US Apparel Giant GAP&Nbsp; Purchases US $10 Billion (Three)

Can the Chinese market become a "good medicine"?

The big retreat of GAP began with a loss of 3 billion 200 million US dollars in 2002. Millard Mitch Drexler (Millard), who worked for GAP for 19 years and brought 15 years of brilliant CEO to GAP, has been on the brink of a downward spiral since 1999 when its net income was pushed to $11 billion 100 million. The long front line, the low investment return rate, and the new brand squeezed the market, until the first time in early 2002, GAP got into trouble.

In order to save the crisis, GAP company used the new CEO CEO (Paul Pressler). After the new official took office, the three fires included: first, the price increase.

Cutting all the products under $20 from inventory, GAP almost overnight changed from ordinary consumption to a "quasi luxury" company.

Two, digital terminal tracking management.

Three, change the line of product design, gradually abandon the essence of GAP brand's leisure style, and turn GAP into a more fashionable and more advanced fashion.

It has to be said that short-term results will be achieved.

The industry once thought that the GAP salted fish was turned over.

But it didn't last long. By 2005, sales of GAP stores in Dalian decreased month by month. The low end consumer group was the biggest survival base for GAP. The direct result of cutting down low-end clothing is that GAP is no longer GAP, and consumers are immediately attracted by the brand that is updated and sharp.

Fashionable and cheap, which used to be the magic weapon of GAP.

At the beginning of 2007, rumors about "the famous clothing retail giant GAP group will be reorganized internally and intends to sell the group assets in whole or in part" in four cases in Wall Street.

There were even rumors that old rival ZARA would buy some of GAP's assets.

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The adjustment of GAP is not without gains. At the same time, sales of physical stores have dropped, and GAP's online stores have become famous.

Internet sales began to climb steadily until the 2008 financial year, the GAP network sold more than 1 billion dollars.

In order to regain the market, GAP opened the first chain stores in the Middle East and Southeast Asia in 2006, and GAP entered China to take advantage of the Chinese market to gain more initiative.

"The 2010 board meeting is scheduled to be held in China, which fully demonstrates the importance of GAP to the Chinese market."

Yang Deming said, "according to the survey, the expenditure on clothing for Americans is 7%~8% of monthly income, while Chinese expenditure on clothing is about 20%. Only this can be seen that the potential of the Chinese market is huge and it will not be able to surpass the US in the future."

Although it did not admit that it was a little late to enter China, when Yang Deming asked about the location problem, he admitted that as the GAP shops were around 1000 square meters, the mature shopping malls had no place, and could only work together with the emerging shopping malls such as COFCO Joy City.

Many people in the industry are not optimistic about China's expansion plan for GAP.

Zhang Ying, a partner in Jingwei venture capital, said in Sina micro-blog, "come in too late, and feel that success may not be great."

Price is obviously a real problem for consumers.

Yang Deming said: "I think the price in China will be more suitable for China's national conditions, but H&M a pair of jeans has been sold to 99 yuan, I think it will not be cheaper."

If the same low price strategy seems to attract the attention of consumers, but in a new market, how abundant will GAP be in China's market space and brand building time?