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GAP Inc.

GAP Inc. . Kelly Milstead. Agenda . The beginnings of Gap Inc. Technology Organization Management Strategies Business challenges/problems/opportunities Current . Background Information . Gap Inc., was founded in 1969 by Don and Doris Fisher Named after the “Generation Gap”

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GAP Inc.

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  1. GAP Inc. Kelly Milstead

  2. Agenda • The beginnings of Gap Inc. • Technology • Organization • Management • Strategies • Business challenges/problems/opportunities • Current

  3. Background Information • Gap Inc., was founded in 1969 by Don and Doris Fisher • Named after the “Generation Gap” • Targeted late-teens • Brand built around Levi's jeans • Current Stock Price: 41.22 • Headquarters: San Francisco, CA • CEO: Glenn K. Murphy • More than 3500 stores worldwide • More than 136,000 employees around the world support Gap Inc. and its six brands.

  4. Technology “ This is about being clicks and mortar – letting the customers access the Gap brands, whether in store or online” - Ron Beegle, E-VP, Gap Inc. Direct

  5. Online Shopping • Gap Inc. online store openings: 1997- GAP, 1998- BabyGap& GapKids,1999 – Banana Republic & Old Navy • Saw opportunity to solidify their brand, build closer customer relationships, serve markets that were too small to profitably support a store, and improve profit through cost saving • Opportunity to collect information that is difficult to get in brick and mortar store such as where the customer lived, when they accessed the site, the length of their visit, frequency of purchases, products selected and dollars spent

  6. Gap’s Online Incentives • Return Policy: whereas internet pure-plays required the customer to deal with the hassle of mailing back products that didn’t fit, customers who bought through gap.com could also return to products to any store location • Alterations: purchases made at the Banana Republic website or catalog could be brought to any store location for free alterations (just as if it had been purchased at a store) • Trusted Brand: Gap’s well-established brand and reputation made customers feel more comfortable making online purchases. Additionally, customer retention rates for traditional merchants were 10 to 20 percentage points higher that online competitors • Pre-Shopping: Many customers valued the opportunity to do product research on the web, and then make a purchase at a bricks and mortar store • In-store promotions: Gap leveraged the stores to drive website traffic with a variety of strategies, including gap’s ‘surf.shop.click’ posters, and the recent introduction of the web lounges in new York, San Francisco, Los Angeles and Aspen • (Graduate School of Business Stanford University 2000) (Joslin, et al. n.d.)

  7. Online Benefits • 50% of customers who shopped online and in the store spent more then when they just shopped in store • Utilizing the internet increased profit by saving on expenses that can not be cut in a brick –and – mortar but can be cut online

  8. E-Commerce Facts • According to the US censes bureau online shopping revenues have increased from 142.6 billion in 2009 to 224.2 billion in 2012. ( 16% annual increase) • Total retail sales only grew by 5.1% in 2012 • E commerce sales accounted for 5.2% of total retail sales. This is an increase form only 4% in 2009

  9. Promoting Gap.com • Promotions were geared to drive customer resignations and collect emails addresses and offer discounts. • Emails were used to send promotions , new arrivals, specials and birthday and gift reminder services. These emails drove a significant percentage of the online sales • In 1998 Gaps advertising budget was 400m (4.4% of total sales) Gap spent approximately 3m on Gap.com • In 2000 Gap sales accounted for 5% of appeal dollars spent in the United States • For shipment purposes they established specific warehouses for the online stores • Established a 800 – number call center for customer support • Store employees promoted website

  10. Management Timeline • Don fisher Opened the first store in 1969 • In 1974 Gap stopped selling Levi's, and introduced a private- label clothing line. • Took over supply chain, and product development, therefore they were able to price competitively • In 1983 Mickey Drexler joined the company as president • Came form Ann Taylor • Acquired Banana Republic in 1983 • Opened GapKids store in 1986 • Opened first international store in 1987 • Opened BabyGapin 1991 • Introduced the Old Navy Brand in 1994 • 2003 stock fell by two-thirds

