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 started out by selling knits that 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 industry was such that they claimed to be “category killers” – chains so big that they threatened 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 would be 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 the fashion industry today remains, with a story that is still relevant today for major current players like Primark, ASOS and Boohoo in an era of huge flux in the world. the retail landscape and immense pressure on established supply chains.
From the start, for example, The Gap had a clear vision of its clientele. By opening 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 quickly abandoned. Although the prices were not reduced, they were moderately and high enough to convince this core demographic to shop there.
Benetton, meanwhile, capitalized on its initial popularity by expanding rapidly in the 1970s. Having multiple stores in a small area meant 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 the organization of a network of suppliers, initially located nearby in northeastern Italy, was also critical to the success of the business. 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, 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 decline, the opportunity for retailers to source cheaply from Asia increased, leading to the formation of global value chains. focused on buyers in the garment 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 has recently become the number one clothing retailer in the United States and the likes of ASOS are doing well.
As Gap and Benetton laid the groundwork for these changes, the power of these once daring and daring radicals has waned. New blockbuster fashion brands like Reformation, Sezanne and Rapanui are likely to mingle with brick and mortar retail online, 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.
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