Will The "Old Navy" Under GAP Withdraw From China'S Fast Fashion Brand Low Price Strategy Become Ineffective?

Generally speaking, brands with fast updating speed, fashionable design and affordable price are called fast fashion brands. A few days ago, foreign media said that OldNavy, a brand owned by American fast fashion company GAP, would withdraw from the Chinese market in 2020. OldNavy has always been affectionately referred to as the "old navy" by Chinese consumers. Why did the old navy who has only entered the Chinese market for six years withdraw from China?

When the reporter came to the old navy store located in Maotai Road, Shanghai, he found that there was a 40% discount promotion in the store. The clerk said he was not aware of the news that the store was about to be withdrawn.

Reporter: Will this store be closed in the future?

Shop assistant: I can't give you a definite answer. I'm not sure.

The reporter observed that although it was a working day, there were many consumers in the store who had to queue up to pay the bill. Maybe it's because of the discount and the withdrawal of the store. The size of the clothes in the store is not complete.

Shanghai consumer: I have always bought this brand. This brand is a bit larger and suitable for fat people.

Shanghai consumer: It seems that the quality is a little poor, but the price, if discounted, is actually worth the price.

The reporter observed that as early as September this year, the flagship store of the old navy in Jing'an Temple in Shanghai was closed, but at present, the store on Maotai Road has not posted a notice of closing. Then the reporter came to the office of Nanjing West Road GAP Company, and the staff said to the reporter that although there was no public announcement, the group headquarters had indeed decided to withdraw all its brands OldNavy from China at the beginning of 2020, and then the staff sent the official announcement email to the reporter.

OldNavy entered the Chinese market in 2014, focusing on American leisure style, with a lower price than Gap, the main brand of the group. At present, there are still 18 stores in mainland China. According to the latest quarterly report released by GAP Group, the Group's net profit fell 47% to $140 million in the third quarter as of November 2, of which, the sales of Old Navy brand remained unchanged at $1.947 billion compared with the same period last year, and the sales of the same store dropped 4%. Therefore, industry insiders analyze that the decline in performance is the main reason for oldnavy's withdrawal from the Chinese market.

Several international brands withdraw from the Chinese market Fast fashion industry faces reshuffle

In fact, oldnavy is not the first fast fashion brand to withdraw from the Chinese market. Since this year, three fast fashion brands have withdrawn from the Chinese market, and the whole industry is shuffling.

Reporter Zuo Jiayu: I am now in a mall in Lujiazui, Pudong, Shanghai. Last year, there were six fast fashion brands in this mall, including H&M, GAP, etc. Since this year, these fast fashion brands have gradually withdrawn. At present, only Uniqlo and Zara are still operating in the mall.

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

Lin Jichuan, senior analyst of Soochow Securities Textile and Garments: In fact, these fast selling products are more to follow the overseas big brands and constantly follow the global trend. They use "fast" as their core barrier, but now consumers may want to bring something original to consumers. Second, we believe that the change of channels is also a big reason for fast fashion brands to face problems in China.

According to official data, in FY2018, ZARA、H&M、 Uniqlo's total sales were 204.4 billion yuan, 155.9 billion yuan and 138.1 billion yuan, up 3%, 5% and 14% year on year. Industry insiders believe that Uniqlo's advantages mainly lie in its good quality and mature e-commerce channels. In addition, products that are more suitable for Chinese people and year-round are also more conducive to Uniqlo's expansion in third and fourth tier cities.

Lin Jichuan, senior analyst of textile and clothing at Soochow Securities: Like other fast fashion brands, they may target women in their twenties and thirties. Uniqlo's products can actually meet the daily needs of almost all consumers from young to old. In this case, it can smoothly expand to third and fourth tier cities.

In order to meet the current market demand, all fast fashion brands are making all-round adjustments. In terms of design style, H&M and other brands are vigorously launching joint brand series, which has received high attention. In terms of marketing strategy, zara、 Uniqlo and other companies have deeply integrated their brands with online celebrity economy, and more than 200000 articles will appear in many social software searches for zara. However, insiders believe that the core competitiveness of fast fashion brands is still quality and price, and maintaining low prices under high-quality products is the way for fast fashion brands to survive.