Banana Republicwas co-founded by Mel and Patricia Ziegler in 1978.
Banana Republic, at thattime was one of the most unusual clothing store Beverley Hills, California hadseen. It had a jungle theme with life-size elephants and giraffes in the storewith a focus on safari clothing. Banana Republic was founded when Zeiglerbought a Burma jacket on his trip to Sydney, Australia. The look of the jacketinspired the Ziegler’s to resell excess military clothing with a few personalizedcustomizations done by Patricia. With a working capital of $1,500, Zieglerslaid the foundation of Banana Republic.
Later in 1983, Don Fisher, co-founderthe Gap Inc., offered to buy Banana Republic, who were thriving to stay inbusiness. The reason why Zieglers agreed to be bought was because they wouldhave the needed funds to thrive as well as expand and also because they wouldstill have the creative liberty. The safari fad of the 1980s faded by 1987 andthe stock fell. This compelled Fisher to bring in Mickey Drexel, who wanted to makebanana republic more mainstream than theme oriented and this is when the Zieglerswalked out. Being a classic, high on quality line, Banana Republic fitperfectly into Gap’s vision of market expansion.
1990 saw the new look ofBanana Republic which was nothing like it used to be. It was all aboutminimalistic and modern clothing. (adweek.com) by early 1998, Banana Republicwas transformed into a store with modern interior, super-sleek fixtures-theirsignature feature, lots of polished metal, and much more. Banana Republic is aspecialty store offering apparel and accessories.
They offer productson-line(e-commerce) as well as in stores (brick and mortar). They offer avariety of merchandise like denim, khakis, t-shirts, winter wear, shoes, fashionapparel, bags, belts, accessories, jewelry, intimates, personal care productsfor men, women, and children. “Banana Republic’s niche is withhigh-income, over-25, white collar professionals, 32 percent of whom have anannual household income of more than $100,000. Another 22 percent of thecompany’s customers earn at least $75,000, and yet another 19 percent are inthe $50,000 to $75,000 range.” (Whiteley, 1999). According to an article in Men’sHealth Magazine, “the primary age that shopped Banana Republic ranged between25-34 (31%) and 35-44 (28%). Average household income ranged from $100k to$150k (36%). Their consumers gender weighed slightly higher with female (57%)than males (43%).
Most consumers who came into Banana Republic had an educationlevel of college. The Psychographics of the Banana Republic consumers included sophisticatedand fashion forward females and sharp looking regular males.” Heriford (n.d.) Their target market are individuals lookingfor work and leisure attire at the same time. The ones who are full ofpossibilities and would want to experiment and make the most of every momentand opportunity. These working-class individuals are value seeking consumerswho wouldn’t mind paying for luxury. However, in 2015 they expanded theirsegments to target the millennials and young professionals as well.
This segmentation,however lead to Banana republic losing their old target market. Banana Republics competitors include Amazon, J.Crew, Talbots, Ann Taylor , Bonobos, J. Hilburn and Gilt Groupe. This initiative lead to adecline in 12% of its sales in 2015. After this point, they never really gotback on track. The consumers got confused with the kind of apparel they wereoffering. According to Andi Owen, former president, Banana Republic, “Tailored pants,sweaters that fit just right, and classic outerwear that brings the whole outfittogether are Banana Republic’s bread-and-butter products.
” (Adams, 2016). However,now when you walk into the store, you’d find more denim culottes, floralrompers, drop-waist dresses, and a sales rack stuffed with merchandise. BananaRepublic’s highest sales in a decade was marked in 2014 was $2.4 billion. Thislead to a change in creative directors, which also was of no use.
The skirtsgot shorter, and the fittings were disappointing and made it difficult for itstarget consumer to pull it off with ease. Instead the former loyal consumersrevolted and the sales went down. These changes confused the consumers and theystarted going to different brands. As per the investors report, “Net sales recordedin fiscal year 2015 was $2,211 million, in 2016 $2052 million and in fiscalyear 2017 for until the 3rd quarter is $1,396 million”. A cleardecline is seen in sales over the past three years. (Hoovers.com) According to Galereport 2017, “Median household income is $50,000.
Median age of US is between 30-40years. USA population comprises of about 17.90% Hispanics, 5.7% Asians, about12.9% Blacks, 70.4 % Whites and around 10% of other race and ethnicity. About60.
7% of the population has a white-collar job while the rest 39.3% areblue-collared. Total consumer apparel expenditure in 2017 is $1,845 and ispredicted to be about $2,178 by 2022, of which women apparel expenditurecomprises of about 37%. Consumers nowadays havebecome more value seeking rather that luxury seeking. They are willing to payfor luxury fashion but not as steep as they used to earlier. Further theyprefer true to fit apparels, and plus and petite size have become a major trendand many brands are expanding their lines into plus sizes.
Department storesare thriving and e-commerce is trending. Luxury department stores aren’t creativeenough for the consumers any longer. Consumers feel that they aren’t getting thequality they are paying for. Consumers are willing to trade down, in spite ofhigh income and affordable luxury is becoming the new upscale. With technology,people and brands have started personalizing clothing, footwear andaccessories. Rental clothing is also on a rise. (Mintel.
com). The change in consumer behaviorhas affected the retail market. Consumers have become value conscious andexpect good quality. With the available resources, consumers have access to ahuge database of information and are not easily misled.
Ecommerce is on therise and now Amazon has become a competition for almost all retail markets. Theconsumers going into the stores are mainly going for the experience. Personalizationand Customizations of merchandise is trending. Virtual reality and technology hasmade everything graphic instead of the traditional signage and trial rooms.