sales to account for 27% of its revenues by fiscal 2013.

British luxury fashion house Burberry is also bullish about its growth in China, committing to new stores there after booking a 17% rise in first-half revenue helped by strong sales of coats and leather goods. The firm also expects full-year profit to be in the top half of market expectations, helped by the recent acquisition of its Chinese retail operations.

While Gap believes speed to market will be key to transforming its fortunes, the retailer is adamant is' not "going to fast fashion." Nevertheless, there's no doubt the concept of rapidly changing styles and low prices has forced the apparel industry to change - as delegates heard at the recent IAF World Apparel Convention in Hong Kong.

Changes are also taking place in the children's wear market after it emerged that private equity firm Bain Capital is to buy US children's wear retailer Gymboree in a deal worth US$1.8bn.

And US retailers Target and Walmart have been forced to remove children's products including boxing gloves and foam bead jewellery from their stores after independent tests showed they contained above-legal lead limits. The discovery comes more than two years after federal law established strict limits to protect children from these kinds of lead threats. 

Meanwhile, a war of words has broken out after the European Commission finally unveiled details of its plan to lift import duties on 75 tariff lines - mostly textile products - from Pakistan for the next three years. The move is intended to help the country recover from its recent floods, but the European textile and apparel industry claims the measure puts around 120,000 of its own jobs at risk. It also says the concessions would have no impact on helping those hit by the disaster.


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