THE GAP INCORPORATED
Leann Bustamante
Jeffrey Bertinetti
Mary Cassidy
GAP
Gap Incorporated

Leading international specialty retailer
 Founded 1969
 More than 3,800 stores worldwide
 May 19, 1976 initial public offering $18 per
share
 Began trading on the NYSE 1976
 Ticker symbol GPS
 Also listed on the Pacific Exchange
Provides customers with:

Clothing
 Accessories
 Underwear
 Loungewear
 Personal care items

For women, men,
children, and infants
 Under the Gap
(GapKids, babyGap,
GapBody)
 Banana Republic
 Old Navy
Why they lost market share:
 Increasing
competition in the retail
industry
 Not keeping up to date with current
trends and fashion
 Decreasing economy due to September
11th events
Interview

20 Gap Customers
 10 females, 10 males
 How long have you been shopping at Gap?
 Are you satisfied with the quality of Gap’s
clothing?
 Do you feel it’s consistent with the modern
trends?
 Do you feel it is adequately priced?
 Have you noticed any decrease in overall
satisfaction in the recent years?
Results:
 Customers
of over 5 years
 Decrease in overall satisfaction
 Prices increased
 No quality increase
 Have stayed with modern trends
 But competitors doing a better job
THE GAP INCORPORATED
 AHP ANALYSIS
AHP Analysis

Strategy A:
Marketing Brands
 Strategy B:
Design and
Merchandise
Products
 Strategy C:
Shopping
Environment
AHP Analysis

Three criterion:
1.
Cost Control
Quality
Service
2.
3.
AHP Analysis
11/25/01 11:16:30 PM
Page 1 of 1
Model Name: Gap
Priorities with respect to:
Goal: Selecting an Alternative Ma...
Controlling Cost
Service
Quality
Inconsistency = 0.21
with 0 missing judgments.
.413
.260
.327
AHP Analysis
11/25/01 11:22:35 PM
Page 1 of 1
Performance Sensitivity for nodes below: Goal: Selecting an Alternative
Marketing Direction
Object ives Nam es
THE GAP INCORPORATED
Future Sales Predictions
Quarterly Sales
(Observe Seasonality)
Gap Inc. Quartely Sales
5000
4500
3500
3000
2500
Series1
2000
1500
1000
500
pr
-9
8
Ju
l-9
8
O
ct
-9
8
Ja
n99
A
pr
-9
9
Ju
l-9
9
O
ct
-9
9
Ja
n00
A
pr
-0
0
Ju
l-0
0
O
ct
-0
0
Ja
n01
0
A
Sales(in millions)
4000
Quarter
Gap Inc. Annual Sales
(1991-2000)
Gap Inc. Annual Sales
16000
12000
Gap Inc. Annual Sales
16000
14000
Sales (in millions)
Sales (in millions)
14000
12000
10000
Series1
8000
Series2
6000
4000
2000
0
1
2
3
4
5
6
7
8
9
10
Year(beginning in 1991)
10000
Series1
8000
Series2
6000
4000
2000
0
1
2
3
4
5
6
7
Year(beginning in 1991)
8
9
10
Linear Regression
 A linear
model can be used because the
data shows a clear trend
 High R Squared variable shows strong
relationship between annual sales and
year
Linear Regression Analysis
Y
= -333.44 + 1206.95X
 Predicted Sales(all sales in millions)
 2001
= $12943.02
 2002 = $14149.97
 2003 = $15356.92
MATERIALS
REQUIREMENTS PLANNING
New MRP
 SAFETY
STOCK
 20%
of sales should be kept on reserve for
unexpected situations
 LEAD
TIME
 Should
be shortened to get them to
customers when needed
 IMPROVES CUSTOMER
SATISFACTION!!
NEW MRP
 Lot-Sizing-Rule
 Minimum
 Lowest
Order Size
amount of inventory possible
means NO EXTRA COST!
TOTAL QUALITY
MANAGEMENT
CODE OF VENDOR
CONDUCT
 Clearly
laid out set of rules which must
be followed
 Enforcers of the Code: Vendor
Compliance Officers (VCO’s)
 Inspect
sewing machines for safety guards
 Review Payroll Records
 Interview Employees
PROBLEMS WITH GAP
INC.’S TQM
 Workers
see the VCO’s as “watchdogs”
 Workers may hide mistakes
 Workers may pass blame onto their
peers
 LEADS
TO TOO MANY CONFLICTS!!
THE NEW TQM
 Incorporate
Deming’s 14 point program
 Break
down barriers between departments
 Eliminate numerical goals/quotas
 Remove barriers that hinder the hourly
worker
 This
Leads to More FREEDOM!!
THE NEW TQM
 Quality

Circles
Groups of workers meet regularly/share
information about the company
 House
of Quality
Finds out the attributes that a customer
likes
 Benchmarking


Compares Gap Inc.’s products with the
competitors (J. Crew, Abercrombie)