“ I created Gap with simple idea: to make it easier to find a pair of jeans. We remain committed to that principle.” – Don Fisher

“ I created Gap with simple idea: to make it easier to find a pair of jeans.” – Don Fisher

Case Analysis

Ivan G. MoranaReporter : BSIE- 3B

Quezon City Polytechnic University

1969 – Doris and Don Fisher entered the clothing retail company business

1970 – Sales reached $2 million

They opened their second store in San Jose California

1983 – Gap acquired Banana Republic

A year later they entered the international market by opening store in London, England and Vancouver, British,

Columbia and annual sales reached $1 billion

1990 – Gap opened Baby Gap and GapKids in San Francisco

1993 – Gap entered the French Market Place

and the following year they introduced Old Navy Gap in Colma, California and in Canada

1996 – Gap open a 20,000-square-foot Gap store in Tokyo

1998 – they open a store in Alaska

2005 – the company open an online stores

- introduced Forth and Towne in Chicago and New York

- PiperLine to its online Brand.

- Sales Profit are disappointing

2004 – Gap sold all of its Germans operations to H&M

2006-2007 - falling of sales and profits.

Jan. 2007 - Gap CEO Paul Pressler resigned and Robert Fisher become CEO

Feb. 2007 - Gap discontinued its FORTH & TOWNE stores ad brands

Gap, Inc. Is a brand-builder. We create emotional connections with customers around the world through inspiring product design, unique store experience and compelling marketing. Our purpose? Simply to make it easy for you to express your personal style through out your life. We have more than 150,000 passionate, talented people around the world who help doing this purpose to life for our customers. Across our company and embedded in our culture are key values that guide our success: integrity, respect, open-mindedness, quality and balance. Everyday, we honor these values and exemplify our belief in doing business in a socially responsible way.

Gap had recognized that strong business ethics is one of the most important company issues and has a well-established code of ethics. Their code of ethics was addressed in different aspects and guidelines about its purpose, responsibilities, laws, and reporting code violations, retaliation, policy charges and waivers. Responsible and ethical work environment was the focal point of their codes, these guidelines goes beyond the employees and directors. Primarily, their codes was renowned to solve ethical problems as such: conflict of interest; discrimination or harassment, workplace violence, government agency complaints, trade regulations in international market, bribes and improper payments, laws of antitrust and selling practices, product integrity, commercial transactions, brand protection, and political contributions and activities.

Gap Inc. Store Count, As of Feb. 3, 2007TOTAL STORESGAP

Banana Republic Old Navy Forth & Town

United States 1,199 495 949

Canada 94 26 63

International TOTAL

United States 19 -United Kingdom - 135France - 33Japan - 118

3,131

Banana Republic - It was formerly safari-themed clothing, and was rebranded in late 1980’s. It offers accessible luxury that brings modern, soulful, effortless and versatile style for men and women around the world. Banana Republic is characterized by elevated designs, luxurious fabrications and approachable prices. Collections include apparel, handbags, jewelry, fragrance and eyewear.

Old Navy - Fun fashion and value to the whole family was made possible by the establishment of the Old Navy. Low-priced product.

Forth & Towne - Forth & Towne target market were women of over 35 who grew up with the Gap brand, but have "lost touch" with it.

PiperLime - PiperLime is the newest concept offered by Gap on its market. It is an online fashion boutique that inspires customers with a fresh and unique mix of products, brands and price points.

Athleta – It is design for women who have an active lifestyle.

The Banana Republic stores try to convey a more sophisticated image for an upscale customer seeking "modern, accessible luxury," whereas Gap stores appeal to a broader demographic of customers. The Old Navy chain is designed to appeal to families and younger customers by emphasizing "fun, fashion, and value" through a store experience that aims to deliver "energy and excitement." Although Gap, Inc., along with other retail-store chains, has been criticized for blandness and uniformity in its selling environments, the company maintains that it tailors its stores "to appeal to unique markets" by developing multiple formats and designs.

Geographic Analysis Revenues

Report Date 02/03/07 1/28/2006 1/29/2005Currency U.S Dollar U.S Dollar U.S DollarScale Thousands Thousands ThousandsEurope 729,000 825,000

879,000Asia 642,000 617,000

591,000Others 32,000 21,000 35,000

Total 15,943,000 16,023,000 16,267,000

Opportunities Penetration of e-commerce Difficult eagerness of fashion trends and changing consumer

preferencesMany companies have experienced to misjudge the market.

Global new market in Europe and China

Threats Economic downturn directly affect apparel retail business Global specialty apparel retail industry is highly competitive Emerging fast fashion retailers The market for prime real estate is competitive

Strengths Global brand recognition Stores located in worldwide Franchising system easily to expand Gap store internationally Multiple brands and brand extensions for a wide range of

segments Huge customer and vendor base

Weakness Nearly all merchandise depend on third-party vendors, which is

outside of the US. Huge store base including unaffiliated franchisees Less attractive in trendy clothing Uncontrollable production processes

Political globalization has been a current trend to every industry which also

includes the apparel and fashion industry. products are traded regulations and policies are present. changes and transformation in overtime regulations and the share

of the retail stores in the healthcare bill.

Economical a change in consumer preferences in apparel is more apparent. the rapid or slow growth may have a positive or negative impact

on the business. the low-cost destinations sourcing; it will either affect the economy

positively or negatively.

Socioeconomic the degradation of the environment and a continuous concern for

the benefit of the employees. the increasing global environmental issues that arise with the

globalization. is the rise of the population of the retiree.

Technological apparel and fashion industry has experience a rapid technological

changes over the years. utilization of new software and technology for faster production

and marketing.

Threat of New Entrants - The apparel industry has had slow sales for quite some time. Still, the apparel industry has challenges for new retailers entering the market. Although capital expenditures may not be incredibly high (but not low either), brand loyalty and quality influences many consumers.

Power of Suppliers – Gap Inc. has they power as a supplier in giving new trends for the market. But still because of a lot of suppliers in the market it will lead to low down price to market.

Power of Buyers - The buyers have variety of choices to make in the retail clothing industry. Since there are various competitors and substitutes in the company, the buyers might move shopping around. Hence, the companies have to work harder to retain the clients.

Availability of Substitutes - There are many substitutes in casual clothing industry. Since there are a wide variety of  products that people can choose, they could either be substituted by sporting products, business apparels, cheap clothing materials, and others.

Competitive Rivalry - Clothing retailing industry is highly competitive industry. There are many retailers in the industry who fight with each other to improve their customer base; Gap, Inc. is not an exception to this. Gap Inc 's competitive advantage depends on the sporadic change in consumer patterns as well .

Abercrombie & Fitch Co.

American Eagle

TJX Companies, Incorporation

Nordstrom, Incorporation

To keep up with trends in the market is very difficult, but necessary. And most of companies in the market sometimes have failed to produce trendy clothing and affected the companies’ financial statements. Also, this impact is written in the annual report of Gap. So, a recommendation is to make a partnership with art school and to market some trial products with the brand of Gap and a immature designer in the school. This also makes an opportunities to find talented designers.

Gap claims that its different brands have common purpose of making it easy for people to express their personal styles. Although these brand names are distinctive in themselves, they do not work as autonomous business. All these brands share the value with the corporation. Quite often these companies in the portfolio share the warehouses, and other resources. They share the common principles of ethics, mission statement, and client services. The supply chain and ways of operation is almost the same for these companies.

“ I created Gap with simple idea: to make it easier to find a pair of jeans: We remain committed to that basic principle.” – Don Fisher