When Will China Be Able To Produce A Clothing Brand With Annual Revenue Of More Than 100 Billion?

Annual sales exceed RMB 100 billion!

On Chinese brands Clothing enterprise What is the concept of annual sales exceeding RMB 100 billion?

Take YOUNGOR as an example, the garment enterprise, which has been ranked the top five of the top 100 of China's textile and garment industry for many years, has a total income of only 10 billion 780 million yuan in 2008. It has a gap of 90 billion yuan from 100 billion. Moreover, in the total income of 10 billion 780 million yuan, YOUNGOR has only 7 billion 150 million yuan from textile and clothing and the rest from real estate business. In the income of textile and garment business of 7 billion 150 million yuan, only 2 billion 170 million yuan comes from "YOUNGOR" brand clothing in domestic retail, and the rest comes from the export processing business of POLO, JCPENNY and other international brands.

In this regard, YOUNGOR's own brand clothing retail business, but just crossed the threshold of 2 billion yuan.

Other domestic clothing brands, such as Lining It has already crossed 6 billion yuan, Anta has touched 5 billion yuan, Muse, bang Wei, JEANSWEST and so on have entered 4 billion yuan camp.

All these enterprises are far away from billions and far away from 100 billion.

But there is no doubt that one day, China will have a clothing brand with annual sales of more than 100 billion yuan. Stones from other hills can be used to attack jade. We take Lining's sales of 6 billion 700 million yuan in 2008 as the starting point of the 100 billion target of Chinese fashion brand camps. With reference to GAP's development process since 1986, we can see a clothing retail brand from the threshold of 5 billion yuan to the throne of hundreds of millions of people.

　　 GAP Myth of the past

In 1986, GAP's sales revenue was only 850 million dollars; in 2004, GAP sales revenue amounted to $16 billion 300 million. At today's exchange rate, GAP sales in 1986 amounted to about 6 billion yuan, up to about 110000000000 yuan in 2004.

From 1986 to 2004, GAP grew at an average annual rate of 17.9% in 18 consecutive years, with sales revenue rising from $850 million to $16 billion 300 million.

In this picture, we give the change curve of sales revenue, profit, business area and efficiency of GAP from 1986 to 2008.

This curve can be divided into three stages.

The first stage is the connotative growth stage. From 1986 to 1992, GAP sales revenue increased by 244%, business area grew by 93%, profits increased by 200%, and flat effect increased by 96%. Revenue growth is faster than business area growth, profit growth is faster than flat growth rate II.

In the second stage: epitaxial growth stage. From 1992 to 2001, GAP sales revenue increased by 366%, while business area grew by 457%. Revenue growth started slower than business area growth. During this period, the flat effect dropped from $5264 per square metre to $4241, a decrease of 19%.

The third stage: contraction stage. From 2002 to 2008, GAP sales revenue increased by 5%, and business area grew by 9%. Revenue growth is slower than business area growth.

During the same period, Sweden's H&M sales revenue increased from 53 billion 300 million Swedish kronor to 104 billion kronor, an increase of 95%; Spain's Inditex sales revenue increased from 4 billion euros to 10 billion 400 million euros, an increase of 160%! This shows that GAP not only grows slower than the business area, but also grows much slower than its competitors.

Let's take a look at what happens at every stage of GAP.

Three stages of GAP

The first stage: connotative growth stage (1986-1992)

In 1983, Dealer, the legendary Millard of the American clothing industry, was invited by GAP founder Fisher (Donald Fisher) as president of the company. (Drexler) Since then, a legendary growth in the history of world clothing has been launched.

When Dealer took office, GAP was in an awkward position: the GAP denim garment, which was sold on behalf of Levis, has been developing rapidly through centralized purchasing, stocking and low price. But in the early 80s of last century, Levis decided to supply to WAL-MART and other hypermarkets, so Levis jeans were sold everywhere, and terminals were competing to beat prices, so that GAP's low price advantage no longer existed. Teenage consumers of jeans are also very sensitive to prices. Fisher has made many attempts to transform, but they are not effective.

