Gap, Which Has No Way To Go Back, Has Bet On A Traffic "Big Gamble"

Gap, which has no way to go back, has bet on a flow "big gamble".

In February, the first product of the "ten-year alliance" with Kanye West (hereinafter referred to as "Kanye") was quickly exposed.

Oversize version, high saturation color system, inadvertently eye-catching design elements, bold, avant-garde, subverted the usual dull gap, boring.

At first glance, the road ahead of gap is suddenly bright. Before that, it was in the decline of performance, and even "unable to give guidance for the second quarter or the whole year.".

Of course, this is not the first time the gap is on the brink of a crisis. Founded in 1969, it is the inventor of spa mode in the fast fashion circle and the representative of American national trend. But Gaoguang is only 30 years old. After entering the 21st century, the original proud label passes through.

Gap is being abandoned by the times due to the aging of brands, the loss of frequent customers, the hunting of competitors, and the survival of "discount". Shop closure, sales decline, continuous losses, negative frequency.

When there was no way to find a way, Kan appeared. Rapper, who claims to have a gap complex since childhood, has a "savior" halo on his head, vowing to pull gap out of the dead circle.

But the drama is that he walked in the fashion circle, not by selling clothes, but by shoes. Does "shoe Dafa" really hold a flat gap?

01

Gap started by selling Levi's jeans at a low price

The birth story of gap is like the plot of Ba Zong's novels. In 1969, Donald Fisher and his wife, who were originally engaged in real estate, opened a gap in San Francisco to sell Levi's jeans at a low price because they couldn't buy the right jeans at the clothing store.

At that time, hippie culture prevailed in the United States, and cowboy was an indispensable fashion element for young rebellious people to express their individual freedom.

Gap has become popular in the United States with its low price, multi size jeans, basic T-shirt and other popular leisure style clothing, as well as the brand concept of "generation gap". Gap was successfully listed in 1976.

In the same year, the Federal Trade Commission of the United States announced that Levi's restrictions on terminal retail prices of products were prohibited. After entering the 1980s, Levi's sales channels began to spread to Wal Mart stores, with price wars all around, and gap advantage gradually lost.

After a series of setbacks, gap began to seek change. In addition to creating a number of clothing brands and supply chain, he also invited legendary professional manager mirad Drexler in 1983.

Mirad took office with great vigour. Cut off other miscellaneous brands, mainly promote gap, follow-up on the brand mix, product positioning, store operation, marketing and other aspects of systematic adjustment.

In 1986, gap defined its brand-new business model in the name of "spa" in its annual report. Then it swept the North American market, swept the 1990s, and its performance rose.

Gap annual report shows that from 1989 to 2000, the number of stores increased from 960 to 2848, with an average annual compound growth rate of 11.48%; the sales volume increased from 1.587 billion US dollars to 13.673 billion US dollars, with an average annual compound growth rate of 24.03%; and the net profit increased from 97.63 million US dollars to 842 million US dollars.

The capital market is also crazy about it. Gap's stock price reached its highest level in 2000, and has increased 1322 times in nearly 24 years. Behind a string of eye-catching data are efficient spa mode, standardized chain expansion and multi brand strategy.

Spa model opens the way, private brand differential management

Gap is the founder of spa mode. At that time, it was mainly for two considerations: the differentiation of private brand management and the direct control of as many links from production to retail as possible. The ultimate goal is to only sell their own products in Direct stores, improve efficiency and save costs.

The core of spa is the integration of "design, production and retail". The essence of spa is to highly integrate all aspects of the supply chain, shorten the production cycle and strengthen the control over the direct stores.

As the first generation practitioners of spa mode, gap paid more attention to brand and design at the beginning.

Chain expansion of standardized direct stores sweeping North America

Before 2000, the main direction of gap was the chain expansion of Direct stores. Different from other brands, it adopts the strategy of "decentralized management and unified management" for chain stores. The style of each store has uniform and specific regulations and instructions, which can shape the brand image and cultivate customer loyalty.

