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GAP Enters The Chinese Market, Pricing Challenges

2010/6/25 12:38:00 85

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GAP, the largest clothing retailer in the US, will open in Beijing, Shanghai and Hongkong by the end of this year.
专卖店，自此进入中国市场。

The plan was put forward by CEO Glenn Murphy at the end of 2009. Now it has chosen the advertising agency, Young & Rubicam (Shanghai) and the media professional investment service group, Mediacom, as its creative, public relations, media planning and buying company. Its first store will open in Chaoyang Joy City, Beijing, with an area of more than 1800 square meters.

GAP's sales profit increased by 40% in the first quarter of 2010. The figures are pretty good at first glance, but compared with their counterparts, it may be based on the previous year.

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After the downturn in sales, this year after the market has warmed up, each brand has an increase of about 40%.

In any case, CEO Murphy said that after two years' efforts to improve performance, the company is now seeking to increase investment to regain market share while expanding international business and giving us $300 million as a global media publicity budget.

In 2009, its sales in the international market accounted for about 19% of total sales.

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GAP, which is characterized by comfort and popularity, has a net profit of 11 billion 100 million US dollars in 1999. However, in 2002, the company failed to cancel the product line with a price below US $20, and lost its main survival base, low end consumers, which directly led to the decline in the performance of the next five years.

In order to return the funds, the continuous discount and rejection method has affected the brand image of consumers and the price expectation of their products.

Everyone knows that there will be a big discount. No one will rush to pay for the positive price products, especially for GAP, whose design timeliness is not too strong.

This situation did not improve until 2007, and thanks to the company's brand Old Navy.

In 2008, however, it was surpassed by the Inditex group of ZARA with 2 billion 200 million euro sales, leaving the position of the largest apparel retailer in the world.

In China, in recent years, ZARA, H&M, UNIQLO and C&A have come one after another, making the competition of fast fashion market increasingly fierce.

Each style has sprout everywhere, and there has not been much market gap for the brand that plates GAP as "empty".

The GAP with a 90 day shipment can not compete with ZARA and H&M for 12 days and 21 days at a speed. The style is not as popular as the two brands.

The key to GAP's opening up in China will be pricing.

In the United States, the price of GAP is not cheap, and a pair of underwear should be priced at about ten dollars. According to this calculation, after introducing China, I am afraid that it will sell more than 100 yuan. If so, I am afraid that few consumers will buy it. After all, there is also a good clothing store with similar style and cost-effective price.

This will be a big challenge for GAP.