Is the Gap effect enough for China?

Gap has had quite the comeback story across the West. A former casualty of the collapsing mall model, the American retailer has rebranded itself into a serious industry player — tapping into the sweet spot of today’s fashion trends. But does the brand carry the same weight in China? A trickier fit The mainland market has historically proven to be a tougher nut to crack. Gap Inc first entered China in 2010, initially greeted with promising momentum. Despite early optimism, the brand struggled to gain meaningful traction beyond top-tier cities, hindered by weak e-commerce integration and rising pressure from agile domestic competitors. “Gap used to be a very aspirational brand in China when it first entered,” says Shanghai-based trend forecaster and brand strategist Grace Mou. “Back then, it won over Chinese consumers with its unique DNA to sell an American middle-class lifestyle.” But as rivals like Uniqlo expanded their footprint, Gap’s edge dulled. “The competition intensified,” Mou says, and the brand’s appeal began to fade. Homegrown players have only raised the stakes, now accounting for around 70% of China’s fashion market — a stark wake-up call for any global name hoping to carve out space. “Gap’s mid-priced basics feel stuck in the middle, not affordable enough to beat Taobao brands, and not distinctive enough to compete with Uniqlo or rising local players like Peacebird,” says Patrick Steijlen, CEO of Sinolync, a Shanghai-based consultancy helping fashion and lifestyle brands grow in China and Europe. By February 2023, Gap Inc had offloaded its Greater China operations to Baozun, a local e-commerce service provider, in a $50 million deal. Now operating under a franchise model, the brand’s mainland business — along with its hopes of a China reboot — is in Baozun’s hands. Baozun’s President of Brand Management, Sandrine Zerbib, has been candid about the strategy shift. “It is critical for us to interpret the DNA of the Gap brand in a way that’s relevant for China, rather than simply copying and replicating Gap globally,” she said during a 2023 earnings call. To that end, a new local design team is in place, driven by data insights and backed by a shorter supply chain cycle tailored to the market’s fast-moving demands. Signs of life Since the announcement of its turnaround plan, promising signs of progress have emerged. Baozun reported its first net profit in over three years at the end of 2024, buoyed by strong performance in its brand management division, largely thanks to Gap. The company opened 40 new Gap stores in H2 2024, including 16 in Q4, bringing its total to 152 locations. Another 40 stores are expected to open this year, with plans to tap further into second-tier cities — a route many international brands are increasingly exploring to broaden their China footprint. But physical expansion isn’t the full picture. Gap’s digital presence in China remains muted compared to local rivals, with under 97,000 followers on Xiaohongshu (RedNote) and little online buzz beyond brand basics. Experts agree that an improved digital strategy could give Gap a competitive edge in China’s hyper-connected retail landscape. “Unless it localizes sizing, styling, and drops China-exclusive pieces, it’ll keep struggling for relevance,” says Steijlen. Mou concurs. “Chinese e-commerce is so advanced with different platforms, channels, and live-streaming, and Gap needs to move fast and smart with digital savviness,” she says. “The key thing to attract the young audience is to create social buzz and cultivate a large sum of user-generated content on Chinese social media.” Mou highlights potential strategies like experiential pop-ups and offline activations hosted in culturally resonant locations — from historic buildings to trendy cafés and stores — with event registration via WeChat and built-in incentives for consumers to engage, snap, and share on apps like Xiaohongshu (also known as RedNote). From mall brand to mainstream icon After all, Gap’s revival in the West has largely been powered by its cultural cachet. As consumers gravitate toward quality basics at accessible price points, the retailer has joined a wave of once-outdated mall brands — including Banana Republic, J.Crew, and Abercrombie & Fitch — that are reentering the mainstream. Top-level moves have reinforced this shift. Following the appointment of New York designer Zac Posen as creative director, Gap’s new direction turned heads when Anne Hathaway stepped out in a Posen-designed shirt dress at a Bulgari event last year. The look sold out within hours and now fetches more than double its original price on resale platforms. High-visibility endorsements like these, paired with buzz-generating collaborations with indie labels like Dôen and Cult Gaia, have helped Gap Inc. double its share price over the past year. Replicating that resonance in China will require a similarly savvy approach, with Mou emphasizing the importance of partnering with local KOLs and domestic brands for visibility. Gap took a tentative first step in 2023 with a China-exclusive collaboration with Wuhan-based label Attempt — a move that hinted at deeper engagement with the country’s indie fashion scene. But despite an encouraging response, follow-up creative partnerships have been scarce — a missed opportunity to further embed the brand in local cultural conversations. China challenges: Navigating tariffs and nationalism Adding to the challenge is the intensifying U.S.-China trade war, with tariffs on goods manufactured in China and entering the U.S. climbing as high as 145%. While Gap has taken active steps to reduce its dependence on China — cutting apparel sourcing to around 7% by shifting production to countries like Vietnam and Bangladesh — Steijlen points to a different kind of risk. He cites the brand’s 2018 map T-shirt controversy, which omitted territories claimed by China, such as Taiwan, as a key example. “Gap mostly sidesteps tariffs by manufacturing locally, but consumer nationalism is the bigger threat,” he says. “The brand needs to double down on its localized image under Baozun and show it contributes to China’s economy. Any misstep, like the map T-shirt incident, could erase years of work overnight.” In a market where digital engagement, cultural relevance, and hyper-localized marketing are key, Gap will need more than a store rollout to replicate its Western turnaround. With the right cultural cues and an ear to the ground, the brand could reignite its growth.

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Is the Gap effect enough for China?