  11. Management Timeline • Paul Pressler took control in 2003 • 5 consecutive years of decreasing sales • Failed turn around attempts • Fashion mistakes • Current CEO Glenn Murphy • Reduced US store count • Slowly expanding internationally in Europe and China • In 2006 Gap started Piperlime an online only shoe store • In 2007 Gap starts to open franchise stores • In 2008 Gap acquired Athleta

  12. Strategy • Market segmentation strategy – each brand has a very specific target customer • Gap – collage age, teens, 25-35 year olds (more female then male) • Banana Republic – older and more affluent consumer, and offered more stylized products • Old Navy - families, focused on the bargain-minded consumer, offering fashionable, value oriented clothing at lower price points • Athleta – for women athletes • Piperlime – Online shoe, bag and clothing store. Sells brands not affiliated with Gap Inc. • Each brand has its own president therefore enhancing the separation of the brands. There is a very limited relationship between brands • Well balance offering though different brands • E-Commerce strategy mirrored their offline strategy – establishing new markets, focusing on stylish value driven product, and keeping value- drivers tightly controlled in house

  13. Gap Inc. Brands

  14. Challenges • Few barriers to entry • No switching cost • Competitors • Fast Fashion

  15. Business Challenges - Competitors

  16. Manufacturing • Gap Inc. does not own any of its manufacturing factories • Reliant on outside vendors for supply of products • 98% percent of merchandise comes from other countries – mainly China • Outsourcing the manufacturing results in having very little control over the timing and the quality of the finished product

  17. Need for “fast fashion” • In order to stay competitive Gap Inc. will need to keep up with retailers who can offer “fast fashion” that offer latest trends for lower cost • H&M, Zara, forever 21

  18. S.W.O.T Analysis

  19. Gap Inc. Today • Gap products are available via online in approximately 80 countries • In the 3rd quarter of 2013 sales were up 1.5% in the US, 11% in Asia, 3.5% in Canada and 6.8% in Europe • In the 3rd quarter of 2013 Gap reported net sales increasing 3.1% to 3.98 billion • More than 3,100 stores across the United States, United Kingdom, Canada, China, France, Ireland, Japan and Italy • 375 franchise stores in locations across Asia, Australia, Eastern Europe, Latin America, the Middle East and Africa

  20. QUIZ • What brand was Gap originally centered around? • Ann Taylor • Levi’s • Lee What is not one of Gap’s online shopping incentives? • Return Policy • Free Alterations • Better discounts than in store Gap now has franchise stores • True • False

  21. Works Cited • GAP . 2014. GAP Inc. About us . May 14. http://www.gapinc.com/content/gapinc/html/aboutus.html. Graduate School of Business Stanford University. 2000. "Gap.com." https://gsbapps.stanford.edu/cases/documents/EC9A.pdf.Joslin, Richard, Peter Lueck, Chad Martino, Melissa Rhoads, Brian Wachter, Robin Chapman, and Gail Christian. n.d.“ • Gap, Inc.: Has the Retailer Lost Its Style?" HITT.IRERLAND.HOSKISSON. http://www.cengage.com/management/webtutor/ireland3e/cases/gap.pdf. n.d. • Kell, J. (2013, Nov 22). Corporate news: Gap's profit gets boost from online and abroad. Wall Street Journal Retrieved from http://search.proquest.com/docview/1460417921?accountid=7284 • The Gap, Inc. SWOT Analysis.http://violetaamercado.com/gap-inc-swot-analysis-2/. • The Gap, Inc. SWOT Analysis. (2013). Gap, Inc. SWOT Analysis, 1-10. http://web.a.ebscohost.com.summit.csuci.edu:2048/ehost/pdfviewer/pdfviewer?sid=c413e627-bf8a- 4690-b79d-d025c18499e5%40sessionmgr4004&vid=4&hid=4109

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