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GAP "Retreat" Uniqe "Charge" Church Disciple Starved To Death Master?

2020/2/11 15:14:00 0

Fast Fashion

The decline of fast fashion industry in China has become an irreversible industry trend. After ZARA and H&M closed the news, GAP was also struggling recently, while UNIQLO was making a lot of progress. As an imitator of GAP, how did UNIQLO take its master "GAP" on the beach? GAP, how did this fast fashion pioneer embark on the situation of "church apprentice and starving master"?

In recent years, GAP has become increasingly uneasy in China. It will soon become the first brand of four fast fashion brands (GAP, H&M, ZARA, UNIQLO).

Over the past 50 years, GAP has grown from a small shop with only four or five people to 3200 multinational chain stores with an annual turnover of over 13 billion and a multinational company with a market value of about $40 billion. But now GAP is no longer available, and its market value is only 6 billion 306 million dollars, less than the previous 1/6.

In November 2019, GAP group reported that its revenue in the first 3 quarters was $11 billion 709 million, down 2.07% from the same period last year, earning 535 million dollars, down 26.41% from the same period last year. This is also the seventh consecutive quarterly decline in GAP sales.

On the day of its earnings announcement, GAP also announced two important decisions: the sub brand OldNavy (once the growth engine of the company), withdrawing from the Chinese market in 2020, and the group closing 230 stores in two years. The reason why GAP has such a move is nothing more than market pressure.

In fact, the pressure is not just GAP. After rapid growth, many fast fashion brands began to bid farewell to the golden age from the end of 2015. 2018, on the eve of "double 11", TOPSHOP, the fast fashion brand of the British high school founder, closed the store for its Tmall flagship store. At the end of the year, NEWLOOK officially announced its withdrawal from the Chinese market. Then, in 2019, Forever21 also left the Chinese market; besides, news about ZARA and H&M stores was also heard.

These once popular global fast fashion clothing brands are now blown away in the cold wind of the industry. The fast fashion industry in the Chinese market has not become the "industry trend" in the eyes of people. Giants seem to be dead, and struggle is useless. However, in the cold winter, UNIQLO went all the way in the past two years, earning enough attention in recent two years. As an imitator of GAP, how did UNIQLO take its master "GAP" on the beach? GAP, how did this fast fashion pioneer embark on the situation of "church apprentice and starving master"?

One

GAP: the moat of the industry leader.

The story of GAP should start with a person named Donald Fisher. In 60s, Fisher was engaged in real estate development in California, and the cause was very popular. One day, he went to a clothing store to buy Jeans, which wasted half a day and did not find a suitable one for himself. This annoyed him very much. But after he was angry, he saw business opportunities: why can't we open a shop and let customers feel the convenience of buying jeans? In this way, Fisher and his wife opened a retail store near University of San Francisco in 1969.

His shop sells jeans and tapes side by side, but the result is not ideal. At that time, the jeans market was long occupied by Levi s, a cowboy. Fisher's retail store had no bright spots. Sadly, people are more interested in tapes than jeans. Finally, nearly 4 tons of jeans, Fisher can only sell at a price.

After drawing lessons from the past, Fisher and his wife changed their positions in second stores, shifted the target users to young people, and launched the name "GAP" ("generation gap" in English) to emphasize the difference between the baby boomers (1945-1964 years old) and their parents. The goal of GAP is to provide cheap and fashionable "integrated dress solutions" for young people, such as round neck T-shirts, smart cotton tops, jeans and other wardrobe necessities.

Under the efforts of Doris, the boss, GAP created an atmosphere of "equality and kindness" for customers. Entering GAP, all young customers will feel comfortable and will not feel "a poor man" at all. This model makes young people refreshing. Within a few years, GAP quickly won the attention of a large number of young people, and chain stores springing up everywhere. In 1976, GAP was successfully launched.

Early GAP is the "shopping center" thinking, and all kinds of products are sold in their stores, which is similar to the logic of department stores. But as business models became more mature, GAP began selling products of its own brand in 1986, and strictly restricted the whole process of clothing retailing. This is the SPA model of GAP.

