By CHEN Qirui
Having bought out acquiring Gap in China a year ago, e-commerce Baozun has released its Q3 financial report.
In the past year, the best that can be said about Gap in China is a small increase in gross profit margin and a reduction in inventory turnover.
Despite Baozun’s insistence that Gap is no longer about discounts, customers still think it is, perhaps because of the number of discounts available. Offline, Gap’s strategy is to re-enter key business districts with small stores of around 300 square meters.
But many discounted items can be found in what Gap stores remain, with prices of current-season items reduced by as much as 40 percent. During the Singles Day shopping event, some stores offered 50 percent discounts, much more than competitors Zara and H&M.
Getting rid of discounts may not be very effective. Gap’s styles are considered monotonous and old-fashioned, lacking recognition compared to other fast fashion brands. Gap has little profile beyond discounts, and reducing discounts may lead to a loss of customers.
Design, production and shelf placement efficiency lag behind, while Gap’s prices - discounted or otherwise - are often higher by tens or even hundreds of yuan compared to similar brands. The in-store display is still dominated by densely stacked garments.
When Baozun announced the acquisition of the China operation for US$40 million (290 million yuan) in stock, Gap formed a local product design team for the first time and began working with Chinese designers.
If Gap wants a new image, stores are the best channel, many have been closed down. Although there are plans to reopen them, it may not be so easy.
In the past, malls were willing to give large spaces to fashion brands because they brought in customers and other brands. That’s no longer the case. Malls are no longer willing to offer discounts to fast fashion brands.
