Less Ads, More Data, More Tools Register for FREE

Pin to quick picksMarks & Spencer Share News (MKS)

Share Price Information for Marks & Spencer (MKS)

London Stock Exchange
Share Price is delayed by 15 minutes
Get Live Data
Share Price: 295.40
Bid: 295.70
Ask: 295.90
Change: -1.50 (-0.51%)
Spread: 0.20 (0.068%)
Open: 297.30
High: 297.90
Low: 291.80
Prev. Close: 296.90
MKS Live PriceLast checked at -

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

REFILE-Gap Inc seeks new berth in China with Old Navy

Mon, 03rd Mar 2014 02:12

* Gap Inc to open 35 stores in China this year

* Targets price-conscious shoppers with Old Navy brand

* Will invest to boost online fans, lags rivals

* China No. 1 growth vehicle for Gap - China head

By Adam Jourdan

SHANGHAI, March 1 (Reuters) - When Gap Inc began anonline campaign ahead of the launch its Old Navy label in China,the iconic U.S. clothes retailer posed an important question toits potential Chinese consumers: have you heard of Old Navy?Only a few had.

Brand awareness is one of the uphill battles Gap faces inChina as the U.S. firm looks to increase its stake in theworld's second largest clothing market, where it lags rivals H&M, Japan's Uniqlo, owned by Fast Retailing Co Ltd and Inditex SA's Zara.

Gap, which launched its first Old Navy store in Shanghai onSaturday, plans to open five stores of the value-end chain thisyear as well as adding 30 Gap stores to its current 81, Gap'sGreater China president Jeff Kirwan told Reuters on Saturday.

"Outside North America this is the largest opportunity forus, acknowledged by all the senior leadership in the company.This is the number one growth vehicle for the company," Kirwansaid in an interview at Gap's Shanghai office.

A bastion of the clothing sector in the United States, whereit has around four percent of the apparel market, Gap enteredChina behind its rivals, setting up its first own-brand shop in2010. It now has around 80 stores, around half the number ofrivals H&M, Inditex-owned Zara and Uniqlo.

"I hadn't heard of Old Navy before. I was just passing byand saw something going on. It was my sister who told me it waspart of Gap," said Ji Yin, 30, queuing for the flagship store'slaunch in Shanghai's up-market Jing'an district.

Gap's China team plans to invest in promoting brandawareness with local shoppers, especially online, to play intothe rapid growth of China's e-commerce sector, a segment of theretail market that is unusually large.

"We're putting a lot of attention into e-commerce for bothbrands," Kirwan said.

They might need it. Gap's account on popular Sina Weibo,China's equivalent of Twitter, has just 86,000 followers, afigure dwarfed by Uniqlo's 3.6 million Weibo fans. Old Navy,which joined Weibo in January, has just 3,700 followers so far.

"If you can get a social media buzz in China it goes fastand wide, because Chinese people are very well connected.Without one, it's difficult for a consumer brand in China. It'salmost a must I would say," said Nick Debnam, Asia Pacificchairman for consumer markets at KPMG.

FINDING A NICHE

One hurdle facing Gap is that some consumers say it lacksthe trendy image of Zara but prices itself above affordablerivals such as Uniqlo, a specialist in basic clothing items. Gapsays with its Old Navy brand it will try to leverage anenergetic and enthusiastic "American voice".

"Gap's position in China is not very clear. It's outpaced byZara on a fashion level and out-competed by Uniqlo on theconcept of high-value basics," said Cherry Dai, Shanghai-basedproject manager at consulting firm SmithStreetSolutions.

Price is also an factor for China's cost-consciousconsumers. A pair of Gap women's jeans costs up to 599 yuan($97.48), higher than around 299 yuan ($48.79) in Uniqlo and 399yuan ($65.11) in H&M, according to a Reuters' analysis.

Kirwan said the key rivals for Old Navy - where a similaritem cost up to 299 yuan - would be Uniqlo and H&M.

Uniqlo has 260 mainland China stores, and has Uniqlo plansto add up to 100 stores each year. Tiger Pan Ning, Uniqlo'sGreater China CEO, told a press conference in Hong Kong onFriday that Uniqlo's wide store footprint, speed of openings,and its range of simple, everyday basics gave it a "competitiveedge".

In a market where low cost can be equated with low quality,however, price is not the only factor determining success.

"The most important criteria is of course the clothes beinggood-looking. The price should also not be too low," said WangManxue, 21, a female student in Shanghai, who shops at France'sEtam Developpement SCA and boutique Chinese brands.

