Baozun E-commerce Transformation Gap: A Hard Move to Reduce Discounts and Promotions
阿豆学长长ov
发表于 2023-11-27 09:51:10
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At the milestone of nearly a year since the official acquisition of Gap's China business, Baozun E-commerce expressed its determination to continue transforming Gap in China in its 2023 third quarter financial report: "We will gradually transform Gap from a discount driven brand to a brand that wins with consumer mentality."
Some indicators show that Gap's operations in China have changed over the past year - gross profit margin has increased by 10% to 56% year-on-year, inventory turnover days have decreased from 220 days to 177 days, and losses have significantly narrowed.
However, at least for now, consumers should still easily associate Gap with discounts.
Upon entering the Gap store, you will find that there are still many discounted products, and among all discounted products, hoodies with the GAP logo printed on them are the least discounted. This is its iconic product. For the current most seasonal autumn and winter thick jackets, Gap can offer a discount of up to 60% off.
"I have been offering discounts since I started working," an employee at a Gap store in Guangzhou told Interface Fashion. "The discount on the logo hoodie is similar to that on the new product, while the current main promotion of autumn and winter thick jackets has already been discounted again at the original level." Because of the main promotion, discounts are only available for people to buy. "
During the previous "Double 11" period, some Gap stores also launched a "50% discount on selected products" campaign, with more intensity than Zara and H& M and other fast fashion peers in Europe and America are even larger.
"Reducing discounts doesn't have much effect," Du Bin, Chairman of Hanbo Commercial Shanghai, a commercial real estate consulting company, told Interface Fashion. "The brand power of Gap was not established before. Many people buy because of discounts, and now reducing discounts may actually lead to the loss of these consumers."
The monotonous style and lack of innovation make Gap lack distinctive recognition compared to other fast fashion brands. It's not like Zara and H& M closely follows the trend and does not follow the technology and simplicity path of Uniqlo. For many years, the stories surrounding Gap have been told in an American style. But now the American style in the popular context has been linked to the old money style, which is even further from the positioning of Gap itself.
In addition, due to the lack of its own factory for a long time, Gap lags behind Zara and H& in terms of new product design, production, and shelf life efficiency; Competitors such as M. Compared to similar brands, the price of Gap products with similar styles often rises by tens or even hundreds of yuan.
This to some extent explains why Gap prefers to use discounts to attract consumers. But the problem is that although the overall price of fast fashion is not high, it does not mean that it can be frequently discounted. The core of fast fashion stories is to provide consumers with fashionable or easy to wear clothing at relatively low prices, emphasizing good image and cost-effectiveness, rather than being cheap and image blurry.
These reasons have put Gap in a performance dilemma in China. Interface Fashion once reported that Gap had already closed stores in multiple cities in China due to poor performance, and news of selling business in the Chinese region was also spread in 2021.
Until November 2022, Baozun E-commerce officially announced the acquisition of Gap's Greater China business for a stock price transaction consideration of $40 million, obtaining production, promotion, and omnichannel sales authorization, and began "transforming" Gap.
According to a report by First Financial Daily, after being acquired by Baozun E-commerce, Gap has formed a local product design team for the first time in the history of the Chinese market. The original in store display has shifted from a large store style category promotion to a multi scene overall combination.
At the same time, Gap also launched a joint venture with Chinese designer brand ATTEMPT and announced Ouyang Nana as the "brand renewal manager".
Offline, Gap's strategy is to return to the core business district of first and second tier cities, and it opened a new store in Guangzhou Zhengjia Plaza in September. Secondly, strategic adjustments will be made to the size of the stores to enhance their hierarchy, with the aim of opening small stores of approximately 300 square meters. At the beginning of Gap's entry into the Chinese market, two or three story large stores were the main types of stores.
Internally, Gap's employee management model has also become more rigorous and direct.
As for reducing discounts, it can be seen as another move in the combination of Baozun e-commerce's transformation of Gap's business in China.
However, aside from frequent discounts, when visiting Gap stores in Beijing, Interface Fashion found that the store still features a densely packed display, with the most discounted main autumn and winter jacket placed in the center facing the entrance, and the logo hoodie placed on both sides. The design has not changed much compared to the past. The division between men's and women's styles is not clear, and the salesperson did not provide any specific introduction for the dressing scene.
But according to the employees of the Guangzhou store mentioned above, Gap has indeed become stricter in managing frontline sales personnel.
He told Interface Fashion that nowadays, the store manager often checks the surveillance to confirm whether the employees are providing adequate service, working diligently, and talking to colleagues. "Nowadays, we are required to make two large orders worth over 1000 yuan every day, with a reward of 10 yuan for each order. However, the main pressure still lies with the supervisor."
Previously, Interface Fashion reported that some employees who have worked in multiple fast fashion brand stores believed that compared to Uniqlo and H& M and other fast fashion brands, Gap's work intensity is not too high, and many store employees even chat about their family and work experiences.
For Baozun e-commerce, it is imperative to reshape the image of Gap, but the test is not without severity.
Gap wants to present a new image most directly, and offline stores are the best channel. But Gap had previously closed its stores on a large scale, and although there is now a plan to return to first and second tier cities to open stores, it is not easy to implement it.
"Previously, shopping malls in first tier cities were willing to offer large spaces for fast fashion brands because they could bring in foot traffic, generate revenue, and attract other brands to settle in due to their good image," said Du Bin. Nowadays, besides being able to pay rent, many fast fashion brands are unable to bring other brands to settle in. "Sometimes it's just that the mall has a relatively large area and you need a fast fashion brand to be recruited."
Moreover, many shopping malls are no longer willing to offer rental discounts for fast fashion brands. If the new store strategy does not ultimately yield corresponding returns, it is highly likely to become a form of profit promotion, which not only puts financial pressure on the brand's operations, but also has a negative impact on the brand's image if the store is closed in the future.
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声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
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