US clothing chain Gap Inc plans to open 10 to 15 stores in Australia over the next three years as part of a big push in Asia to offset soft sales at home, a senior executive told Reuters on Wednesday. "We are in talks with mall owners; the timing really depends on the real estate," Gap's head of strategic alliances Stefan Laban said in an interview.
He was in Melbourne to open the chain's first Australian store on Thursday. A Sydney store is due in October. Gap has had trouble finding large enough spaces for its flagship stores, with the Melbourne store at 1,200 square metres about three or four times the size of an average Australian clothing store.
The US firm, one of the world's largest apparel retailers and owner of the Gap, Old Navy and Banana Republic chains, has cut costs at home to counteract a protracted domestic sales slump.
A push into Australia is part of a move by global retailers to cash in on growing consumer wealth across Asia. Gap is expanding into Southeast Asian countries such as Thailand this year. It plans to open its first four stores in China later in 2010. "What you are going to see over the next year is a really fast-paced expansion in Asian markets (for Gap)," Laban said.
"The big focus is China now because the potential is massive; the strategy is to do the big cities first," he said.
Gap reported higher-than-expected quarterly profit last week, helped by an expansion of online shopping to a total of 55 countries, but its same-store sales in North America continued to slip, falling 4 percent. Laban acknowledged that the weak state of US consumer spending was driving the push into Asia. US consumer spending was subdued in July.
"The US market isn't strong right now so the more international business you get in, the more balance you get," he said. Laban added Gap plans to open more stores in Thailand, Singapore, Malaysia, Indonesia and China in 2011. Laban expected US sales for Gap to improve in coming months driven by new products.
"If you wait two to three months, we will get some good strides in the US market," he said.
Global retailers have their sights set on Australia as they reach out to new markets, but they may have their work cut out with Australian consumers in a new frugal mood. Spending has been weak this year as shoppers digest a string of interest rate hikes. Retail sales rose just 0.2 percent in June.
Spanish fast-fashion icon Zara parent company Inditex said last month it will expand in Australia and in South Africa in 2011. It opened its first stores in India this year. Swedish fashion giant Hennes & Mauritz is rumoured to be eyeing Australia, but told Reuters recently it has no concrete plans "for the moment".
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