Gap Inc. 1 Gap Inc. Meghan McGowan Simmons College Gap Inc. 2 Introduction Gap Inc. is a major player in the family clothing market worldwide. They have locations in the United States, the United Kingdom, Canada, France, Ireland, Japan and franchised locations in Bahrain, Indonesia, Kuwait, Malaysia, the Philippines, Oman, Qatar, Saudi Arabia, Singapore, South Korea, Turkey, the United Arab Emirates, Greece, Romania, Bulgaria, Cyprus, Mexico, Egypt, Jordan, and Croatia, and Israel. In 2009 they had the highest market share in the U.S. family apparel industry. Five Forces Analysis 1. Competition from rival sellers is strong. The rapid introduction of new trends in fashion causes the clothing industry to be in a state of constant change. The myriad of options for consumers of stores to purchase clothing causes switching costs to be low. It is essential the companies are able to respond quickly to new trends in order to appeal to consumers and create brand loyalty due to the high amount of competition in the industry. 2. Competition from potential new entrants is weak. In the apparel industry the barriers to entry is very high. It is imperative for a company to have high brand loyalty, due to the low switching costs. This makes it difficult for new entrants to survive, because they will not have brand loyalty. Consumers tend to stick to clothing brands that they like and to continue to shop there if they trust the company. This is why it is important for a company to always be building their brand loyalty. 3. Competition from substitute products is weak. There are not many substitute methods to attaining clothes other than shopping at clothing stores and it is because of this that competition from substitute products is weak. Some substitutes to purchasing clothing at apparel stores is making clothing and wearing hand-me-downs. Neither of these options is appealing due to being time-consuming for the former and not specific to the consumers taste for the latter option. There are very few substitutes to purchasing clothing at apparel stores which makes competition from substitute products very weak. 4. Supplier bargaining power is weak. Most companies in the apparel industry do not own their own factories to manufacture clothing and thus rely heavily on third-party manufactures to create their clothing. All over the world there are manufacturing businesses and therefore supplier bargaining power is weak. These companies are unable to charge high prices, because there are many companies willing to offer their manufacturing facility at a lower price. 5. Customer bargaining power is moderately strong. Gap Inc. 3 While switching costs from one store to another are low and there are many existing companies in the industry, customers are unable to decide what price they should be paying. If customers are dissatisfied with the clothes’ quality, pricing, or the stores’ adaptation to new trends than their course of action is to no longer purchase clothing from a store. In this respect the company needs to keep their customers happy in order to retain their business. Key Success Factors 1. Adaption to new trends Fashion trends are constantly changing and it is incredibly important for companies to be able to adapt to this and get their products onto the shelves fast. While some companies follow less trends than others, they need to understand their target consumers in order to decide which trends to follow and which to pass on. After deciding if a trend is applicable to their target consumers it is essential to get the product quickly developed and to the market prior to their competitors. 2. Quality Customers are searching for high-quality clothing that will be long-lasting and are unwilling to compromise on this aspect. They want to get the best value by getting the highest quality clothing at the lowest price possible. Pricing is an important factor in the U.S. family clothing store industry since families are price conscious and often have strict budgets. It is important for companies to use competitive pricing to attract those budget conscious families rather than overpricing which attracts those who are interested in brands associated with luxury or prestige. Implementing high prices may be an appropriate tactic for the high end clothing industries but for the U.S. family clothing industry it is important to keep family budgets in mind when setting the prices. 3. Pricing Another important key success factor in the family clothing store industry is that families that are shopping generally have set budgets and are very price conscious. Companies need to be competitively priced in order to attract families with budgets. While having very high prices is appropriate in other segments of the apparel industry, it is not applicable for the family clothing industry in attracting consumers. 4. Brand Loyalty In the apparel industry brand loyalty is imperative. Due to low switching costs strong brand loyalty will help to retain customers and keep them from switching to other brands. One way that Gap has been able to achieve this industry key success factor is through its historically good reputation and their marketing campaigns. 