There is a historical detail that can reflect the situation of GAP at that time. In 1976, GAP was publicly listed. The high growth attracted many investors, and the shares were sold at $18 A share. But after the listing, it began to slide and even lose money. The stock price dropped to $7.25, and Fisher himself sold many of his shares ahead of schedule before the company announced the loss. This brought 9 group lawsuits against angry investors against Fisher insider trading. The lawsuit lasted until 1979, and GAP paid 5 million 800 thousand dollars for reconciliation.

Therefore, the arrival of De Le Le has a milestone in the development of GAP.

At that time, Dealer just helped women's clothing Ann Taylor complete transformation, sales increased by 4 times. Fisher rushed to seek medical advice and dug up a large company stock. Later, they made the company one of the wealthiest presidents in the US retail industry.

Dealer made a radical change in GAP from products, customers, stores and publicity.

From the product, most consumers at that time regarded GAP as a place for teenagers to buy Levis jeans. The fierce competition in the jeans market and the market of GAP's youthful vitality make the company plunge into a price sensitive market. In order to achieve upgrading, downer cancelled the sale of miscellaneous brands, and began to advocate its own brand GAP. Of course, in a period of time, Levis products remain. But after the GAP brand grew, Levis completely withdrew.

De la re defined the consumer group for GAP, shifting customers from teenagers to 20~35 year old youth groups. The shop is no longer in line with jeans and non jeans, but instead of men and women. Downer asked the design team to develop clothes that are casual, concise, and look rather formal but not classic. This is aimed at consumers who want to look younger but are not willing to be rebellious. This is the largest consumer in the 80s of last century.

In the past, GAP shop was a relaxed and hippy atmosphere: bright orange in the shop, and many racks with different brands of clothes and trousers for customers to choose from. It looks very fashionable and bright, but it doesn't have the "taste" needed by older customers. He replaced the original orange with light grey and pure white, replaced the originally rounded coat hangers with showcases and layering shelves. The clothes are neatly folded and placed on the shelf, accompanied by a bright and soft spotlight, giving the whole shop an elegant and concise atmosphere.

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The company's advertising campaign has been adjusted accordingly, from the original radio and television to high grade magazines and newspapers, and the older models are being chosen. The scenes are arranged in families, outdoor areas and so on.

GAP has many classic publicity cases. The "Individual of Style" (true ego style) was one of them. This is a series of black-and-white photographs released by a group of famous photographers. The whole series emphasizes "style" rather than "GAP". In many photos, there are no products of GAP. This publicity campaign has gradually reversed the public's impression of GAP. GAP began to represent high quality casual wear. Since then, GAP has had an advantage in competing with retail brands such as Benetton and The Limited.

Dealer spent a lot of money in the reform of GAP, but in the second years after assuming office, the financial results in 1984 were not good. However, by the middle of 1985, people began to realize that he was creating miracles. By 1986, GAP's income, profits and efficiency had begun to increase. From 1986 to 1992, GAP's business space has been reduced by 1 times, its profit has doubled 2 times, and its revenue has increased 2.5 times.

He has found a new set of business models for GAP.

The second stage: epitaxial growth stage (1992-2001)

Standing in 2001, GAP is like an increasingly feeble old man. Many people mark the historic loss of GAP in 2001 as a turning point in its decline.

In fact, GAP chose the strategic growth point long ago to take refuge in the choice, not to upgrade the product innovation capability and satisfy the temporary harvest in the low-end market. The seeds of this result have been quietly planted.

Today, the Ping effect of H&M is 57 thousand kronor. The flat effect of ZARA is 4700 euro, and the corresponding RMB is 54 thousand yuan and 45 thousand yuan respectively. In 1991, the flat effect of GAP was 5264 US dollars, equivalent to 36 thousand yuan, and there was still a lot of room for improvement. But Dealer thought that the efficiency of GAP had come to an end. The other way is to enter the low-end market with the accumulation of GAP.