GROWTH PROSPECTS

A shift towards mass market retail could work in Gap and OldNavy's favour. Lower-priced fast-fashion brands such as H&M andZara beat store expansion goals last year, while two-thirds ofhigh-end retailers missed their target.

Other mid-range brands have also struggled in China. EspritHoldings Ltd shut 38 directly managed stores last yearas it grappled with high rents, stalling sales and wholesalerswith too much inventory.

"I think Old Navy has a better shot (than Gap) of pushingdeeper into China," said Kirwan, referring to its potential inlower tier cities, increasingly the engines for China growth.

"We'll read the customer and if the customer is happy withthe brand then we'll get very aggressive and move quickly."

Though launching a new brand from a standing start willrequire substantial capital spending, there is significantpotential for growth in China despite fierce competition fromboth international and domestic rivals.

"The China market is just huge at that price level," saidVincent Lui, Hong Kong-based consumer sector partner atconsultancy firm Boston Consulting Group. "Just getting one ortwo percent could mean a couple of thousand stores."

More News
21 Aug 2023 00:00

Food tech company ENOUGH raises 40 million euros

New fundraising led by World Fund and CPT Capital

*

Read more
18 Aug 2023 11:18

Temple Bar laments "miserly" UK valuations but promises long-term wins

(Alliance News) - Temple Bar Investment Trust PLC on Friday said its net asset value saw a moderate half-year increase, and that its "fundamentally sound" portfolio will eventually bear fruit despite the tough backdrop.

Read more
18 Aug 2023 08:21

British consumers curb their shopping in rainy July

Retail sales -1.2% m/m in July vs Reuters poll -0.5%

*

Read more
17 Aug 2023 14:00

Sustainable Switch: H&M investigates Myanmar factories

Aug 17 - By Sharon Kimathi Energy and ESG Editor, Reuters Digital sharon.kimathi@thomsonreuters.com

Hello!

Read more
16 Aug 2023 16:55

LONDON MARKET CLOSE: FTSE falls on rate fears and niggling China worry

(Alliance News) - Stock prices in London closed lower on Wednesday, with interest rate-sensitive stocks on the back foot, as a robust core inflation reading poured cold water on hope of a Bank of England pause.

Read more
16 Aug 2023 14:19

H&M probes alleged Myanmar factory abuses as pressure intensifies

Cases of worker abuses at garment factories soar -report

*

Read more
16 Aug 2023 12:01

LONDON MARKET MIDDAY: Stocks down; UK inflation cools in July

(Alliance News) - Stock prices in London were lower at midday on Wednesday, as investors digest some mixed inflation figures and the impact they will have on the Bank of England's next move.

Read more
16 Aug 2023 09:29

LONDON BROKER RATINGS: RBC cuts Antofagasta; Shore likes Trainline

(Alliance News) - The following London-listed shares received analyst recommendations Wednesday morning and Tuesday:

Read more
16 Aug 2023 08:55

H&M probes Myanmar factory abuses as pressure intensifies

Cases of worker abuses at garment factories soar -report

*

Read more
16 Aug 2023 06:00

H&M probes Myanmar factory abuses as pressure intensifies

Cases of worker abuses at garment factories soar -report

*

Read more
15 Aug 2023 17:29

Sweden, UK lead European shares lower on rate-hike fears

China-exposed firms drop after weak economic data

*

Read more
15 Aug 2023 17:21

FTSE 100 hits one-month low as record UK wage growth drives pound higher

UK basic wage growth hits record

*

Read more
15 Aug 2023 16:56

LONDON MARKET CLOSE: Stocks slump on darkening China outlook

(Alliance News) - European equities suffered on Tuesday as poor data out of China compounded growth worries for the world's second-largest economy, while a red-hot UK wage inflation reading put the Bank of England under the spotlight.

Read more
15 Aug 2023 11:56

LONDON MARKET MIDDAY: FTSE 100 down as wage growth sparks rate fears

(Alliance News) - Stock prices in London were lower at midday on Tuesday, as wage growth fuelled talks of the Bank of England's next move.

Read more
15 Aug 2023 09:01

LONDON MARKET OPEN: Financials lead decline in FTSE 100; M&S jumps

(Alliance News) - Stock prices in London opened firmly in the red on Tuesday, following a mixed UK jobs print, and the latest stream of weak data from China.

Read more

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.