Many Brands Are Trapped In The Big Discount Cycle.

Today's clothing retailers have encountered unprecedented difficulties. Although sales have gone up, prices are always stuck in the crazy discount, which makes it difficult to improve their turnover and brand image.

This is highlighted in a new report from Credit Suisse:

"Gap and Abercrombie belong to high frequency discounts in our price tracking.

Both companies are heavily dependent on very many discount promotions to boost consumer demand, "the analyst wrote.

"Gap stores sell 31% less than the original price, while Abercrombie stores sell 25% less.

The discount rates of the two companies are 13% lower than the average selling price of the average retailers.

"Analysts are based on data from the discount sale prices of all brands in the homecoming season.

The report shows that over the past 18 months, the two companies have more than 50% discount each month.

Discount plates for Gap retail stores

This puts the brand in a discount circle, and people are obviously used to the discount period of these brands. Gap's CEOArtPeck also mentioned this problem at its earnings conference in May.

In particular, he referred to the troubled BananaRepublic and compared it to a "Coward game".

Credit Suisse said that such a commercial structure adopted the "high and low price mode" commonly used by small brand clothing retailers, which may lead to the loss of more clothing market share of these brands.

In fact, from the perspective of brand dealers,

I felt the suffering of these quarters.

Sales of brands under the clothing retail companies: Gap, OldNavy and BananaRepublic declined by 2% in the second quarter of fiscal 2016.

Sales of BananaRepublic fell by 9%, Gap fell by 3%, and OldNavy was basically flat.

Of course, fast fashion is also the main reason for these brands to get into trouble. Credit Suisse points out that Zara, H&M and especially cheap Primark have led consumers to buy fashionable clothes at a low price.

At the same time, Zara also has a very well-known supply chain that is quick to respond to market changes. The technology behind it is a big data processing center within the brand. This technology gives the brand a very efficient ability to determine which products are consumers' needs and which are likely to be unsalable.

Credit Suisse also points out that Zara is reducing its selling price and making it more competitive.

When consumers are accustomed to the high frequency replacement and low price of fast fashion products, it is hard to persuade them to return to a slightly higher brand.

Similarly, when consumers are accustomed to buying brand goods at discounted prices, it is hard for them to find reasons to pay the full price for goods.

"When the brand starts to make consumers wait until 30% or 40% of the price is used to buy goods, the only way to turn it around is to let them experience a very small number of fashion clothes and sell them as fast fashion brands as they can to consume more goods at full price," said retail experts.

Abercrombie is also working hard to reverse its brand image.

Gap's CEO believes that only one thing can be won.

Pay more for clothing: quality goods.

In a recent telephone interview with the company on its earnings report last Thursday, Gap's CEO highly claimed that the brand was able to win more profits from its products.

"Therefore, when Gap is able to regain power and stick to the brand strategy of quality products, we have confidence in brand goods that we can redefine commodity prices and pass the quality value of goods from the brand, but at the moment, we still have a long way to go for our brands."