SPA mode is a huge wealth that GAP brings to the business world. SPA is the private brand professional retailer business model, which is a vertically integrated sales integrated from commodity planning, manufacturing to retail. In this way, all dealers are removed, and manufacturers and users are directly connected. Businesses directly grasp consumer information, improve the speed of supply chain reaction, and can quickly withdraw funds. Later, UNIQLO and IKEA of Sweden were developed under the inspiration of GAP's SPA mode.

The innovative business model has made GAP more powerful. In 1982, GAP acquired the brand of BananaRepublic (slightly upscale), and founded OldNavy (slightly low grade) brand in 1994, forming a brand matrix of GAP high and low price. By the 1990s, the baby boomers were already getting old, and jeans were not suitable for them. So GAP introduced the matching scheme of yellow khaki trousers. Through successful market operation, GAP has made khaki trousers a member of the fashion industry. This way of wearing is even popular today.

In this way, GAP has achieved an unmatched position in the North American market. However, behind the prosperity, the crisis of GAP is also coming quietly.

   Two

GAP: the gap between the laggards

"Success will erode enterprising spirit" is the curse of success for many enterprises. GAP is no exception.

The success of the North American market has made GAP obsessed with the North American market rather than the attention of the global market. It was not until 1987 that GAP, which had been established for nearly 20 years, began to internationalize. It first entered Britain and then entered Canada, France and other countries. But at that time, GAP had missed the opportunity to gain the first mover advantage in the international market. What is more regrettable is that its large scale globalization started after 20 years, and the space left for GAP in the market has been very narrow.

In addition, GAP's sharp grasp of the trend has gradually become inactive. The United States has been the main battleground of GAP. In the most important area of the United States, GAP has set up a large number of Direct stores, which are the direct embodiment of GAP's channel advantages and the ballast stone of GAP sales. Stable customer groups and channels, so that they only need to constantly expand the brand to new areas, you can maintain growth and enjoy dividends. But as the user age increases, people's fashion tastes begin to change, but GAP disagrees. And with the aging of management, the trend is no longer a concern of GAP executives.

In 2000, the dilemma of GAP's failure to catch up with the tide began to emerge. So the manager began a radical "fashion change" action. In 2001, jeans, khakis and T-shirts were no longer the main hits of GAP, instead of sequins, diamonds, tights and other costumes. This huge change made the old customers confused, and the comic fashion did not flatter the young people. GAP's performance began to decline sharply. The CEO of the company changed 3 before and after, but everyone was tired.

Another important reason for the decline of GAP is the continuous emergence of alternative brands. GAP's OldNavy can buy clothes, H&M and WAL-MART parity can also be purchased, a few high-end BananaRepublic brands can buy clothes, and a large number of light luxury alternatives. But all of this, GAP was not too serious. After all, GAP's financial figures were pretty good at that time. In 1986-2001 years, GAP revenue increased by 20.47% annually. In 2001, GAP group achieved a revenue of 13 billion 848 million US dollars.

Financial "false prosperity" can not conceal the dilemma of GAP brand aging and product innovation. GAP has no idea who is its core user. What is the group of users who are getting older? Or the present young man? After 2001, GAP group's market value and volume were gradually overtaken by H&M, ZARA parent Inditex and UNIQLO parent company's fast selling group, and its performance began to decline.

Paying close attention to, understanding and predicting the needs of core users is almost the magic weapon for all companies. This ability has been used by GAP, but after GAP successfully launched khaki trousers, this ability is becoming more and more rare. Since 2000, GAP has become completely different from its constant doubts and adjustments in its position. Even retail experts say that GAP should learn from UNIQLO, "offering good design and good quality products at a low price". But in fact, UNIQLO was inspired by the GAP warehouse self shopping mode and targeted GAP as its target.

GAP, once a unique one, now needs to rely on other people's labels to define itself.

Three

The Chinese market: it made an early morning to catch a late night collection.

Too early to focus on the North American market, GAP missed the global expansion of the Asian market, especially the bonus period. In 1987, the late GAP began to lay out Asian business and put the first station in Japan. This choice is understandable. After all, Japan was the most advanced economy in Asia at that time, but in Japan, GAP and its "pupil" UNIQLO were facing a losing battle.

