BrandWatch by Michel Gutsatz

Gap - what does its future hold?

Gap just separated from its Chief Designer, Patrick Robinson, and the heading of the WWD article reads: "Gap Future Scrutinized as Designer Exits", but also says "The $ 14.7 billion Gap Inc. needs a big fix".  A makeover of the iconic brand of the 90's has been overdue for the last 10 years.  Two graphs succinctly resume the situation:
The first, published by Les Echos on May 23, 2011, shows us the main challenge that Gap is faced with:  it has been largely overtaken by Zara (and H&M) - which, it did not realize, were direct competitors.

As for the second, in Business Week, it shows that the domestic market has lost interest in Gap: its "same store" sales have been declining for almost 10 years. The brand has thus only found a form of salvation in what has turned out to be a headlong attempt to escape the inescapable: by opening new stores.


Gap, in my view, has 2 fundamental problems:

1. Its positioning: Who remembers the origin of the name "Gap"? It was chosen by its creator, Donald Fisher, to represent the "generation gap", which the brand symbolized.  Gap was a brand for the young - a breakaway from brands such as Levi's.  Its products, which differed completely from those of traditional jean manufacturers, the structure of its boutiques, the very "service-oriented" spirit of its vendors, were the factors of its success.  All this has been lost.  American youth today relate to Abercrombie & Fitch, J. Crew, American Apparel or Gucci.
2. Its trivialization ("commoditization"): in 2000 the brand boasted of the opening of a new store every day.  The 3 brands (Gap, Banana Republic and Old Navy) thus opened 570 stores in 1999 and 731 in 2000.  "From the end of fiscal 1995 (Jan. 28, 1995) through the third quarter of fiscal 2003 (Nov. 2, 2002), total store count more than doubled, from 1,508 stores to an all-time high of 3,158". Gap followed the same itinerary as Starbucks during the same period: over-exposure, which resulted in trivialization. This went hand-in-hand with a considerable decline in the quality of its products.

Gap lost itself - and the tragicomic episode of its new logo last year (see my post of October 14, 2010) was the best proof of this. However, it made two efforts worth noting:

• A significant reduction in the number of stores: they were reduced from 1,500 in 2003 to 1111 in 2011
• It decided to call in Patrick Robinson in 2007 - and give a face to its creation for the first time. Gap became a part of the current trend of personalizing the fashion designer. But is Gap a fashion brand?  Its constant veering from basics to fashion is confusing.

However, this is not enough: the brand has to be infused with a new meaning (as also Banana Republic and Old Navy) and it should therefore find the one that corresponds to the "generation gap" of today - like the one that Spike Jonze and Daft Punk represented in the 90's.  One could probably find a solution with "cool" modern styles and excellent quality, where each client can make his/her own fashion statement (and inspire the others).  By placing its faith in each one's creativity (as the site poyvore.com explains - see my post of June 13, 2010), a brand such as Gap could even regain its popularity in the U.S.

The Coca-Cola Bottle

Posters urging us to discover "the new legendary bottle" from Coca-Cola have invaded Paris.  It is a powerful pitch.  But does reality live up to the promise?
One of the essential factors that contribute to the brand's aesthetics is quite evidently the "Contour" bottle, and it is interesting to recall the original brief: "We want a bottle that can be recognized even blindfolded" ... and which, "is recognizable even when broken".  The bottle was made of glass until PET arrived on the scene:  None of the PET bottles so far (especially the large sizes) resembled the original.  The last 2-liter bottle is a woeful example.



We have become familiar with a major innovation from Coca-Cola over the last few years:  it created a new iconic bottle in aluminium - a replica of the "Contour" bottle, but decorated by famous designers (Nathalie Rykiel, Karl Lagerfeld, 8 fashion designers from Italy, Daft Punk, and others).

These bottles were created at the initiative of the French and Italian subsidiaries - thereby instating Coca-Cola as a "trendy" brand, inscribing it in the fashion world.  They are a far cry from the supermarket shelves where the very unsightly PET bottles reigned supreme.
But now, on the occasion of its 125th anniversary, Coca-Cola is launching a series of sales strategies relating to the bottle. They can be divided into two groups:

• The "exclusive" back to basics:  In the U.S. Coca-Cola is offering collectors limited editions of the "Contour" bottle in crystal or gold plated, and in Europe, a series of 4 iconic bottles (the 4 original designs, including the "Contour"), sold at Colette in France and Selfridges in Great Britain (costing 50% more in France!).
  
  
  
  
• A return to its origins for the general public:  A new 1.25 litre bottle (costing less than $1 in the U.S.) has been launched - a replica of the "Contour" shape in PET.  The commercial for the launch shows, with humour, how the brand has accepted the fact that the previous inelegant bottle had to be reinvented.

