This blog is becoming a little retail obsessed, but today’s announcement that US clothes vendor The Gap is indeed heading to Australia was hard to ignore (especially as I’ve dismissed the notion at least twice before).
I share the views expressed in the article that is a high risk move, and the Aussie customers will not be a pushover when it comes to pullovers etc.
While I personally find the Gap offferings very dull, I also struggle to see that they can make a network of 15 or so stores economically viable in a pretty well-developed, mature fashion market. I can’t see that customers will want to pay any price premiums for what are bog-standard tees and chinos. The firm has passed much of this risk onto the franchisee.
It should be a worrying signal to said franchisee that the firm only runs company-owned international operations in Canada (191 stores in total across the firm’s three brands), Japan (147), UK (138), France (40) and Ireland (3). Note that each of this is a pretty substantial commitment for the firm in terms of store numbers, and thus able to tap into some economies of scale (Ireland is presumably subsidised by the UK operations).
Gap’s head office leaves a whole range of much smaller (and typically developing country) markets to franchisees. The list is Argentina, Bahrain, Cyprus, Greece, India, Indonesia, Israel, Jordan, Kuwait, Malaysia, Pakistan, Philippines, Russia, Saudi Arabia, Singapore, South Korea, Thailand, Turkey and United Arab Emirates. There would seem to be a pretty big ‘gap’ between most of those locations and Australia…
Tags: Australia, business, finance, International business, International retailing, Internationalisation, internationalization, retail, Retailing, Strategic management, strategy, The Gap
International BS Blog 
March 27, 2010 at 5:51 am |
Even though you’re extremely brainy, I have to disagree. Look at starbucks, it still has some successful cafes in Melbourne, where according to your logic, it shouldn’t. I wouldn’t be too quick to underestimate the sheeplike nature of consumers everywhere, even in Australia with its “mature” fashion market (this is the same country that gave us stubbies and tanktops mind you). I think people will go to the GAP, possibly even big time, there’s so much advertising in movies etc. that I would be very surprised to see it go unshopped-in.