What can we learn from Gap and Benetton’s former dominance in fashion?
In 1969, Don Fisher was struggling to find the right size of Levi’s jeans in traditional clothing stores. His solution was quite radical. With his wife Doris, he opened his own store, The Gap, selling a wide selection of products that Fisher had found so difficult to buy.
A year earlier, across the Atlantic, an Italian family business, Benetton, had opened its first boutique, entering the mass fashion market with a slightly different approach. Rather than designer clothes, Benetton began by selling knits they made themselves.
From those humble beginnings, The Gap and Benetton have grown into highly successful fashion retailers. At one time, their superiority within the sector was such that they claimed the status of “category killersâ- chains so big that they threaten the survival of smaller competitors.
A key feature of Category Killers – other famous examples include Toys “R” Us, Home Depot, and Staples – is the convenient availability of specific, affordable products. It is a retail format based on a clear understanding of what the customer wants and meeting that demand at low cost.
With the announcement this summer that Gap is closing all of its stores in the UK and Ireland, and with Benetton no longer on the cool frontier, the idea that these brands were once so dominant seems rather odd.
But the influence of these category killers on today’s fashion industry remains, with a story that is still relevant today to major current players like Primark, ASOS and Boohoo at a time of huge flux in the retail landscape and immense pressure on established businesses supply chains.
From the start, for example, The Gap had a clear vision of its clientele. Opening of the first store near San Francisco State University, Fisher wanted to appeal to students and the counterculture generation.
To attract them, the first Gap stores also sold records, but these were soon abandoned. Although the prices were not reduced, they were moderately and lively enough to convince this demographic core for shopping.
Benetton, meanwhile, capitalized on his initial popularity by expanding rapidly in the 1970s. several stores in a small area meant that the company could dominate local markets, generate high sales volume and effectively manage its distribution network.
A key difference between Benetton’s clothing and those available from their competitors (usually department stores) were Benetton’s bright colors. Last minute dyeing of clothes allowed the company to be flexible and responsive, reacting quickly to changes in demand.
The use of sophisticated inventory control and its organization of a network of suppliers, originally located nearby in northeastern Italy. Being able to track inventory and know what was selling and where that meant Benetton could plan the store’s supply flow, while also designing and producing the clothes consumers wanted to buy.
In the United States, The Gap was transforming the way Americans shop and dress, with a shift in focus from Levi’s jeans to ubiquitous khakis and pocket t-shirts. The stores have been redesigned, but the focus has been on a narrow range of products at affordable prices in convenient locations. Like Benetton, Gap’s adoption of computers to control inventory was critical to their superior ability to meet customer demand.
Of course, other retailers have sought to emulate some of these advances. In 1975 a Spanish clothing manufacturer headed by Amancio Ortega opened its first Zara store. Zara’s business model quickly focused on quickly meeting changing customer demand.
Then, as the power of technology accelerated rapidly and trade barriers continued to drop, the opportunity for retailers to source cheaply from Asia increased, resulting in the formation of global value chains focused on buyers in the clothing industry.
The dizzying pace of change brought about by these developments has led to the global fashion industry as we know it today. It is fast (some would say too fast), practical and agile. Amazon recently has become the number one clothing retailer in the United States and the likes of ASOS work well.
As Gap and Benetton laid the groundwork for these changes, the power of these once daring and daring radicals has waned. New successful fashion brands, such as Reformation, SÃ©zanne and Rapa nui are likely to mix online with brick and mortar retailing, and make sustainability a central part of their offering.
But The Gap and Benetton’s approach – solving a problem, being different, prioritizing convenience, reacting to change – deserves to be replicated for today’s industry innovators. As consumers become more aware of the environment and e-commerce accelerates further, the business acumen that has made these companies successful is unlikely to go out of fashion.