5. Market Share Gap Inc. 4 Lastly, having high market share is a desirable factor for competitors within the same industry. When switching costs are low it is important for companies to maintain market share because it helps to retain existing customers and attract new customers who are looking for a clothing store. Gap had the highest market share of the U.S. family clothing industry in 2009 and achieved this share by effectively implementing the key success factors. Due to low switching costs in the industry it is essential to have a high market share in order to entice and retain consumers. In 2009 Gap had the highest market share in the United States family clothing industry by meeting the many different key success factors in the industry. Competitive Strength Assessment KSF 1. 2. 3. 4. 5. Adaption to new trends Quality Pricing Brand Loyalty Market Share Overall Strength Rating Gap 10 9 10 10 10 48 TJX 1 9 10 8 8 36 Ross 1 9 10 8 5 24 A&F 10 7 8 10 4 39 AEO 10 7 8 10 1 36 On the whole Gap Inc’s competitive strength is better than that of their competitors. For every key success factor they were either on par with or outperformed their rivals. Out of all of their rivals American Eagle Outfitters position is the weakest. Below the rankings for Key Success Factors is explained in detail. 1. Adaptation to new trends TJX Companies and Ross Stores are two major off-price retailers in the United States, but this means that they are unable to adapt to new trends because they are reliant on purchasing previous seasons designs, which is why they are ranked poorly for this Key Success Factor. Gap, Abercrombie & Fitch, and American Eagle Outfitters were given the highest possible ranking for this category because they have the capability to get new trends onto the shelves quickly because they design their own clothing and do not rely on previous season’s fashions. Abercrombie and Fitch and American Eagle Outfitter’s target market is much younger than Gap’s which means they need to adapt to more trends faster than Gap needs to. Gap is well known for their classic style of clothing and they do not need to keep up with all of the short lived fads , because they are not appealing to their consumers. Quality TJX and Ross are ranked the most competitively in this success factor because they carry designer brand products off-price. Gap is ranked second in this category due to their reputation for producing high-quality products. In this category American Eagle Outfitters and Abercrombie and Fitch are ranked lowest. They cater to the fashion fads and therefore are unable to produce high quality goods, because they need to produce new clothing fast to keep up with consumer demand. 2. Gap Inc. 5 Pricing TJX Companies and Ross Stores both performed the best in this category because their prices are incredibly low due to selling last season’s fashions. Gap, Abercrombie and Fitch, and American Eagle Outfitters all have similar prices and charge more than TJX Stores and Ross Stores. 3. Brand Loyalty TJX Stores, Gap, Ross Stores, American Eagle Outfitters, and Abercrombie and Fitch all have loyal customers and have good reputations among their target customer base. These companies all spend large amounts of money on marketing and advertising in order to constantly grown their brand loyalty. 4. Market Share In this category Gap is ranked highest because they had the highest market share in 2009 with 15%. In this category TJX is second because they had a market share of 13.4%. Ross Stores, Abercrombie and Fitch, and American Eagle Outfitters had market shares of 6.9%, 4.1%, and 1% respectively. 5. Gap Inc.’s Strategy The five generic competitive strategies are low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider. Gap Inc. owns many different companies, which results in different strategies for Gap, Old Navy, and Banana Republic. Gap Gap’s strategy was to offer a widespread selection of clothing that was high quality, casual, classically styled at moderate price points. The focus on providing high quality clothing at low costs means that their strategy is to be a best-cost provider. One aspect of a best-cost provider is focusing on value buyers. This makes sense because their direct competitors are not luxury brands, it is TJX Companies and Ross stores, which are both companies that sell to valueconscious consumers. A company that is a best-cost provider also offers good products with appealing features at attractive prices. This is evident in their emphasis on producing high quality apparel for the Gap line. What will be key to maintaining their success as a best-cost provider is managing their costs in order to keep prices lower than their competitors and to add upscale features to better attract customers. Gap’s main competitors are TJX Companies, Ross Stores, Abercrombie and Fitch, and American Eagle. While Gap charges more than TJX Companies and Ross Stores for their products, they are at the same price point as Abercrombie and Fitch and American Eagle. Gap needs to be careful not to drop their prices so low that they are now in the same price point as Old Navy. Old Navy Old Navy’s strategy is to target customers who are looking for family apparel, shoes, and accessories