GAP Is Going Through A Large Scale Of Closing Shop. What Lessons Should We Learn From It?

Despite its good performance in China, it is not comfortable in the US, and it is experiencing a large-scale closing shop trend.

In June, the GAP group announced that it would shut down 175 poor outlets in North America, accounting for 18% of the existing stores in North America.

At the same time, GAP headquarters will lay off 250 staff members as part of the company's plan to enhance the productivity and interest rate of the same brand.

After the implementation of this measure, the number of GAP stores in North America will be reduced from 977 to 800, including 500 stores and 300 outlet.

Closing shop was not a sudden start.

Before that, GAP has gone through 10 years of frustrations. This time is only the latest example.

The decline in same store sales for 13 consecutive months is regarded as the most direct reason for GAP's closing.

The main brand GAP has become the brand that dragged the whole GAP group back.

As of May 2015, the 2 quarter of the first quarter earnings showed that GAP earned $3 billion 657 million, down 3.1% from 3 billion 774 million US dollars in the same period last year.

GAP group's 2014 annual report shows that revenues of GAP, Old Navy Navy and Banana Republic are 6 billion 165 million, 6 billion 619 million, and $2 billion 922 million respectively.

Do you realize that when you want to buy basic funds, you will go directly to UNIQLO; when you want to buy clothes that are nice and not too expensive, you will go to Zara or cheaper H&M.

Under what circumstances do you go to GAP? It is probably just passing through a GAP while shopping, and there is just a lot of time left.

This is precisely James Harkin's analysis of GAP's dilemma in "minority behavior". "GAP's target customers are hard to be captive. Its target customers are everyone. If you are satisfied with all people, then you are nothing."

After swinging from mass market to young people to the mass market, the old casual brand, far from the fashion and the material, to the design, failed to make the basic money like the UNIQLO.

As one of the four fastest fashion brands in the world and once the largest clothing retailer in the world, GAP even was named "one of the five most likely fashion brands in the future" by Forbes in 2013.

What happened to GAP?

In 1969, the first GAP store opened during the anti cultural unrest in California, which sold all Levi's cool jeans, black vinyl records and everything related to "cool".

The name "GAP" came from the "generation gap" between rebellious hippy young people and their conservative parents.

GAP is trying to bridge the two generation of people -- using casual jeans and basic casual clothes that everyone can wear.

This strategy proved successful in the following decades. Everyone can buy things in GAP shops, casual clothes become the trend of the whole society.

By 90s, Gap has become the largest clothing retailer in the world.

It bought Banana Republic (Banana Republic), expanded the market to Asia and Europe, and launched a cheaper brand Old Navy (Old Navy).

90s is a critical period for GAP to occupy the fashion industry.

At that time, the neutral trend made their plaid and jeans become the favorite of Grunge school.

In the 1996 year of the year, actor Shharon Stone appeared on the red carpet in GAP's Charcoal Grey turtleneck, matching Valentino's skirt.

This "high and low mix" became fashionable at that time. In 1998, Shharon Stone once again attended the Oscar presentation ceremony with a GAP white shirt and Vera Wang Lavender long skirt.

As GAP gradually made itself into a popular brand to satisfy everyone, the market changed: the loyal consumers of that generation were getting older and older, and the new generation of young people no longer wanted to wear those ordinary T-shirts and khaki trousers, which made everyone look the same.

Since 1992, the number of young people in the United States has increased year by year, and the generation of Y generation (from 1977 to 1994) has grown into a consumer group that can not be ignored.

Young people who are seeking the trend are fleeing from GAP to escape from their parents' governance, and go to those brands that are more focused on the youth market -- J.Crew, American Apparel, H&M......

At the same time, with the aging of management, young and fashionable interpretation rights are no longer. Since 2000, you have rarely seen GAP and fashion together to occupy an important media layout.

It may be the biggest tragedy that a once young brand is aging with the people it serves.

GAP in crisis is eager to catch up with the new generation of young people.

For this reason, around 2000 years old, GAP began to make short blouses and bright pink trousers. Even the hoodies and tight sweaters, miniskirts and doll dress were specially introduced into the leather pants production line.

GAP hired R&B singer Messi Grey to launch the publicity campaign, and she also followed A&F to play the new avant-garde music in the shop.

It turned out to be a tragedy.

In the summer of 2002, GAP executives found that the young people they pander to were not buying it - they easily saw the difference between cool and cool.

To make matters worse, a loyal 35 year old customer was driven away.

After the youth market suffered setbacks, GAP wanted to return to the public and try to pull the lost middle-aged and old customers back, so it had to double the strength.

GAP has launched a series of dazzling spokesmen to create a sense of "inter era": old country singer and composer Willy Nelson stands with young singer Ryan Adams, Gina Gina and Salma Hayek.

These are still not working.

By the end of 2002, GAP's performance had been down for 29 consecutive months, the worst in history.

"GAP has been abandoned by the vast middle market (the mass market) because it first turned to the young market, when it acknowledged the mistake and tried to redraw the middle market, but found no intermediate market."

James Harkin said.

A few rounds of hesitation made GAP blurred and had a bad effect on the brand and the market.

Kristin Bentz, a retail specialist, even thinks that UNIQLO should buy GAP and directly use it to expand its strongholds in the North American market.

"UNIQLO should be the object of GAP learning, providing good design and good quality products at a low price."

What you may not know is that UNIQLO was inspired by the GAP warehouse self shopping mode and targeted GAP as its target.

