Mind the gap

Updated: 2015-05-29 11:43

By Matt Hodges(China Daily USA)

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Mind the gap

With over 100 stores in China, Gap has laid a solid foundation for its sister brand to build on.

He told China Daily about building up Old Navy's database of China-based customers with campaigns such as one last year where shoppers were asked to guess the number of flip flops inside a fish tank and scan a QR code to register.

"You get that formula right, and it seems to work really well," he said. "For us right now, WeChat is super important, as is mobile messaging. The customer becomes sort of an insider. Weibo is important, too. The speed at which digital and social moves here is crazy."

Another "Super Cash" campaign, where customers earned "Old Navy money" that they could either share with friends via social media or redeem off future purchases, was so successful it may even be transferred to the US.

"Sharing with friends - that is something we have never been able to do in the US," said Barnes. "It is an example of where China is leading the way."

Retail 3.0

Art Peck, the new CEO of Gap Inc, which also owns Banana Republic, Athleta and Intermix, discussed the shift from bricks and mortar to online and mobile under the term "Retail 3.0" in an interview with Fast Company.

Picking up on this thread, Barnes said: "In markets where you have a store presence, you have a stronger online business. Is there showrooming going on? Sure. Right now we see a need for both to exist. But it is rapidly changing."

Gap Inc reported global online sales of $2.50 billion for fiscal 2014, up from $2.26 billion a year earlier. Although it does not disclose country-specific figures in Asia, media reports claim its China revenue hit $300 million in fiscal 2013, a number the group was expecting to see triple by 2016-17.

In China, total online retail sales surged 53.6 percent in 2014 to 2.8 trillion yuan ($450 billion), according to a March 31 report by Knight Frank. This accounted for 10.6 percent of all retail sales in the country, up from 7.6 percent in 2013.

Both Gap and M&S now have online stores on Tmall.com and JD.com, the country's leading online marketplaces. M&S saw clothing sales on the former spike 200 percent in the last quarter of 2014. In January, it launched a new dedicated kidswear store on Tmall offering over 300 lines.

"Continuing our 'bricks & clicks' strategy, we are leveraging e-commerce to strengthen brand awareness and reach across the country," said a spokeswoman for M&S China.

Sweden's H&M launched an online store in China last September and Spain's Zara followed suit on Tmall, the largest B2C website in China, in October.

Old Navy has also jumped on the Tmall bandwagon as it finds non-traditional marketing methods to be the new normal in this country of 1.4 billion, half of whom now live in cities.