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Can All-American Gap Succeed in India?

Gap (GPS) has always celebrated its all-American aesthetic: casual, colorful, optimistic. Facing competition from Zara (ITX:SM) and Uniqlo (9983:JP)in particular, sales in America have been falling. The brand reported (PDF) on Thursday that second quarter net sales slid 5 percent, to $850 million, compared to the year before. So Gap has been opening stores in China, Brazil, Hungary, Costa Rica, and plenty of other countries. It operates in more than 40. Now it is entering India for the first time, in partnership with a local retailer. Gap hopes to open 40 stores in India’s two biggest cities, Mumbai and New Delhi, by 2015.

India, with a growing middle class and a huge population under 25, is an attractive market for retailers. Indians even like to go to the mall. In a conference call, the chief executive officer of Gap, Glenn Murphy, noted that Gap has “strong brand awareness” in India. But high tariffs—and the resulting high prices—have made it tough going for overseas companies.

The experience of Gap’s partner, Arvind Mills (sign-in required), might help with this. It is one of Asia’s largest denim producers—and a longtime Gap supplier. The company operates more than a thousand retail outlets for Nautica (VFC) and Tommy Hilfiger (PVH), two very American brands.

When I spoke in March with Gap’s creative director, Rebekka Bay, about designing for people around the world, she said she knows what they want: an American look and feel and spirit. “That’s not founded in any research,” she said. “That’s just super-intuitive.”

Berfield is a writer for Bloomberg Businessweek in New York. Follow her on Twitter @susanberfield.


Companies Mentioned

  • GPS
    (Gap Inc/The)
    • $42.54 USD
    • -0.79
    • -1.86%
  • ITX:SM
    (Inditex SA)
    • $29.82 EUR
    • 0.11
    • 0.37%
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