Attempting to offset dwindling growth in the US, Gap executed a grand opening in China last year. However, a year on it has failed to grab much of the 16 percent retail sales growth in the country. It only has four stores, compared to Japanese chain Uniqlo’s 76.
Gap’s first problem in China is its brand image. It is not positioned as a luxury brand, hence could not demand its share of the USD13.6 billion worth of luxury goods sold in 2010. Nor is it seen as a value for money brand by the majority of China’s price sensitive shoppers.
In other words, Gap has fallen into the middle class image trap like many foreign retailers including Marks and Spencer. These retailers tried to target China’s 350 million strong and rising middle class but have surprisingly attempted to evoke the same images and aspirations of America’s middle class. China’s definition of middle class is very different from America’s.
(Source: CNBC)