GAP In The Chinese Market: Arrogance Or Sluggish?

Procurement of more than ten billion dollars, planning more than 10 years to enter China

[for GAP's reasons for not wanting to enter China in the past more than 10 years, Yang Deming remained silent.

But according to the public information, we can see that in the past 10 years, GAP is not without shock.

If you haven't heard of the top ranked clothing brand in the US -- GAP, it doesn't matter. At least you've heard of Lewinsky and her famous one.

When the former US President Clinton's sex scandal spread all over the world, he was arrested.

For brand experts, this seems to be a good thing for GAP's popularity, but there may be a discount on its reputation.

People care not only about gossip, but also its price.

In the US GAP store, the price of the skirt is less than 10 dollars.

Yes, the parity and universality of GAP can be seen.

It is very similar to the price range from Sweden's H&M, Spain's ZARA and Japan's UNIQLO, and because of this, some people call GAP the "McDonald's" of the clothing industry.

Today, the world fashion giant, which owns more than 4200 chain stores worldwide, is "coming late".

Recently, Yang Deming, President of GAP China, told the first financial daily, "GAP expects to open 4 shops in China at the end of 2010, of which 2 are in Beijing and 2 in Shanghai, and each shop has an area of 1100~1800 square meters.

At the same time, network sales follow up.

Compared with the global rivals ZARA, H&M and UNIQLO, GAP went to China for at least 3 years.

Can it still catch up in 3 years?

GAP's philosophy of success

In fact, GAP's most famous commodity is not a blue skirt, but a pair of jeans.

In 1969, GAP founder, Donald Fisher, was choosing a pair of jeans suitable for his own in a fashion shop in California, but couldn't find a suitable pair of trousers if he chose them.

Driven by this kind of power, Mr. and Mrs. Fisher created GAP.

GAP's first store was not a big success.

When the first shop of Lao fisher used Levi 's jeans (its own jeans brand was founded in 1974, its chain store sold the tapes sold by Levi' s' in 1991) and sold the tapes together, but the result was not ideal.

When GAP opened second stores, Lao Fisher focused on young people, emphasizing a younger shopping atmosphere.

The products we sell include round T-shirt, short and smart cotton blouse, jeans and so on.

The classic design of GAP is still jeans.

"And the point is that GAP sells more than just jeans, many jeans are paired with clothing."

Yang Deming said.

This new way of selling makes GAP soon known in the US.

In 80s and 90s twentieth Century, GAP developed rapidly, and its series of brands such as GAP, OldNavy and GAPkid went public.

Peg Andesil, the author of why we buy things: Science of shopping, says that the winner of modern retailing is people who spend the least energy on shopping.

For businessmen, your convenience is their business opportunity. Why don't you buy a dress of the same color to match your fancy vest? Peg Andesil added, "in fact, 70% of what we buy is actually not planned at the beginning.

This is where GAP is best at it. The salesmen open their arms to encourage customers to try.

Men, women, home, leisure, sports, children and baby clothing, accessories, GAP in the store layout on the hard work.

Everything is arranged in advance: all sizes have been carefully separated and the clothes that are arranged together are displayed.

"There are very few people here who want to buy clothes but can't buy them.

Even if there is no shop, you can search it online. "

Yang Deming said, "the success of GAP is partly due to the importance attached to customers. For example, the store stipulates 9 points, but there are people waiting in line after 8 o'clock. GAP's practice is that as long as this situation is found, the 8 will be open ahead of schedule."

GAP also uses RFID tracking system to effectively manage sales terminals.

Every GAP clothing label is tracked by the system, whether it is placed in the storehouse's packing box or on the shelves of the store.

As long as customers have needs, salesmen can immediately tell consumers how many kinds of colors they choose to see through the portable reader, avoiding the time spent by traditional manual searches and the loss of customers.

According to statistics from relevant departments, GAP's sales increased by 20% after RFID's effective tracking and management of clothing.

In addition, GAP is still the master of marketing. Over the past 40 years, GAP has invited all kinds of Hollywood stars, rock stars and TV stars to endorse GAP products. There are countless marketing events that are affecting. In recent years, the most influential one is in the shop in Vancouver, Canada. In a period of time, all the devices in the shop have turned upside down, giving people the illusion that they are being inverted themselves.

The upside down items include shop Logo, window model, 4 showcase, hundreds of T-shirts, 1 hot dog cars at the door and 3 cars.

"We produce in more than 40 countries, and there are more than 300 codes of conduct.

We also have strict control over costs and procedures. "

It is precisely because of these diverse reasons that GAP has made more than 4000 stores in the world in more than forty years.

In the United States alone, the number of stores is as high as 3000, and last year it was sold for $15 billion.

Arrogant or slow?

However, GAP has not yet entered China.

Despite the statistics from GAP stores in the United States, more and more Chinese tourists will buy GAP products and bring them back to China; although there are already small and medium-sized wholesalers in China from the United States to wholesale GAP products, although H&M, ZARA and UNIQLO have tasted the sweetness of their expansion in China in recent years, although GAP has purchased over $10 billion in China in the past 25 years, it has maintained cooperation with more than 400 factories in China.

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H&M announced the first half of 2010, including 2062 of the world's total chain stores, with 86 new outlets in the first half, and 33 in China.

In May this year, the first Asian uniqo flagship store in Nanjing West Road, Shanghai, opened, with a total investment of $30 million, which became the fourth flagship store after New York, London and Paris, and the number of stores in China has reached 64.

GAP's old rival, ZARA, not to mention that, in 2008, the financial crisis broke out, with the expansion of emerging markets such as China, ZARA overtook GAP and squeezed it out of the world's top 500.

GAP is still holding on.

Is this the pride or slowness of a billion scale enterprise?

"In fact, GAP has been paying attention to China's market. In the past decade or so, we want to enter China at different times."

Yang Deming explained, "although China has not entered, China already has products that consumers understand about GAP.

I think there are three ways to enter GAP clothing in China, one is bought back in the United States.

One is to buy (wholesale) in the US and to retail in China.

Another is counterfeit, fake. "

In many wholesale markets in Beijing, Shanghai and Shenzhen, more than twenty yuan of RMB can buy clothing printed with GAP trademarks.

In the past few years, we can see that the GAP brand has not entered, and the phenomenon of freight is ahead.

For GAP's more than 10 years' desire to fail to enter China, Yang Deming remained silent.

However, according to public information, GAP is not uneventful in the past 10 years.

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 one.

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, is now borrowed by H&M and ZARA and added to the new winning secret: fast.

Catch the fashion trend of top brands and integrate into their own design elements. Finally, the cycle is 21 days in H&M, 12 days in ZARA, and 90 days in 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". Four smoke and dust in Wall Street.

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

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?

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