The Gap Inc.
This research paper looks into The Gap Inc. , an American specialty retail store dealing with clothing and accessories for everyone, men, women and children alike. It has five brands operating under the ‘corporate umbrella,’ The Gap Inc. It has had 40 years experience in the retail industry and is even stronger and better now. They could very well be the definition of what specialty retailing entails!
However, for the purposes of this research, I will study on the company’s target markets, innovativeness, assortment strategy, brand approach, inventory management, price elasticity of demand, the store atmosphere, marketing tactics and of course their financial situation.
A specialty retailer is a retail company that specializes on one type of merchandise. This research focuses on Gap Inc ( clothes and accessories retailer based in San Francisco, California). It was founded in 1969 by Donald and Doris Fisher, as a result of not getting a pair of jeans that fitted Don.
He had bought a pair that did not fit very well and so sort to have them replaced by some that did. Unfortunately, none of the stores he visited had the size he wanted. This was very frustrating and thought that if only he could have a store where everyone, of whatever body shape and size, could get a decent pair that fit. This was the creation of The Gap. They started off with one store in San Francisco on Ocean Avenue in August 1969. In one year they made $2 million in sales and this resulted in the opening of their second store in 1970 in San Jose, California.
Along with this came their first company headquarters in Burlingame, California, employing four employees. By 1973, the company had opened up over 25 stores, expanding even out of their California comfort zone. Today, The Gap has grown to have over 3,100 stores globally and is a market leader in the retail industry. Added to this number are the stores that operate under a franchise agreement. Most of these are across the Middle and Far East countries. ( Michman & Mazze, 2001,P. 13) With such remarkable growth and expansions, The Gap now operates under five labels.
Namely; Banana republic, Old Navy, Gap, Piper lime and Athleta. The first of these, Banana Republic, was purchased in 1983 and later re branded in the late 80s. It is a luxury brand that offers the clients a different feel and sophistication to go along with it. It is the more pricey of the brands but still affordable. Banana Republic offers high-end quality clothes and accessories that are simple yet covetable. It mainly targets the upper- middle and upper income-earners. This is a look that everyone around you will want, both for professional and casual wear.
The brand brought in $475 million in revenue from the North American stores only in the first quarter of 2009. ( Michman & Mazze, P. 19) The second brand, Old Navy, was launched in 1994. It is a chain designed to appeal to families as it offers a relaxed look, portraying fun, fashion and energy. Their target market would be those who prefer taking time off to spend with the family and attend family functions. This is on assumption that these types of clients would want a nice, comfortable, trendy look that does not require much effort on their part. Of course, within an affordable price range.
In my opinion, this could be their largest market share, because majority of the population have just enough disposable income after the bills are paid. So it is in order for them to spend a bit more on shopping. In the same quarter of the 2009 financial year, Old Navy made $1. 18 billion in revenues, from North American. Their third brand, Gap, is nicknamed after the corporation itself. It is the signature store as it was created in 1969. It originally used to sell the signature blue jeans and white cotton t-shirts before incorporating the rest of the new designs.
Like wine, Gap has grown better with age. This is a very relaxed look that majority of the population would readily have on. A pair of good jeans and a t-shirt just complements a good day especially on the weekends when people are tired of office attire. Revenue in the same quarter totaled to a cool $834 million from the same region. ( Ogden, 2005, P. 24) I have also mentioned Piper lime, which is an on line shoes and handbags retailer, created in 2006. This kind of an arrangement is especially convenient for those who are geographically distant or are too busy to physically visit one of the stores.
With the world now being a global village and increasing technological advancements and diversity, Gap was also forced to upgrade in order to remain on top of their game. Who can blame them? This is just one of the ways by which they are able to continue competing on the global front. It boasts of a collection of more than 200 hottest styles and designers. The most amazing thing about this store is the fact that it offers free shipping and returns on all orders! That sounds like a pretty good deal. The last of these brands would be Athleta.