at a low cost. This means that they are striving to be a low cost provider. The strategic target for a low cost provider is a broad market which is exemplified by the fact that Old Navy provides clothing for men, women, and children. The entire family can shop at Old Navy and find products that are value-priced. Old Navy needs to offer their products at a cheaper cost than their competitors. When considering the four main competitors of Gap Inc. which are TJX Companies, Ross Stores, Abercrombie and Fitch, and American Eagle; Old Navy is less expensive than all of them. This attracts their consumers because they are offering a lower cost Gap Inc. 6 product. For a low cost provider strategy the product line should be basic with no frills. In comparing Gap’s and Old Navy’s products it is clear that the latter is a product line that is more basic, whereas Gap offers classically styled clothing with differentiating features. In order to manage their strategy they need to continue to cut their costs year after year in order to continue to offer price cuts for their clothing that is of an acceptable quality for their price point. Banana Republic Banana Republic carries clothing, shoes, accessories, and personal care products that are more sophisticated and at higher price points than Gap. Their strategy is focused differentiation which is an attempt to concentrate on a narrow buyer segment by meeting specific tastes and requirements of their niche members. Banana Republic caters to consumers who like classically styled sophisticated clothing. Whereas Gap offers casual clothing, Banana Republic is targeting consumers who purchase clothing that is more professional and sophisticated. Compared to a regular differentiation strategy, their target market is niche, not broad. Their product has many differentiating factors from their competitors and they produce a superior product. In order to succeed in this strategy they need to be firmly committed to their niche market and not blur the lines by trying to enter other market segments or by offering products in order to widen market appeal for their brand. As a whole Gap Inc.’s strategy is to offer a brand that appeals to many different markets and price points, while sticking to their product offering of classic clothing. In order to better do this they also added Athleta and Piperlime to their company. Athleta offers athletic apparel and Piperlime is focused on offering many diferent brands of footwear and handbags. Through their focus on many different strategies Gap Inc.’s competitive advantage is that they are able to have a position in all the different price points. SWOT Analysis Strengths Weaknesses ● Global Presence: Gap has more than 3,100 ● Reliance on third-party Gap, Banana Republic, and Old Navy stores manufacturers: Gap’s clothing is in USA, Canada, UK, France, Ireland, manufactured by third-parties Japan. They have franchised locations in which is risky because they can run Bahrain, Indonesia, Kuwait, Malaysia, the into potential shortages of apparel Philippines, Oman, Qatar, Saudi Arabia, of material. If there is a large Singapore, South Korea, Turkey, the United increase in demand or a producer Arab Emirates, Greece, Romania, Bulgaria, lost a vendor, it is likely that Gap Cyprus, Mexico, Egypt, Jordan, and would be unable to meet demand Croatia. In 2010 10-20% of sales were from for a product. international operations for larger industry ● Rapid expansion: Gap’s rapid rivals like Gap and TJX Stores. expansion in the late 1990s heralded the addition of long-term ● One easily accessible e-commerce platform: They redesigned Gap.com, debt of close to $3 billion, the BananaRepublic.com, and OldNavy.com to decline in the quality of their provide greater functionality and a better clothing, and a decrease in the shopping experience. New York Times popularity of its styling. called it “among the best e-commerce sites ● Failed launch of Forth & Towne in retail”. chains: This short-lived concept Gap Inc. ● ● ● ● ● Customer focus: After hiring Patrick Robinson as the head designer they were able to better focus on their customers by redefining their target customer base. Instead of going after 18-24 year olds who are shopping at low-cost retailers like H&M, Uniqlo, and Zara they focused on 25-35 year olds who appreciate the classics they became popular for. Global brand recognition: Worldwide Gap has become synonymous with classic American style. Mix of franchise and company-owned stores: By having some stores that are company-owned Gap invests a lot of money, but has a lot of control. They also have franchise agreements, mostly in the Middle East where they invest a moderate amount of money, but they have a moderate amount of control. This decreases their risks in these markets. Brand extensions: The family of brands that Gap owns covers the demographics of different customers very well. ○ Gap is a brand that is “classically styled, high quality casual apparel at moderate price points” (C-158). Gap is a store that sells basics as well as fashion apparel. They also have a GapKids and babyGap, which makes sense because their target consumers are likely to have children. ○ Old Navy is targeted to