Gap Inc.
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Gap Inc.
Meghan McGowan
Simmons College
Gap Inc.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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 $Millions
Revenue Growth
Industry
2010
2009
84400
83950
-1%
3%
2008
86410
3%
2007
89256
-1%
2006
88154
Number of Establishments
(units)
Growth
33760
3%
32741
-5%
34564
-6%
36595
2%
35929
Gross Product
% Profitability
13166
16%
12280
15%
12584
15%
14999
17%
14208
Global Presence
6.
What is the performance of Gap outside the US? What are their strategies and what
challenges do they face in expanding outside of their main market?
Gap Inc.
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Figure 2
Gap Sales by Brand and Region ($ 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.
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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.
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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.
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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.