GAP'S "Old Navy" Will Withdraw From China'S Fast Fashion Brand, And The Low Price Strategy Will Fail?

Generally speaking, the brand that updates quickly, designs fashionable, the price is close to the people is called fast fashion brand. A few days ago, foreign media said that the OldNavy of GAP, the fast fashion company of the United States, will be withdrawn from the Chinese market in 2020. OldNavy has always been called "Old Navy" by Chinese consumers. Why did the Old Navy enter the Chinese market for six years?

Reporters came to the Old Navy in Shanghai Moutai Road store found that the store is doing 60 percent off promotional activities, for the upcoming withdrawal of the store, the clerk did not know.

Reporter: will this store be closed later?

Salesperson: I can't give you an answer. I'm not sure.

The reporter observed that although it is working day, there are many consumers in the shop. It may be the reason for the discount and the reason for the withdrawal.

Shanghai consumers: this brand has always been bought. This brand is relatively large and suitable for fat people.

Shanghai consumers: it seems that the quality should be a little bit worse, but at this price, if the discount is made, it can be affordable.

Reporters observed that as early as September this year, the Old Navy's flagship store in Jingan Temple, Shanghai, was closed, but at present, Moutai road's store did not post a notice to close the store. Subsequently, the reporter went to the office of GAP company in Nanjing West Road. The staff told reporters that although no announcement was made, the group headquarters had decided to withdraw all its brand OldNavy from China in early 2020, and the staff sent the official announcement to the reporters.

OldNavy entered the Chinese market in 2014, the main American leisure style, the price is lower than the group's main brand Gap. At present, there are still 18 stores in mainland China. According to the latest quarterly report released by GAP group, the net profit of the group declined by 47% to 140 million US dollars in the third quarter of November 2nd, of which Old Navy brand sales were flat at 1 billion 947 million US dollars in the same period last year, while same store sales fell 4%. Therefore, the industry analysis, the decline in performance is the main reason for OLDNAVY to withdraw from the Chinese market.

Many international brands withdraw from the Chinese market, the fast fashion industry is facing a shuffle.

In fact, OLDNAVY is not the first fast fashion brand to quit the Chinese market. Three fast fashion brands have been evacuated from the Chinese market this year, and the industry is shuffling.

Reporter Zuo Jiayu: I am now in a shopping mall in Lujiazui, Pudong, Shanghai. Last year, there were six fast fashion brands in the mall, including H&M, GAP and so on. This year, these fast fashion brands are gradually being withdrawn, and only UNIQLO and Zara are still open in the mall.

In August 2018, TOPSHOP announced that it would terminate its cooperation with Chinese franchisees in advance, and then shut down Tmall flagship store. Last December, NewLook announced that it would close Chinese stores and Tmall flagship stores. In May of this year, Forever 21 announced its withdrawal from the Chinese market. Insiders pointed out that in recent years, consumer demand for clothing quality has gradually increased, and the strategy of attracting consumers by styles and low prices is gradually failing.

Lin Jichuan, a senior analyst in Soochow securities and textiles and clothing, actually, these fast selling products are actually following the big overseas brands and constantly following the global trend. They use "fast" as their core barriers, but now more consumers may want something original to come out to consumers. The second point is that we believe that the change of channel is also a fast fashion brand, which is a big problem in China.

Official data show that in fiscal year 2018, sales volume of ZARA, H&M and UNIQLO were 204 billion 400 million yuan, 155 billion 900 million yuan and 138 billion 100 million yuan, up 3%, 5% and 14%, respectively. According to the insiders, UNIQLO's advantage lies mainly in its better quality and mature e-commerce channels. In addition, it is more suitable for the Chinese version and the products of the whole age segment, which is also more conducive to the expansion of UNIQLO in the three or four tier cities.

Lin Jichuan, a senior analyst at Soochow securities and textile and apparel: like other fast fashion brands, it may target consumers in their twenties and thirties. UNIQLO's products can satisfy almost all the daily needs of young consumers, so in this case, it can smoothly expand to the three or four tier cities.

In order to cope with the current market demand, all fast fashion brands are undergoing all-round adjustment. In terms of design style, H&M and other brands are vigorously promoting the joint name series, which has attracted much attention. Marketing strategy, Zara, UNIQLO and other companies will brand integration with the net red economy, in many social software search Zara will appear more than 200 thousand articles. But the industry believes that the core competitiveness of fast fashion brands is still quality and price, and maintaining low price under high quality products is the way to survive fast fashion brands.