"Qianping store" is one of the gap standard configuration, with complete products. Since the 1990s, it has implemented the "supermarket style" self-service shopping mode, encouraging self-help try on. The relaxed and free consumption atmosphere has stirred the hearts of young consumers.

Standardized chain operation, superimposed on the innovation of sales model, gap swept the North American market, and quickly extended its tentacles to the United Kingdom, France and other European countries.

"High, medium and low" brand matrix, locking up multi customer groups

Born out of hippie culture, gap acquired Banana Republic in 1983 and established Old Navy brand in 1994, forming a clothing group covering high, medium and low prices. Gap also opened up a series of children's wear and baby products, harvesting different levels of consumer groups.

At the same time, with the help of advertising blockbusters, magazines (such as Vogue's 100th anniversary special issue) and television (Khaki rock dance), the traditional American leisure style of gap is popular in the streets.

After decades of high light, gap turned downhill.

02

Abandoned by young people, missing the golden age of fast fashion in China

In the 21st century, gap's growth mode of "high-speed expansion of stores to promote sales scale" gradually fails. There was a brief recovery around 2012, but the overall decline did not decrease.

Gap financial report shows that from 2001 to 2019, the number of group stores has increased from 3097 to 3919, with an average annual net increase of only about 46; sales volume has increased from US $13.8 billion to US $16.4 billion, and the growth rate has dropped in recent ten years, showing a serious fatigue.

Gap suffered a loss for the first time in 2001. The group is full of confidence to bet on the fashion transformation, and the products pursue the trend and exaggeration unilaterally. However, the fact has proved that this is a "disaster". Not only does the product wind evaluation turn down sharply, but also leads to the company's loss. Mirad Drexler also left.

Since "bad" 2001, the market value of gap has been gradually overtaken by H & M, INDITEX, the parent company of Zara, and FMCG, the parent company of UNIQLO. Since 2007, the sales scale has been crushed by the latter three.

The profitability is "erratic", and losses become a common occurrence of gap. There are two major drag factors behind the fall from the peak period to the bottom

Mature brand aging, can't keep up with young people

Gap group relies on the mature brands gap and Banana Republic, which are based on basic leisure products. They are highly reproducible and easy to be imitated. Later, Wal Mart, target and other retail enterprises have launched similar competing products for business.

When the opponent is surrounded, the space of gap can be greatly compressed. Abandoned by young people, it will be a fatal blow to the enemy.

After the millennium, the consumption preferences of young people in the United States have changed greatly. The fast fashion brands represented by H & M and Zara have won the favor of young people by virtue of price and fashion design. Gap living space is squeezed again.

In order to bring back young people, gap tried to change its brand positioning, but it was too partial to pursue novelty and fashion. Finally, it lost those basic customers who were in love with American leisure style.

The reason is that the first generation SPA Model of gap cannot match the third generation spa of H & M and Zara. The former emphasizes brand and terminal, ignores production and logistics, and slow turnover; the latter is "customer-oriented and quick response", with fast inventory turnover, which can capture changes in consumer preferences in the shortest time.

Since 2004, gap group's sales growth in the U.S. market has almost stagnated. In 2019, the sales volume was $13.398 billion, returning to the level of 15 years ago, and the sales share of gap, the main brand, continued to decline.

Turn the bow, gap speed up the pace of survival.

Overseas slow half beat, strategic mistakes miss China's Golden Age

In fact, gap's overseas expansion began in the 1980s. Starting from London in 1987, it entered Canada, Paris and Japan.

However, it was not until 2007 that the globalization strategy was formally established. At that time, the sluggish North American market was dominated by small-scale opening and closing stores. Since 2012, gap, Old Navy and Banana Republic have launched their international business divisions to speed up shop expansion.

Originally, I wanted to use Asia as the springboard to pull back gap, but I fell down again. First, Japan was the main position to face UNIQLO, and the result was tragic. Not only did the store close, but the sub brand Old Navy directly announced its exit from Japan in 2016.