GAP, which has lost its initiative in product strength, began to play the idea of low-end market in order to keep total revenue growing. Since then, the GAP's efficiency has been fluctuating, and has been fluctuating within the range of US $4500~5500. The implication behind this is that GAP's product power on consumers is beginning to stop.

In 1994, the Old Navy brand was created.

Old Navy is a cheap brand that is similar to GAP brand but more sensitive to price. The first 3 stores of Old Navy originally intended to be a warehouse store in GAP. After the creation of Old Navy, the company gave these Old addresses to Old Navy. More commodious stores, richer products, cheaper prices, and GAP's mature management made Old Navy a great success. In just 4 years, sales of Old Navy jumped 1 billion dollars, becoming the fastest clothing brand ever achieved.

If GAP takes full advantage of the years that Old Navy has earned for itself, and set aside a single hand to create its own product innovation capability, Old Navy will become a perfect business case with perfect strategy and tactics. Unfortunately, GAP has not done so.

If in the first stage, the growth of GAP comes from the dual engine driving of business area and flat effect, then, in the second stage, GAP will become accustomed to relying on the business area single engine drive, in short, it is to open shop continuously.

For a garment enterprise, giving up improving efficiency is equivalent to giving up efforts in product innovation. GAP's product design is becoming less and less innovative, and every year it revolves around the limited classical style. However, the classic style is the largest selling part of the market, plus the market position of GAP, which makes its life still good. Even at some times, such as 1999, the popularity of the classics has made it a new high.

In the 2001 fiscal year, this good life is at an end. This year, the business area of GAP reached 3 million 370 thousand square meters, and it became more and more difficult to open new stores. At the same time, as the fierce competition reappearance of jeans Market in the 80s of last century, WAL-MART and other hypermarkets began to offer cheap classic style clothing. This made it hard for him to consider the introduction of fashionable designs to keep away from classic style price wars.

A child who does not exercise will never get a good mark when he suddenly goes to the marathon. The same applies to GAP. GAP, who has never been concerned about product innovation, is trying to introduce some fashionable designs. Though the idea is good, the accumulation of capabilities is far from enough.

GAP confidently launched a "jacket + low waist pants" combination, which proved to be a disaster afterwards.

The disaster has three consequences: the first is the company's losses; the second is that downer is removed from office; and the third is that GAP has become a tottering giant since then.

Contraction stage (2001-2008)

The loss made GAP a snake bitten, ten years shy of the rope. After dismissing the company, the business became more conservative, and began to try to consider the growth of sales under the premise of maintaining profits. For this reason, the company reduced the low price goods and reduced the discount sales promotion. However, maintaining this strategy proved to be too difficult. Although sales revenue of GAP has hit a new high in 2004, it did not reverse the downtrend of the company.

In May 2007, in order to reduce operating costs, GAP fired about 300 Old Navy store managers with low performance. In fiscal year 2008, GAP's single store performance fell by 12%, of which Old Navy's single store performance fell 19%. In March 2009, in order to reduce operating costs, the company reduced the board from 13 to 10, leaving the directors to cut 15% of their stock returns. The chairman and CEO also paid 15% extra salary, and the bonus of headquarters employees was abolished. All of these, apart from continuing to combat morale, are of no help in improving product strength.

All this makes GAP more and more like an old and dead beast.

Who is China's 100 billion brand?

GAP's rise and fall and its successes and losses are worth considering. There are lessons that we should bear in mind, and lessons we should learn from.

From 1986 to 2004, GAP grew at an average speed of 17.9% for 18 consecutive years, and eventually grew into a world-class apparel giant. This process is worth learning and learning from. Today, some of the national brands such as Lining, Muse, bang, Anta, JEANSWEST and others are already on the same scale starting point as GAP in 1986. After 18 years, that is, 2028, they can have a family that can grow 18 times in 18 years and become a 100 billion giant in China's clothing brand.

Who will it be?