Strategy Brief (Part I)
April 3, 2007
GOALS AND OBJECTIVES
The retail landscape has changed dramatically since the Gap's emergence as a powerhouse several decades ago. As the company has grown to become one of the giants of its industry, new challenges, including a more complex market and a more competitive landscape, have arisen that threaten to unseat the Gap from its casual-wear throne. Compounding the problem, the company has responded to this new competition by trying to change its brand identity, leaving its consumers confused and frustrated. Due to these internal and external pressures, the Gap is facing a decline in sales and revenue.
For the Gap to thrive, it must respond to the new retail landscape and its new competitors in an authentic way that will resonate with its core consumer. By reinvigorating the brand, the Gap has the opportunity to once again re-define the category.
This plan will take advantage of the Gap's strengths and opportunities in the market, by organizing around the company's strengths and the competition's weaknesses, in order to execute the plan to position the Gap brand as the destination for everyday fashion.
Three objectives must be met to enact this goal. These objectives are both narrow and measurable, enabling the company to determine its progress. Additionally, the objectives present pragmatic solutions to solving the Gap's recent troubles; by tightening the core target audience and clarifying the company's messaging, the Gap will be able to more effectively reach its most valued consumer.
Efficiently integrate the brand message within the market environment
Plan execution, reach and application of resources
Determine the positioning for the brand within the core purchaser segment
Focus on the market the Gap can attract with a message that will resonate with them
Increase the percentage of the core customer segment that views the Gap as the destination for everyday fashion
Essentially, the Gap must find a niche in the retail landscape by identifying a market it can claim and by fulfilling a function it can champion.
As stated, the retail landscape is over-cluttered. However, the Gap still has the opportunity to discover an unclaimed space in the industry and work to own that space. For the Gap, a brand with roots in quality, comfortable merchandise, which was valued by consumers for trend-resilient product offerings, this unclaimed space is every day fashion.
By positioning the company as the champion of everyday fashion, the Gap will create an opportunity to reach an underserved market and serve a function for consumers who already view the brand in a positive light. This tightened messaging and segmenting will allow the Gap to more effectively reach its market and better utilize its vast resources.
State of the Business
The retail industry is facing a variety of new pressures in today's marketplace. Within the industry itself, the increased cachet of luxury brands has forced the rest of the market to adapt, resulting in discount shoppers "trading up" from discount stores, while expecting discount prices. This causes the profit margins at such retailers to shrink. Combined with the nation's uncertain economic future and the increasingly fragmented media landscape, it is a hard time to be a discount retailer.
The implications of this new pricing strategy are of great importance to the Gap. With the creation of its sister brands, Old Navy and Banana Republic, the Gap reinforced its image as "the middle-of-the-road retailer." However, as consumers' expectations increase, seeking greater quality at a lesser price, the Gap has been forced to engage in a price-slashing strategy, prompting Women's Wear Daily to dub the company "a discount retailer in the mall." For the company to be profitable in this environment, sales would need to increase to make up for the...
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