Just as the name suggests, this line of outfits is mainly aimed at those individuals who love to run a sweat. It targets athletes, gymnasts and all other outdoors men. Although it may be a sporty design, the choice of market is narrowed down to women only. It is quite encouraging to see that women’s needs are catered for by a renowned label such as this one. For years, women have been quite unsuccessful in trying to dress themselves in comfortable athletic wear to suit their lifestyle. Those days are over, all thanks to Athleta.
The prices attached to the different brands are set in such a way that most of their customers in their target groups can afford to buy more than one item per shopping trip. They are very friendly and approachable and so people are willing to spend a bit more because even the quality of the apparels and their fabrications are fantastic. The accessories are also the best in their categories and hold a price tag to match. The fact that these prices cut across the board only goes to show us that The Gap has the customers’ best interests at heart as well as their own.
Besides, it’s also a business like any other store out there. ( Ogden, 2005, P. 25) When you walk into any of the Gap stores, you will notice the big windows and the open plan arrangement that makes goods visible and accessible to the clients from whatever corner of the store. This causes a psychological effect that encourages the client to shop for more. It also gives the illusion of so many goods all found in one store. Well, we know that one cannot buy what one cannot see. The atmosphere is very welcoming and calm and the staff are willing and ready to help if need be.
Don and Doris Fisher really took time to consider a professional, yet casual and relaxed image for their stores. We can confidently say that it has paid off because of the great response they get from their customers. What with their stores all over most of the Americas, Europe, Middle and Far East, the company handles thousands of tonnes in stock. This may be so but they have a great inventory management plan that allows them to keep in store just what is needed. No excess stock is kept because it gets more expensive, the larger the stock.
Operating expenses total $587,000 as at Jan 30, 2010. so it is highly recommended that they reduce holding costs as much as possible. Better yet, aim to do away with them. On the other hand, their Net Income was $352,000. This is also the net income applicable to common shares. In order to have this amount increase, they should probably look into more expansion by introducing a new brand chain or improve on the existing ones. This could be done through further research into the fashion industry and studying the trends in order to be able to predict.
It could help them come up with new designs as a result of fusing already existing or past designs to bring out a new flair to the old ones. ( ( Michman & Mazze, P. 32) CONCLUSION The Gap Inc has come a long way and deserve every bit of the success they have achieved. Of course we know them to be high class store as well as a designer label. Most of their merchandise will cost a bit more than what we would at the other stores. But the idea that they have tried to make their goods affordable to the common man is quite desirable.
Gap has also sort to make themselves accessible from anywhere in the world. Setting up stores near you potential client is always a strategy that could result in an increase of your market share and could easily put your company on the Most Sorted after stores. All businesses desire this. On the other hand, it is a great risk as you run a chance of market rejection and consequently operational losses. The company has had, over the years, their fair share of criticisms and scandals but they have almost all been resolved. Regardless, Gap took a leap and so far so good.
Worth a mention is the recent international news that Indonesia has illegalized the purchase and dressing of Muslim women in fitting pants (jeans or otherwise). This has caused a blow to Gap and its businesses in the country. The company has a few stores operating there and this ban takes them a few steps back. I may not have the exact details as to what they plan to do in order to continue operations but I would recommend that they stock up on skirts and dresses that the government wishes the stores to have. Good news it that this limitation mostly applies to the Northern province of Aceh, which is predominantly Islamic.
This occurrence brings into perspective the importance of knowledge and ability to adapt into a different culture from your own. It is very important because this way, you are able to penetrate and integrate well into the market. Gap realizes this and has been able to continue with its operations. REFERENCES Michman R. D, Mazze E. M. (2001). Specialty retailers: marketing triumphs and blunders. University of Michigan: Greenwood Publishing Group, ISBN1567203426, 9781567203424 Ogden . (2005). Retailing: integrated retail management . University of California: Dreamtech Press, ISBN8177225111, 9788177225112Sample Essay of Edusson.com