consumers who want value-priced family apparel. ○ Banana Republic carries more sophisticated clothing that is sold at higher price points than Gap. ○ Athleta sells stylish work-out clothes for outdoor activities like running, skiing, and yoga. ○ Piperlime sells over 200 leading brands of footwear for men, women, and children. Stance on ethics: Gap was recognized four 7 ● ● ● ● was met with mixed reviews. Some people loved it and others hated it. There was a failure to launch and market it. All Forth & Towne chains were closed in June 2007. Excessive cuts in spending: During Pressler’s time as CEO he made excessive cuts to design, product development, and marketing. This caused the quality and popularity of their product to decline. Cost cutting in supply chain: By cutting costs in the supply chain, Pressler slowed product-to-market cycle times which caused them to be unable to compete with hightrend clothing stores like H&M and Zara, because they weren’t able to respond as fast to trends and fashion changes. Disagreements: Gap experienced constant disagreements between their research and design personnel which resulted in a delay in decision making and eventually poor decisions were made in order to just get something in the stores. Loss of key executives: With the continual declines of revenue many key executives were frustrated and quit, due to Pressler’s approach and lack of experience and understanding of the apparel industry. Gap Inc. consecutive years as one of the most ethical companies. They have their own Code of Vendor Conduct that they adhere to when managing relationships with vendors. Opportunities ● Plus-sized segment: By 2010 the plussized segment had grown to a $27 billion segment and the number of obese adults ages 20 and over had grown to 34% of the population by 2008. The demand for plussize garments has increased for both genders and all ages. ● Discount segment: The discount segment of the clothing industry withstood the 20082009 recession. With people still being price-conscious it is still a huge market to be in. ● Global expansion: Currently Gap is located in 27 countries that accounted for 1,622 million dollars. The plan to move into China, Italy, Thailand, and Australia as well as to launch online stores in Canada and the United Kingdom gives Gap the ability to better capitalize on this opportunity. ● Recent emphasis on a company’s CSR: With Corporate Social Responsibility becoming more important it has begun to factor into some people’s decision making processes. Gap has one of the best CSR missions for U.S. Companies and thus would have the resources to capitalize on this. ● Increased trend in health and wellness: Many people are becoming more health conscious and trying to become healthier. This is one reason why Athleta has become a popular brand for Gap, Inc. ● Buying power of Generation Z: Generation Z is the first generation to be brought up completely with social media and technology. Knowing how to use social media to effectively attract Generation Z buyers, as well as other consumers is vital to the survival of companies. 8 Threats ● Reliance on third-party manufacturing: Gap relies on thirdparty manufacturers to make their products. Most are located in Asia, the Middle East, and South America. This places them at risk for negative publicity if something illegal or unethical occurs in those factories, like child labor and low pay. ● Economic downturn: The economic downturn has made people more priceconscious and has resulted in less spending on luxury goods. ● Emergence of companies that are low cost and high fashion: The entrance of foreign companies like H&M, Zara, and Uniqlo to the US market has attracted consumers who are price-conscious and fashionconscious. They are especially appealing to younger consumers. ● Rapidly changing trends: Gap is unable to keep up-to-date with the changing trends like H&M, Zara, and Uniqlo. ● Popularity of thrift and vintage shopping: One type of shopping that has become popular in the recent years are shopping at thrift, vintage, and second-hand stores. Some of the benefits of this kind of shopping is the unique clothing a consumer finds and the price is generally cheaper than from a new clothing store. ● Introduction of manufacturing in developing countries: When a manufacturing plant is built in a developing country at first the workers will accept very low wage rates because they don’t have the experience in manufacturing. However, gradually Gap Inc. 9 standard of living will increase and so will work experience and higher education rates. This will result in higher wage rates and a company may need to shift its manufacturing operations to a new location to keep manufacturing costs low. While Gap has a lot of weaknesses and problems to address, they have made a lot of progress in addressing these issues. If they continue to focus on their target market and to strategically work towards their goals, they will be able to turn things around. There are enough opportunities for the company to capitalize on by maximizing on their strengths. For example, their strong global presence will aid them in further penetrating the international market. Overall it is a moderately attractive situation for Gap. Gap Inc. 10 Financial Performance Figure 1. 