Losing Japan in Asia is not dreadful, because there is also a much larger volume of China. However, compared with the other three brands, GAP is late again in China. UNIQLO, ZARA and H&M entered China in 2002, 2006 and 2007 respectively, and soon established a high brand awareness in the consumer group, and had a certain scale of stores. But it was not until 2010 that GAP, which was frustrated in Japan, began to switch to the Chinese market. At that time, it has been 23 years since the Asian business of GAP.

GAP not only missed the opportunity to occupy the minds of users, missed the dominant position of busy roads, but also missed the sinking market with huge growth space. In the sinking market, the location of the mature shopping mall is extremely rare, and has been occupied by the other three brands. So far, the proportion of GAP in the 152 shops on the mainland is 97% in a second tier city. In this case, GAP can only take orlet as its main channel of expansion.

GAP, which does not attach much importance to overseas markets, has no own factories in China. GAP products from design, production to store cycle is 10 months, and then the competition is 2-3 months. As a fast fashion brand, such a long product cycle is clearly unable to compete with competitors. Although GAP's new CEO has since proposed to shorten the cycle to 30 days, GAP is still too long for ZARA to wait for a week.

More importantly, GAP really lacks a memory point in the minds of users. If the user wants to buy the foundation, he will go to UNIQLO, buy fashion clothes to go to ZARA, want to buy cheap, go to H&M, and what can GAP give users? Once the "comfort, leisure" positioning and the price of the people, GAP has three advantages in the North American market. Now, time and space are changing, products are not fashionable enough, lack of design sense, do not understand young people's GAP, lose their advantages.

However, the Chinese market is too large. With the rapid development of China's fast fashion market, GAP has enjoyed a certain growth bonus in the Chinese apparel market although it has been at the bottom of the big four. In the past 2006-2011 years, the average growth rate of total revenue was negative. GAP's Asian business growth has been maintained at around 10%, which has contributed to the decline of the overall performance of the group. But the market layout is too late, so that the most brilliant moment of its Asian business, which accounts for only 9.6% of the total international revenue, fails to eat up the market dividends like other giants, bringing a great turning point for enterprises.

Of course, GAP's trip to China is not always worse than its rivals. In 2010, when GAP entered China, domestic social media and e-commerce were developing rapidly. With the sharp smell of online dividends at the time, GAP first became the explorer of the earlier online and offline integration of online channels through ZARA and H&M.

Unfortunately, the identity of the first mover still does not bring any advantage to GAP. The problems such as weak brand, imperfect product description, incomplete online style, slow update and poor customer service attitude have made GAP fail to grasp the only first mover advantage in the Chinese market. GAP Tmall flagship store's 6 million 640 thousand fans, far behind ZARA's nearly twenty million fans, and even less than H&M less than two years online.

Under the draught, pigs can go to heaven, but the tide will recede and the naked swimmer will show up. Soon, GAP's Asian business turned from a straw to a bottle.

Four

Fast fashion industry

With the entry of major brands, there is less and less space left in the Chinese market, and the saturation period of fast fashion brand industry is coming. Moreover, the traditional fast fashion brand is hard to quickly coordinate the online and offline business and the traditional system of operation, and quickly cut into the new track, enjoying the huge bonus of the incremental electricity market.

In addition, since 2013, due to the convenience of the network in terms of sales time and space, inventory management, and commodity shelves, many brands that did not get development opportunities in the physical store era began to rise. Because of their light weight and quick response, they can meet the diverse needs of users in a timely manner and create a great impact on traditional fast selling clothing brands. Fortunately, in the past 2011-2016 years, China's clothing output has achieved a "five consecutive rise", from 25 billion 420 million to 31 billion 452 million, with an average annual compound growth rate of 4.4%.

In 2017, China's apparel industry fell for the first time in 6 years, with a drop of 8.5%. In addition, with the diversification of consumers and the rise of electricity providers, the era of market segmentation is coming. Lining, Semir and others know more about the domestic market trend of China's market and get faster growth. Most of the fast fashion brands, which once dominated the world, began to appear unsalable products. Large scale production of fast fashion enterprises leads enterprises to reduce inventory and become inevitable. After the market equilibrium is broken, the survival environment of enterprises will gradually deteriorate.

Therefore, Topshop, NewLook, Forever21, Esprit and other brands are facing a nearly bankrupt crisis, and even the industry giants such as ZARA and H&M are also experiencing a slowdown in sales and poor performance. GAP is more unscathed. Since 2017, GAP's Asian business has started to grow negatively. In 2018, Asia's business growth was -18.2%, and its growth rate was -2.4% in 2019.

