Case Study, Gap Inc.

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Introduction
Gap Inc. is a retailer that provides clothing, accessories, and personal care products for men, women, children, and babies. The first store was opened by Doris and Don Fisher in 1969. Gap also owns Old Navy, Banana Republic, Piperlime, and Athletica brands. The company provides a wide range of family clothing products including denim, khakis, t-shirts, fashion apparel, shoes, accessories, intimate apparel, and personal care product.

Mission Statement
Gap has no formal vision or mission statement, but the company does have philosophy and ethics. Gap strives to be a leader in the specialty family clothing industry and has strongly espoused the importance of its customers and employees. They have a well established code of ethics, translated in 65 different languages, that addresses the different aspects and guidelines about its purpose, responsibilities, laws, reporting code violations, retaliation, policy changes, and waivers. Gap operates from a hybrid divisional structure by geographic region and by product.

External Analysis

Strengths:

S01) “’Natural’ and ‘organic’ products appear to be favorable received by customers.” This allows for the opportunity of growth in that product line and fresh new ideas and products. “Apparel companies are now devoting substantial sums of profits to the research and development of new and appealing products,” so Gap could turn out a new product that comes from organic materials that is a popular hit throughout the stores before other clothing stores develop such products.

S02) “In the apparel industry, acquirers are enabled to combat pricing pressures by developing multiple brands and maximizing operating efficiencies.” Gap offers a lot of different options in their product line, including clothing, accessories, and personal care products for men, women, children, and babies, at a variety of different prices and qualities. Old Navy is a more affordable, family style clothing store, while Banana Republic is a more up-scale, expensive store.

S03) “For many apparel products, the consumer is willing to wait for price reductions before purchasing.” This allows Gap to get rid of their out of season styles and clothing quickly by putting on big discounted sales. Although they may be dropping their products, people are willing to spend more if they see that they are getting a good deal on it, so this is beneficial because otherwise, Gap would be stuck with extra clothes that won’t sell.

S04) “Companies are developing new point-of-sale technologies that enable better tracking of inventory and communication between the retailer and vendor in order to supply inventory as needed.” With improved point-of-sale technologies Gap will be able to have a better grasp on their inventory count and also communicate with the warehouses quickly and efficiently when their inventory is getting low so they can quickly restock when necessary.

S05) “Additionally of interest to the apparel sector is the projection that disposable personal income increased 3.2 percent in 2010.” With disposable personal income increasing, people will be more willing to spend money on themselves and their families. In this case, they will go shopping and buy more clothes, which could encourage Gap to start new promotions and sales, or just hope that overall sales will improve with the increase in spending.

Weaknesses:

W01) “While much of the boom in retail sales is attributable to the 77 million baby boomers, there has been a shift in their purchasing priorities to children’s educational costs, retirement, elder care, health care, housing, and leisure activities.” If baby-boomers are not spending money on clothes and shopping, and they are the biggest consumers of Gap products, then potentially sales will drop significantly.

W02) “Retailers that appeal to teens are struggling to keep them as customers as they enter young adulthood.” As teens get older and their styles develop and mature,...
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