2010 Gap 2009 2008 2007 2006 14,197 -2% 14,526 -8% 15,763 -1% 15,923 -1% 16,023 8,473 60% 9,079 63% 10,071 64% 10,266 64% 10,154.00 63% 1,102.00 8% 967.00 7% 833.00 5% 778.00 5% 1,113.00 7% TJX Stores 2010 2009 Revenue ($ millions) Revenue Growth CoGS ($ millions) % of Revenue Net Income ($ millions) % Profitability Revenue ($ millions) Revenue Growth 20,288.00 7% 18,999.00 CoGS ($ millions) % of revenue 14,968.00 74% 14,429.00 76% Net Income ($ Millions) 1,214.00 % Profitability 881.00 6% 5% Ross Stores 2010 2009 Revenue ($ millions) Revenue Growth 7,184.00 11% 6,486.00 CoGS ($ millions) % of revenue 5,327.00 74% 4,957.00 76% Net Income % Profitability 443.00 6% 305.00 5% Gap Inc. 11 Abercrombie and Fitch 2009 2008 Revenue ($ millions) Revenue Growth 2,929.00 -16% 3,484.00 CoGS ($ millions) % of revenue 1,045.00 36% 1,153.00 33% Net Income % Profitability 0.25 0.01% 272.00 8% American Eagle Outfitters 2009 2008 Revenue ($ millions) Revenue Growth 2,991.00 0.07% 2,989.00 CoGS ($ millions) % of revenue N/A N/A N/A N/A Net Income % Profitability 169.00 6% 179.00 6% Revenue $Millions Revenue Growth Industry 2010 2009 84400 83950 -1% 3% 2008 86410 3% 2007 89256 -1% 2006 88154 Number of Establishments (units) Growth 33760 3% 32741 -5% 34564 -6% 36595 2% 35929 Gross Product % Profitability 13166 16% 12280 15% 12584 15% 14999 17% 14208 Global Presence 6. What is the performance of Gap outside the US? What are their strategies and what challenges do they face in expanding outside of their main market? Gap Inc. 12 Figure 2 Gap Sales by Brand and Region ($ millions) Fiscal Year 2009 (Ending January Old Banana 30, 2010) GAP Navy Republic Other Total United States 3,508.00 4,949.00 2,034.00 10,491.00 Canada 312.00 386.00 162.00 860.00 Europe 683.00 Asia 774.00 24.00 106.00 Other regions International 36.00 743.00 48.00 928.00 57.00 57.00 1,769.00 386.00 292.00 141.00 2,588.00 5,277.00 5,335.00 2,326.00 141.00 13,079.00 GAP Old Navy Other Total United States 3,840.00 4,840.00 221.00 8,901.00 Canada 329.00 392.00 146.00 867.00 Europe 724.00 Asia 732.00 Total Fiscal Year 2008 (Ending January 30, 2009) Banana Republic 23.00 101.00 Other regions International Total 33.00 780.00 47.00 880.00 68.00 68.00 1,785.00 392.00 270.00 80.00 2,527.00 5,625.00 5,232.00 491.00 80.00 11,428.00 Gap Inc. 13 Fiscal Year 2007 (Ending January 30, 2008) GAP Old Navy Banana Republic United States 4,146.00 5,776.00 2,351.00 12,273.00 Canada 364.00 461.00 147.00 972.00 Europe 822.00 Asia 613.00 89.00 Other regions International Other Total 5.00 827.00 36.00 738.00 50.00 50.00 1,799.00 461.00 236.00 41.00 2,587.00 5,945.00 6,237.00 2,587.00 41.00 14,860.00 GAP Old Navy United States 4,494.00 6,042.00 2,251.00 12,787.00 Canada 379.00 442.00 119.00 940.00 Europe 792.00 Asia 581.00 Total Fiscal Year 2006 (Ending January 30, 2007) Banana Republic 61.00 Other regions International Total Other Total 1.00 793.00 7.00 649.00 24.00 24.00 1,752.00 442.00 180.00 8.00 2,406.00 6,246.00 6,484.00 2,431.00 8.00 15,193.00 Main Issues to Address in 2010 General Issues Gap, Inc. Faces All three of Gap’s brands face similar issues in the apparel industry. These issues are the recession that is currently affecting many countries, the necessity and difficulty of keeping up with the latest fashion fads, and establishing stores in locales that have similar stores in order to attract consumers. Although Gap, Banana Republic, and Old Navy face some unique issues, these are issues that they will have to work towards in the next year. Issues facing Gap Gap Inc. 14 In order for Gap to continue being a best-cost provider of apparel in the family apparel industry they will need to develop unique expertise in cutting costs while incorporating upscale features and attributes. Due to the worldwide recession this is even more imperative in order to attract buyers. Issues facing Banana Republic Banana Republic’s competitive strategy is different than the Gap brand, which means they will face some unique issues. In order to maintain its position as a focused differentiation provider they need to know their target consumer very well and to be very clear about who they are targeting. If this image becomes blurry, they will likely lose their loyal customers. They will also have the issue of keeping their clothes at the right price point. If they charge too much they will lose customers as they enter the price range of more luxury clothing and if they charge too little they will draw consumers away from their Gap brand. Issues facing Old Navy Old Navy’s strategy is being a low-cost provider. Due to this their particular issues are that they need to continue to provide economical prices that fit into the family budget. Because their prices are much lower than Gap and Banana Republic they also need to appeal to consumers who are more interested in trends than those that purchase their other brands. In order to continue to offer low costs they face the issue of managing costs down year after year in all aspects of their business. This will require excellent financial and inventory management in order to control cash flow, reduce debt, and keep