GAP needs to fill the gap

Gap Inc. Chief Executive Glen Murphy announced last week in an investors meeting that decision was made to open GAP’s first namesake store in China next year. This is when competitors H&M, Zara & Uniqlo already started footing their presence in 1st tier cities in China a few years back. Despite being the world’s no. 1 fast fashion retailer in terms of sales revenue, Gap’s market focus has been in North America & Europe. It has moved much slower in international drive compared to Spanish Inditex & Swedish H&M (Hennes & Mauritz). Again, even as the global player, Gap’s profit margin is substantially lower that the no. 2 & 3. Its concentration on the western markets also hurt its 2009 performance.

Based on their respective 2008 annual reports, here is an interesting comparison of the world’s top 3 fast fashion retailers:

GAP
Brands: GAP, Old Navy, Banana Republic, Piperlime, Athleta
Store count: 3,145
Sales: USD14.5Bn
Net margin: 6.67%

INDITEX
Brands: Zara, Massimo Dutti, Bershka, Pull & Bear, Stradivarius, Oysho, Zara Home, Uterque
Store count: 4,264
Sales: Euro10.4Bn
Net margin: 12%

H&M
Brand: H&M
Store count: 1,800
Sales: SEK 88.5 Bn
Net margin: 14.7%

It appears that the Americans still have a lot to learn from the Europeans to fill the gap.