With many brands delisting and negative growth, many people believe that China's fast fashion market has been on the decline. But UNIQLO is in this industry differentiation, all the way forward. In the 2019 fiscal year, UNIQLO's revenue in the Greater China region reached 502 billion 500 million yen, with a profit of 89 billion yen in China. It is estimated that in the 2021 fiscal year, the number of stores that will operate in mainland China will reach 1000.

Why does UNIQLO go against the trend?

In the 80s of last century, UNIQLO had no advantage other than cheap. But after 90s, it began to focus on R & D of scientific and technological fabrics, and at the same time, through continuous improvement, the advantages of the flexible supply chain were brought to the extreme, and the market advantage was achieved by short and fast way. In clothing design, UNIQLO did a lot of work, and products were welcomed by young people. In the past two years, kaws, seven dragon balls and other fashion joint winds have made UNIQLO not only win the hearts of young people, but even become a commodity.

In addition, the penetration of China's electricity providers is much higher than that of the US and other European countries. UNIQLO and many domestic brands have grasped the electricity supplier side and created more opportunities in differentiation. As the pioneer of new retail industry, UNIQLO, in addition to taking the lead in opening up online and offline consumption scenarios, truly integrates online and offline, also opens stores into boxes of fresh horses, which can be delivered in app30 minutes. The example of UNIQLO tells people: not fast fashion industry, but lagging behind.

  Five

summary

The loneliness of GAP and the triumph of UNIQLO are an interesting contrast. It seems that there is a scene of "church apprentice, starving master". But the more pondering question here is why GAP is left behind. Why is fast fashion collectively "occupied"? And how did UNIQLO build its own advantages in imitation?

In my opinion, one of the key reasons is that we are addicted to the core user groups that are firmly established in the most scenic days, and it is hard to keep up with the brand of a particular generation.

The user can grow old, but the brand must be young forever. For example, no matter how the times, regions and culture change, McDonald's core users will always be families with children, and then all actions will be carried out around the core users. McDonald's does this very well, because every generation of young people will die, and only young people will die. This is also the reason why I couldn't agree with the adult products of Wangwang food's "growing up" series.

Enterprises that do not innovate themselves, but do only cater for users, seem to be constantly innovating, but they will eventually lose their core competitiveness in the cruel market.

The decline of fast fashion industry is inevitable. On the one hand, people's demand is gradually diversified. Naturally, more providers of solutions are needed. The era of big and complete win is over. On the other hand, with the change of channels, new brands both at home and abroad are constantly rising, and the redistribution of market is inevitable under the condition of limited market space. But that does not mean that big brands are not welcome. UNIQLO is an example.

The biggest wisdom of UNIQLO lies in its ability to constantly improve itself and actively keeping pace with the market. Compared with the other three brands, UNIQLO's clothing is the most versatile and can match any costume of any scene. In addition, due to excellent supply chain management, UNIQLO's cost performance is also higher than peers. This is why the rise of electricity providers, tide cards, fake products, small factories on the "appearance" ZARA and H&M impact is far greater than the "strength" UNIQLO.

In the case of product strength protection, UNIQLO stands in the era of draught, focusing on the analysis of the way of life and attitude of Chinese users, neither blindly follow the trend, nor lag behind, and always can give users a pleasant surprise. Another fast fashion brand giant ZARA has also declined in spite of its growth in China, but its supply chain capability is also unquestionable. In the future, the competition in the fast fashion industry will become more and more intense. The smaller vendors scattered around the city will be more competitive than the big ones. Next, the giants' opponents are not just giants, but no matter who they are, they need to consolidate their core strengths.

GAP has many problems, but breaking the board is not without opportunities. The advantages of GAP in children's clothing industry are obvious to all. It is not hopeless to make the fist product strong enough to form a drive to other fields. Although the channel of GAP in the sinking market is limited, the electricity supplier still provides the possibility for it. Although the exit of OldNavy is bad news on the surface, as long as we can do a good job of user focus and deep tillage, the current situation is a danger for GAP and a machine.

Source: Gravel Business Review Author: Golden plum

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