Old Navy Rebirth: Elite Team Behind Bargain Prices

Three years ago, Gap hired Larson to hand the company's most challenging brand, Old Navy, to him.

When Larson came to the company, the low price brand of Old Navy changed dramatically under his leadership. It changed from the laughingstock of the parent company to a bright pearl on the crown of the company.

Last year, sales of Old Navy in the US were close to US $6 billion, accounting for 40% of the company's total global revenue, almost equivalent to the total sales of two brands of the company's Gap and Banana Republic.

Due to the fact that other major brands of Gap are not in good condition, it is believed that the company's earnings this week will further emphasize that Old Navy is the main driving force for Gap and other struggling brand growth.

However, the competition between big and low fashion brands seems to be more and more like price war.

In such an environment, maintaining this strong growth rate will be a great challenge for Old Navy.

Larson is not upset about this.

"I think Old Navy is a pearl that has not been polished," said Larson at the corner of the crowded restaurant of the Old Navy headquarters in San Francisco recently. "The success or failure of all brands originates from their products."

This is the first interview he took after taking over Old Navy.

Under the management of Larson, Old Navy has given some attention to some other fashion brands that are dominated by low-end, family oriented clothes, and the designs previously used by Old Navy.

The success of brands is now coming from this.

(Larson says those low-end brands are selling clothes on a pound basis. He says this way ignores the mood of low-income consumers.

)

Today, there is a fundamental change in the way people buy clothes. In addition to the wealthiest class, the United States has created a new frugal fashion among other consumers. These two factors have also injected new vitality into Old Navy.

Carrying a designer bag, wearing a T-shirt priced at $10, is now becoming more and more common, and customers are becoming more selective in their consumption.

Although lower natural gas prices and a more active job market bring benefits to consumers, families with a budget, especially those with children, prefer to buy basic living facilities such as houses and cars.

These are good for OldNavy.

The fourth quarter sales of the brand are now up by 11%, so far no popular clothing brand has ever gained a faster growth rate in the important holiday season.

Betty Chen, a retail analyst at Mizuho Securities (Mizuho Securities USA), said: "the previous strategy of Old Navy was to sell goods," said Betty.

Miss Chen said, but Larson has brought fashionable fashion and marketing strategies to Old Navy, all of which have a "strong aura effect", which has improved the brand image.

"And Old Navy is much cheaper in price than Gap and Lululemon."

In the early 1990s, the company launched a low price version of Gap, namely OldNavy, in order to deal with competitors' efforts to lower prices and seize the market.

At the very beginning, the brand was a great success.

OldNavy promises that its single product will maintain the style and quality characteristics of Gap clothing, and it will be matched with the products sold on Home Depot shelves at low price and variety.

The layout of the OldNavy store is quite new. On the concrete floor, there are simple and simple display cabinets for school lockers. These shops are a hit in the salaried residential areas when they open.

Four years after its establishment, OldNavy's sales volume reached $1 billion, which is the fastest growing retail industry at that time.

(even Google took much longer than that to earn $1 billion.

At that time, Gap quickly set up a large number of Old Navy stores.

Around 2002, the expansion of Old Navy began to develop problems.

It was almost at that time that the strong Swedish fast fashion brand H&M opened its first store in Manhattan in the United States.

H&M's lace dress and trendy coat are not only cheap, but also the latest styles in fashion show.

By contrast, Old Navy's casual clothes and its pretentious advertisements are beginning to become less attractive.

In 2007, Old Navy failed to cooperate with the famous designer Todd Odenham (Todd Oldham).

The recession has led to a sharp drop in spending on retail consumption, even the low price brand OldNavy has been hit.

Between 2006 and 2008, sales of Old Navy fell by more than $1 billion, and morale plummeted.

OldNavy's parent company hired Larson to save the troubled brand.

Larson set up a heavy weight team and hired Ivan Wicksteed (IvanWicksteed) as the marketing director of the brand.

Wickstead served as global creative director in Coca Cola Co. He also worked as a brand pformation designer in CONVERSE and ColeHaan.

