William Council May 4, 2008 Gap Inc. SWOT Strengths: Formed in July of 1969, the Gap has been in business for 39 years We Are Gap Inc.” 11) Under the leadership of Donald and Doris Fischer, the small San Francisco company rapidly grew. Its core products were khakis, button down shirts, Levi jeans and T-shirts. It achieved $2 million dollars in sales in one year. The Gap’s early success birthed its second store. The chain didn’t experience meteoric growth until Mickey Drexler took the helm in 1983. One of his first acts was to acquire the Banana Republic. (Popovec 200).
The Gap biggest growth period occurred between 1994 and 1999. As more companies adopted casual dress codes, the Gap’s sales increased. It is now the largest US clothing chain with over 3,000 stores. Its core brands are The Gap, Old Navy, Banana Republic and the online shoe store – Piperlime. The Gap is one of the most recognizable names in any industry. In 2008, the Gap announced that its returning to its classic design style.
The Gap is expanding both internationally and through the Internet. The first Banana Republic store opened in the United Kingdom in 2007. It has 75 franchise stores in the Middle East and Asia. Toby Lenk has grew the Gap’s online business over the past 5 years. Piperlime, its online shoe store, carries over 200 brands of shoes. The Gap’s private label credit cards also assisted online sales.
Weaknesses: The Gap has suffered an identity crisis since 2000. It has cycled between its core business and following the latest “fashion trends.” (“GAP: Good Genes May Not Be Enough.” 28) The revolving product line confused consumers. By attempting to appeal to everyone, the Gap lost its appeal to anyone. It is brand known by all but desired by none. Gap Inc. lost its ability to connect with its customers. Every company, regardless of the industry, must stay focused on its core demographic. Companies that consistently monitor those groups are more successful than companies who follow the latest trend or “hot product.”
Poor management made the Gap’s core stores its worst competition. Under CEO Paul Pressler, the same products were carried in the Gap, Old Navy and the Banana Republic at different price points. Frustrated consumers stopped going. The Gap failed to keep its brands diversified. Originally Old Navy was the Gap’s bargain basement store. Consumers could go there and find cost effective clothing. Thanks to Pressler, consumers went their to get discount prices on Gap products.
The Gap’s management continued to create more problems for the company. The Gap started cloning itself by creating the GapMaternity, GapKids, BabyGap and others. This expansion hurt both the individual stores and the entire chain. Each new store requires employees, utilities and rent. The deluge of stores with specialized Gap products cut into the corporation’s profitability.
Opportunities: Gap Inc is an international company. Having stores in several countries protects it from local economic downturns, recessions or depressions.
Threats: The U.S. is experiencing a recession. Families are struggling with rising gas and food prices. Each dollar is carefully weighed before being spent. Retail spending is down across the board. Companies are fighting over a shrinking market share. The Gap’s competitors (including Target, JCPenney, H&.M, Kohl’s and J. Crew) provide better customer service and adapts better to the fickle fashion climate. All of these companies are significantly smaller than the Gap and are able to implement changes quicker. The Gap is also vulnerable to US government regulation. China apparel and textile restrictions are in effect until December 31, 2008. A change or increase in these restrictions could raise production costs.
Popovec, Jennifer. “Hanging by a Thread. " Retail Traffic 1 May 2007: 199-200,202-204,36. Alumni – ABI/INFORM Complete. ProQuest. Columbia University, Albuquerque, NM. 4 May. 2008 "GAP: Good genes may not be enough. " Marketing Week 18 Jan. 2007: 28. Alumni – ABI/INFORM Complete. ProQuest. Columbia University, Albuquerque, NM. 4 May. 2008 We Are Gap Inc.: 2007 Annual Report 7-15.Albuquerque, NM. 4 May 2008