costs low. Recommendations a. Hire New Designers: In order to better compete with its competitors and to appeal to their consumers Gap, Inc. should hire new designers to produce different lines. In order to keep up with the latest fashion it is imperative that Gap keeps their designers up to date. In order to do this Gap may want to think about hiring new designers. These new designers will help to differentiate between the brands and what merchandise should be sold where. This will help each of the Gap stores be competitive within their markets. b. Keep prices constant: Due to the recession it is imperative that Gap, Banana Republic, and Old Navy make sure to keep their prices affordable as compared to the quality of their merchandise. In order to maintain their customers they cannot raise their prices year after year or their consumers will become frustrated. c. Cut costs: In order keep their prices constant, while increasing revenue Gap will need to cut costs. However, they need to be careful that they aren’t cutting costs that are essential. For example, too many cuts to design and research and development could cause them to lose popularity like when Pressler was CEO. d. Continuous Global Expansion: A lot of Gap Inc.’s revenue (18%) came from international markets. They should continue to expand in markets where there is a lot of Gap Inc. 15 potential. Their planned expansions in Israel, China, Italy, Thailand, and Australia, as well as their planned launch of a website in Canada will be helpful. Becuase they have already been expanding globally it will be easier for them to continue with this, than if they were just beginning to expand internationally. e. Continue to market and advertise aggressively: When Gap, Inc. was first formed they had celebrities like Marilyn Monroe were seen in their advertising campaigns. One way that Gap, Inc. can attempt to bring back the popularity that they had then is by marketing agressively and focusing on the classic style that they are famous for. They can do this by partnering with celebrities that embody the classic and timeless image. Along these lines they should make partnerships with designers to produce lines of clothing that can be sold in their stores, like in 2009 with Stella McCartney. f. Expand into the plus-size market: The plus-size market is currently a market that should be capitalized on, because the demand for plus-size clothing is increasing over all genders and ages. Finding plus-size clothing is difficult, despite the fact that 34% of adults older than 20 were considered obese in 2008. Finding stylish and fashionable plussize clothing can be even harder. Nobody has been able or willing to do this, so this could be a great expansion for Gap, Inc. If they think that a plus-size section to their stores will ruin their product line, my suggestion would be to create a new brand that is solely for plus-size clothing. Not just clothing from their other brands that is made larger, but clothing that is actually designed for plus-size bodies. This is something that could really benefit them. g. Continue and expand their CSR campaign: Gap, Inc. has been recognized as one of the most ethical companies for four consecutive years in March 2010, by the Ethisphere Institute. This is a huge plus for Gap, Inc. because there has been a recent trend of consumers trying to buy from ethical companies. Gap already has a CSR campaign in place, but they should continue and expand this part of their business. h. Continue with R&D to create new products: Gap, Inc. had issues with product-to market cycle times which were further exacerbated by the disagreements between research and design personnel which led to poor decisions for products, just to get something on the shelves. By spending more time and money on this process they will be able to better manage the product-to-market cycle time. i. Increase spending on market research: Directly related to the above recommendation is to increase spending on market research. One problem that Gap, Inc. ran into was that they were trying to reach too many people by keeping up with many of the mini fashion trends. If Gap, Inc. can learn more about their target consumer and what she/he wants, they will be able to better manage their decisions and actions regarding all aspects of their business, including which trends to follow, where to advertise, and what products to offer. j. Create new branch of Gap, Inc: Athleta is a recent addition to the Gap, Inc. family of brands. It has been very popular in selling workout and outdoor activities clothing for Gap Inc. 16 women. One way that they could expand upon this is to create a new brand that is similiar to Athleta, but target to men. Healthy living has become a very important trend recently and Athleta is unable to fully capitalize on it, because they only sell clothing for men. I hesitate from saying that they should sell men’s clothing, because having a women’s only store is a good brand extension, but they could create a new brand that sells athletic clothing for men. Much of the raw materials and manufacturing needs would be the same so they wouldn’t be starting from scratch if they decided to pursue this path.