NEW DELHI, India — Gap Inc. has announced its plans to open 40 new locations in India beginning in 2015, the first of which will be in Mumbai and New Delhi. The message came shortly after its second quarter earnings were released. The company experienced a three percent increase; though it may not seem like a significant jump, many of its competitors, such as Aeropostale and American Apparel, have experienced substantial sales decreases (each down thirteen and six percent, respectively).
Gap is encouraged by its figures – as it should be, especially when considering that more than three quarters of its sales are based in the U.S. In order to continue the upward momentum of this year, it is in the company’s best interests to continue setting its sights on outside markets.
The retailer could see an even greater increase once their doors are opened to a completely untapped customer base in India, which boasts the second-highest population in the world.
Gap has already dipped its feet into Asia, with a total of 231 stores and revenue in 2013 reaching slightly over $16 billion. Asia accounts for only nine percent of the retailer’s total revenue, but there exist plans to build upon this market as well, adding more than 100 stores this year alone. Gap estimates its sales in China will triple in the next three years to a staggering $1 billion.
The company isn’t the first or only major American brand to set its eyes on potential booming industries outside of the United States. Amazon announced just last month its plan to further develop its operations in India.
Also, in June of 2011, 50 major companies came together, pushing for Congress to protect the International Affairs Budget. This measure, as described by the U.S. Global Leadership Coalition (USGLC), “provides America with the fundamental tools to meet the global challenges of the 21st century and is critical to ensuring our national security, building economic prosperity and strengthening humanitarian values.”
The letter, signed by some of the biggest names in American business – including Microsoft, Google and Coca-Cola – clearly acknowledges the indisputable ties between the U.S. economy, foreign markets and global stability.
The benefits are two-fold: when large corporations such as Gap and Amazon expand their sights to include relatively untouched markets like those of India and Africa, not only will the companies’ pockets and stocks profit from a new customer base, but the specific international communities will gain the infrastructure and economy needed to help them succeed and flourish.
These areas become injected with jobs, commerce and economic stability that were not necessarily present previously. With a foundation on which to grow and develop, these regions gain a strong foothold to become self-sufficient and able to more easily provide for their people.
– Kelsi Auld
Sources: Reuters, BBC, Nikkei Asian Review, U.S. Global Leadership Coalition, The Borgen Project
Photo: NTD