This initiative has two positive effects:

• It will give new meaning to the brand by placing great emphasis one of its iconic emblems.
• It will counterbalance the very recent and very European movement that was drawing the brand towards the fashion world - something that is quite contrary to Coca-Cola, a brand that is a symbol of popular American culture (and which has nothing in common with European fashion and trends).  The brand might wish to ask itself the question of how to reinvent the bottle as an icon of popular culture, taking a page from the French initiative:  have the aluminium bottle decorated by popular rap stars, for example.

Lierac: modern or private label?

Lierac just introduced its new corporate identity at the recent Pharmagora exhibition. This is a revolution for a brand whose graphic identity was, so far, quite "reserved".  Nevertheless, one fact has become evident:  with the systematic use of gold and pink, the brand is positioning itself in the high-end women's category.  This is far from the pedigree of the brand - which is rooted in plants and research.   We therefore have a brand - sold in pharmacies - whose graphic codes are the opposite of its position. Inconsistent.




This new identity creates at least as many problems as the old one did - but for different reasons:

We have fallen into a combination of two very different trends heads first:

• A copy of Shu Uemura - a brand that originated in makeup, and which therefore adopts the codes that relate to fashion and style ... where the colours of its universe are instantly recognizable.
  
  
• A copy of the Sephora private label (which was also copied by Lierac for some of its products):
  
  

We immediately understand the instructions given by the brand: "Give us back some modernity!"  Alas, this comes at the expense of the identity of the brand, which, again, forgets its roots and does not highlight what makes it strong.  Anyhow, at least they will not go unnoticed on the white shelves of the pharmacies.

Luxury: the new "Retail" formats are found in Asia

Two new boutique concepts perfectly illustrate the research luxury brands have been devoting to their "retail" formats. These two initiatives have seen the day in Asia - showing not only that these are the most important markets for luxury brands, but also that a brand is capable of being innovative.
Dior has just reopened its flagship store in Hong Kong (One Peking Road, Kowloon), where it offers, on three floors of more than 1000 m2, its entire collection for women (clothing, leather goods, footwear), babies and men - and its range of watches and jewellery.  The only thing missing is its beauty products. Designed like a modern apartment (evoking its flagship store on Avenue Montaigne to a certain extent) it features all the codes of the mark, in grey with the same caning used for the floor in the "bags" section. Blending fashion and art, Dior projects itself as a lifestyle brand.

 
Hermes has done the opposite.  Having noticed that its watches were too often sold in a multi-brand universe that did not correspond to the status of the brand (like here at the airport in Shanghai!)


the brand decided to test the shop-in-shops concept in department stores and boutiques, then created the La Montre Hermès boutiques: this enables it to valorise its history (its first watch dates back to 1928) and its watch-making expertise. The first store was opened in Singapore, facing the Hermès boutique. The result was amazing: not only did the sales of the new boutique exceed the objectives that were initially projected, but sales of watches in the Hermès shop opposite increased by 25%!  Several other shops followed: Taipei, and now Shanghai.



Both Dior and Hermès seek to enhance their history: the former, by regrouping most of its products in a unique location, a modernized mirror image of its original boutique; the latter, by exiting the multi-brand universe so as to be able to exploit its own brand story.
One question remains: when will their spectacles and beauty products (traditionally confined to their respective circuits) be included in the flagship lifestyle stores of these brands?

Herborist - a Chinese brand to watch

May 2009 - I told you about Herborist, which I quoted as an example of a new Chinese luxury brand. Recently, two years later, I took advantage of my recent trip to China to see how this brand had developed since then: all that I predicted was confirmed, but we need to take a quick step back in time to understand what is at stake here.
In 2005, the brand was distributed mainly in corners of large department stores in China, and attained a turnover of around 100 million Euros.  It then decided to expand globally.  It approached Sephora in 2006 - wishing to be referenced. The answer was clear: Sephora, interested in the concept which was based on traditional Chinese pharmacopoeia, but finding the products of little interest, offered to include a hand cream and a cream for the feet in its product list.  Herborist took this as a snub: it meant that the distributor considered the brand as inconsequential.  But this also obliged the brand to take a hard look at its brand identity - and go back to the drawing board.

It then decided to make two major changes:

• To work with a French design & packaging agency (centdegrés) which helped them to transform the graphic identity of the brand - in order to place it on a level with the best international beauty brands.
  
  
  
• To develop a network of boutiques in China so as to become indispensable in its home market.
  
  
  
  

 The result is phenomenal: Herborist now has 1,000 shops in China, a spa in Shanghai and a turnover of over one billion Euros.
We can draw two lessons from this example:

1. Chinese brands have a strong desire to develop as global brands:  This was confirmed during my recent trip. China is currently creating a large number of luxury brands that will soon, once installed in the domestic market, expand to the global market.
2. This development will be even faster if they know how to surround themselves with expert European advisors, French in particular - as France is considered a point of reference where luxury business models are concerned.