In the past ten years, the pattern of fast fashion has changed.

H&M, GAP

Four brands dominate.

GAP, which has lost its core competitiveness, seems unable to compete in a competitive market.

"In the 80s and 90s of last century, people had no access to high-end fashion.

That's the golden age of business and entertainment. The core businesses of businesses are selling well.

Kate David Hudson, co-founder of online fashion magazine Editorialist, said, "but nowadays, everyone can see the latest trend through social media and blogs. Everyone is a critic, and consumers want to buy it immediately after they want to see it.

GAP brands are very outdated.

This once unique brand must now rely on the label of "others" to define itself.

As fast fashion, is it fast enough?

2013 at the end of the year, Goldman Sachs released a report that "the purchasing team of fast fashion retailers purchased the current fashions from the third party producers, while the design team of the traditional fashion retailers first predicted the fashion trend after 12 months, and then developed related products."

GAP's mode belongs to the latter.

Goldman Sachs believes that there is a risk of a year ahead of the forecast fashion trend, which is restricting the development of fashion retailers such as GAP, Abercrombie &Fitch, Ann Taylor and American Eagle.

If these retailers predict errors, their products have to be sold at a reduced price, thereby affecting profits.

On the contrary, the strategy of Zara is to store less goods and get more new products.

Traditional brands only last once a quarter, and Zara can go up two times a week.

From start design to new product store, GAP takes ten months, which is three times of Zara and H&M.

Its new CEO has previously said it should shorten the cycle to 30 weeks, but this is still about two times that of its competitors.

So, is GAP the basic item? Why UNIQLO can win by the basic funds, and has beaten the GAP of the US market on the basis of basic funds, but has failed?

In many people's eyes, basic means not only means "wild Joker" but also means "Ugliness".

Of course, this is why UNIQLO has been criticized by some people.

UNIQLO is smarter than GAP. I am ugly, but I am cheap and play with technology.

One of the core strengths of UNIQLO is its research and development of new fabrics, fleece, light down and Heatteck. These technical materials give higher value to the basic fund and give customers a reason to pay for it.

Julie Zerbo, the fashion lawyer and founder of fashion law, thinks that the problem lies in frequent changes at the top level.

Since the fall of the star CEO Mickey Drexler in 2002, several creative directors and executives have come and gone from Paul Pressler to Patrick Robinson to Rebekka Bay.

Frequent substitution does not help capture or rebuild the style of the brand, but also makes GAP lose consistency in the design direction.

The result is unsightly.

Consumers can't find the basic funds they want in GAP, but they are lost in T's T-shirt, strange printed trousers, fancy colors and cheap fabrics.

When the product itself has problems, the consequence is that customers do not know what to buy at GAP.

"Gap has no direction and no self in creation, and customers can see this," says Davidson Hudson of Editorialist. "GAP GAP needs to be clear: This is the two most important style we think of this season. This is the two style that we support. This is the best style for you."

The good news is that GAP seems to be doing well outside the US, especially in Asia.

After entering China in October 2010, GAP opened 81 stores in China at the end of last year, and opened 34 new businesses in 2014. It is expected to open 30 more this year.

GAP said earlier this year that it expects to increase China's sales by two times over the next three years to 10 billion billion dollars, making it the second largest market in the world.

The store and layoffs will not affect the Chinese market.

It seems that GAP is trying to reduce its dependence on the North American market and shift its focus to areas such as Asia.

But perhaps one thing that needs to be warned is that the benefits of GAP in the Chinese market are more from it.

You can see that in most stores, GAP's children's clothing area will take up the area of 1/3, including the introduction of China's sub Old Navy.

GAP did not disclose its specific revenue figures in the Chinese market, but in the few media interviews interviewed by executives, they would emphasize that children's clothing is quite popular in the Chinese market.

In 2011, Jeff Kriwan, chief executive of GAP Greater China, said in an interview with Fortune Chinese net that GapKids and BabyGap series were loved by more than 80% mothers in a second tier city in China.

According to the data provided by Ou Rui consulting, GAP children's wear is the only brand that has entered Top 10 in China's children's wear market, ranking seventh in 2014, and H&M ranked 11.

It also implies a dangerous message that they may not get the market of young people themselves.

In March of this year, he invited Wendi Goldman, a business major, to join the group to replace the creative director Rebekka Bay.

At the same time, the position itself will be replaced. GAP will no longer have the "creative director". The new job title is "vice president of product design and development".

Her work will involve marketing, product operation, customer experience and other business oriented parts, which means that next GAP will pay more attention to marketing.

Since last year, GAP has also strengthened its links with the design art community. We can see the autumn advertisement David Finch directed and the second wave GAP Remix Project series that has been exposed recently. The trend artists from 11 cities are making T-shirts with GAP logo as design elements, hoping to attract the "millennial generation" market with unique printing patterns.

In addition, GAP is actively promoting the "net booking store" project.

Up to now, GAP's "online booking store" has produced 50 orders.

Due to its good results, GAP plans to highlight the "reserved" button on the website's merchandise page.

Art Peck previously said that the future GAP will enter the 3 retail mode, focusing on the development of brand e-commerce, mobile terminal possession and a series of full channel sales capabilities.

Once the specific strategy is introduced, it will inevitably "shut down" or reduce some of the shops under the line.

From this point of view, GAP's closing down in North America is also reducing costs and refining competition to cope with competition.

Art Peck is trying to do everything right. It's not so easy to get back to fashion.