After Japan's collapse, gap will focus on the Chinese market. In 2010, gap came late. It announced to open 4 flagship stores in Nanjing West Road, Huaihai middle road and Beijing, and set a target of 1000 stores in China. However, he came 3-8 years later than UNIQLO, Zara and H & M, but missed the golden period of site selection brought by the great development of shopping centers in mainland China.

Gap, which is a slow and slow step by step, has been preempted by H & M and Zara, and can't copy the highlight of the former in the Chinese market. The store is small in scale and weak in brand awareness.

This year, Old Navy also officially withdrew from China. Asia has gradually become the performance burden of gap.

03

Can Kan save gap?

Business adjustment, focusing on the revival of the main brand gap, is the top task of gap in recent years. Optimize stores, pay attention to marketing, change executives, cut off the vice brands of wedding dress brand Weddington way and sports brand hill city, but with little effect.

This year, the outbreak of the outbreak, offline stores closed, the plight of gap even worse. From February to April, gap consumed us $1 billion, cash flow was in short supply, layoffs, salary cuts and rent arrears were in difficulty.

In the first quarter ending may 2, gap group's sales were only $2.107 billion, down 43.1%; net profit loss was $932 million, compared with $227 million in the same period last year.

Among them, the sales of Old Navy, gap and Banana Republic decreased by 42%, 50% and 47% respectively. Just look at the offline, the sales of all brand stores have dropped by more than 50%.

Based on the cruel reality, gap, which has entered the dark time, has no choice but to say that "it is unable to give the performance guidance for the second quarter or the whole year". At this time, Kanye's appearance brought a beam of light.

According to the agreement, gap group has signed a 10-year cooperation with Kanye West, the founder of yeezy, and the two sides will open a new joint brand, yeezy gap.

The first series of yeezy gap, which has been exposed recently, will be released in 2021. New designer mowalola ogunlesi is the design director, focusing on modern, high-level neutral basic models.

As a joint name of Kanye, gap is "desperate" to survive. However, this is not the first time that it has launched a co branding series. In the past, the co branding objects were mainly media platforms or new designers with low visibility, and the purpose of CO branding was mainly marketing.

In contrast, with Kanye, the goal of gap is clear -- to innovate and revive the main brand gap. According to people familiar with the matter, gap expects the yeezy gap product line to have annual sales of $1 billion by the fifth year of cooperation.

It is worth noting that the gap brand's annual sales volume is only $4.6 billion as of February 2020 in fiscal year 2019. Yeezy gap has a long way to go. Kanye, who worked in gap stores as a teenager, is full of confidence.

In addition to quickly appointing mowalola ogunles, a British designer of Nigerian origin, as the design director of yeezy gap, he also plans to move the yeezy factory from China to the United States by 2021, build a production base and ship yeezy gap.

In addition, Mr. Kan has redesigned a gap store in Chicago with a brand new YZY logo. Store fence printed on a whole side of the expression of excitement and yearning for the feelings of handwritten statements, full of gimmicks.

Can he really lead gap to a turnaround? The answer is, I'm not sure.

On the one hand, clothing is not Kanye's strong point. His brand of the same name has a serious "partial branch" problem, which mainly focuses on shoes and shoes, and the clothing line has a general response. When Kanye first cooperated with Adidas, the first fashion series was cut off after a season of survival.

In terms of design, Kanye, who prefers plain earth color, often washes and fades, is often criticized for being unprofessional and lacking in fashion attainments. And the hunger marketing principle that it excels at is also a question mark.

On the other hand, even if Kanye is well prepared, no one dares to guarantee the smooth operation of yeezy gap by its initial spa supply chain and channel operation capability.

However, gap will not easily say no. Try your best to be the winner of this "gamble", which is the only chance for him to turn over. Otherwise, when the next opportunity comes, it may have disappeared into the fast fashion world.