After coming to OldNavy, one of the first changes he made was hanging up popular photos at the headquarters of the company in San Francisco and putting up cheerful music, which made the company dull and monotonous.

"It looked like a doctor's office at that time," Wicksteed said. "(to reinvigorate a brand) you have to start with the most basic things. You have to start with your employees.

If you can't let your employees have the desire to participate actively and change the brand, you will never be able to persuade your customers to buy it.

Larson has also attracted another important member, Jill Stanton (Jill Stanton).

Nike's former dress director changed the way Old Navy designs clothes.

Previously, the supplier of Old Navy would be from Sax SaksFifth boutique (SaksFifth Avenue) and Abercrombie&Fitch.

It buys clothes and selects several of them for OldNavy pformation, and this pformation is usually very bad.

"We get a product from the market, and then it may take another year before we can bring the products to market," Stanton said.

It is also designing apparel for other customers.

So you often hear the design team say, "well, I'm not sure if I will wear this dress, but it's pretty good for Old Navy."

Driven by Stanton, relying on the supply chain of Gap, designers can now launch a small amount of clothing in a small shop and quickly test the customers' affection for their printing, shape and size. If a dress is very popular with customers, Old Navy will increase production.

In this way, OldNavy created and developed its own design power.

The brand launched the single product from the daily and basic funds to other fashionable, seasonal style.

Instead of employing experienced designers in designing low priced garments, the company turned to the top talent: they invited accessories and bag designers from Coach, invited sportswear designers from Nike and Reebok, and invited men's fashion design director from North Face.

Stanton said: "the starting point of their design is not to make the products look cheap."

Old Navy's new advertisement brought two popular comedy stars Amy Pohle (Amy Poehler) and Julia Luis Drivr J (JuliaLouis-Dreyfus) to the viral pmission.

The biggest victory of Old Navy is its pixiepants.

Two years ago, when Larson's team began to build a brand new image, a designer of the OldNavy women's team noticed that the major blogs and show grounds were full of casual and self-cultivation trousers.

The design team "pays attention to every one."

"The details of whether the trousers were fit and just to the ankles on their ankles were given full attention, and the different colors and prints of the trousers were tested in the store.

This made the trousers popular with customers at that time.

"We used a unique design for the pants.

Then we put it in the market to test the customer's reaction to it.

Last year, we sold 2 million 400 thousand of these trousers, "Larson said." this is one of the most profitable items for us. "

Now Larson is looking for the next product that can be sold.

"If you work in the Apple Corp, no one will say," let's redesign and develop iPhone6. "

People will laugh at such an idea and say that it is stupid.

But in fashion, things like this are normal, "he said." if you compete with others with less products and less discount, you will lose.

If Apple is not constantly updating products and making products fit in with the current trend of the times, they will be finished.

The same thing will happen here. "

Old Navy has expanded its business to the new field of sportswear, and has invested heavily in high-performance fabrics such as breathable fabrics for the first time.

Sportswear has swept the fashion world. Sports shoes and yoga pants instead of jeans and high-heeled shoes become popular products.

Old Navy also launched sportswear to keep up with this fashion trend.

Stanton said, but buying a pair of yoga pants at Lululemon may cost nearly $100, and at Old Navy, the same money can buy a sportswear for everyone at home.

The company is also faced with many formidable challenges, and the growth rate of the company is just one of them.

OldNavy had a pretty good sales record last year, and this year it has become particularly difficult to achieve further growth.

In the first quarter of this year, the growth rate of OldNavy same store sales slowed to 3%, but it is still the fastest growing brand of Gap.

Some analysts want to know that the recent decline in natural gas prices has given people more savings, coupled with higher employment rates, and whether some customers will leave Old Navy instead of buying more expensive clothing.

Larson doesn't think so.

The snobbery of fashion in terms of price judging clothing is going to be out of date. He said, especially the younger generation, they no longer have such an idea.

"Traditionally, the fashion industry is built on the ladder of rank, but I don't know if people are going to eat it now," he said. "Times are changing and people have different views on brand reputation."

Especially for young customers, they always want to save money. They want to save money to travel and experience all kinds of things.

Larson said so.