and personal care under the brands Gap, Old Navy, Banana Republic, Forth and

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1 Name of the Retailer : Gap Inc is a retailer conglomerate that sells casual apparel, accessories, and personal care under the brands Gap, Old Navy, Banana Republic, Forth and Towne, and Piperlime. Mission Statement : Gap Inc's mission statement states Gap Inc is a brand builder. We create emotional connections with customers around the world through inspiring product design, unique experiences, and compelling marketing. (Gap.com) This mission statement is basically stating that Gap Inc would like to establish a solid relationship with their customers by continuing to provide quality and innovated merchandise as well as to originate a distinctive atmosphere to make the customers shopping experience feel like much more then just shopping. Location : Gap Inc is a centralized corporation with a headquarters located in San Francisco. Gap Inc has product design offices located in New York, San Francisco, and London. Centralization of a corporation has several advantages for a corporation. Expenses are reduced because instead of several offices with the same functions being performed at all the offices there is only one central office with all the same functions being performed there. Another advantage is specialization of these functions is allowed to happen. Centralization also lays the ground work for expansion of new stores and it enhances the consistency among the merchandise within all the store locations. Although there are advantages to centralization there is a downside to it as well. Due to the corporation being located in one area people criticize centralization because they claim it disables individual stores the capability to respond to local markets. First Year of Operation :

2 The Gap first opened in 1969 in San Francisco. Doris and Don Fisher opened the first store with the goal of generated an easy store experience for their customers, as well as offering a wide selection of fits and styles. Don Fisher stated that he wanted to open a store that would make it easier for customers to find a pair of jeans. (Gap) The Fishers named their store after the generation gap which was the name for the growing differences between children and adults. They began selling Levi's jeans and eventually became a private label retailer and only sold Gap merchandise. During the year 1969 several events occurred such as Richard Nixon was elected to be the 37 th president of the United States, Neil Armstrong became the first man to walk on the moon on July 16 th, 1969, the Stonewall Riots occurred in New York City between police and gay rights activists on June 28 th, 1969, Beatlemania came to a close with the release of The Beatles last album, Abbey Road, and the first Woodstock Music and Art Festival took place in 1969 on the weekend on August 15 th in Bethel, New York. The hippie movement and several war protests against the Vietnam War also took place in 1969; it was defiantly a time for change. Since The Gap first opened the retailer has made several changes. First of all it has evolved into a retail conglomerate that now has separate brands, and Gap itself now has four brands besides the original, that include Gapbody, GapMaternity, GapKids, and BabyGap. Even though The Gap has grown into what is now Gap Inc their current financial situation has not been doing too well. During the 2006 fiscal year Gap Inc's sales went down due to The Gap decreasing in sales. The Gap generates 43% of Gap Inc's total revenue and The Gap's sales were down by 5.6%, so this brought down sales in general by 1.5%. Besides declining sales Gap Inc has also been struggling with revitalizing the brands they offer and creating new products designs for their stores.

3 Stores and Locations: Gap Inc has more then 3,100 stores located worldwide. Gap Inc has stores located in the United States, Canada, United Kingdom, France, Ireland, and Japan. In the United States there are 1,201 Gap stores, 499 Banana Republic stores, 958 Old Navy Stores, and 19 Forth and Town Stores. In Canada there are 93 Gap stores, 26 Banana Republic stores, and 63 Old Navy stores. Internationally Gap Inc has 137 stores located in the United Kingdom, 33 stores in France, and 124 stores located in Japan. Although Gap Inc has stores located worldwide they are a more dominant retailer in North America. Gap Inc derives almost 90% of their sales from North America. Customer Profile: Gap Inc has several brands that are able to target a wide range of customers. Gap has several brands within itself that can cater to a wide range of demographics. On the Gap Inc website they state Gap offers iconic American style to customers of all ages. (Gap.com) This relates back to how Gap's brands range from BabyGap, which carries clothes for infants and toddlers, to Gap, which carries adult sizes for men and women. As for demographics Gap target both men and women ages 12 to 49 who live in a middle income household who want to purchase casual clothes that allow them to convey their own personal sense of style. Old Navy is Gap Inc's brand that offers great fashions for affordable prices. Similar to Gap, Old Navy also carries sizes infant to adult. Old Navy targets men and women between the ages of 12 to 35 who live in low or middle income households. Banana Republic is Gap Inc's luxury brand. Unlike Gap and Old Navy Banana Republic only offers adult sizes, they target men and women, ages 25 to 45 that live in middle and high income households. Forth and Town which is Gap Inc's latest retail store targets women who are 35 and older who live in

4 middle and high income households. Gap Inc also just recently launched an online retail store called Piperlime that sells brand name shoes. It offers over 100 brand name shoes for men and women ages 18 to 35 that live in middle income households. Competitive Profile: Gap Inc's top competitors include Abercrombie and Fitch, American Eagle, and JCrew. These three retailers are among Gap Inc's competitors because they carry similar casual apparel, at similar price points, and all target very similar market segments. Abercrombie and Fitch being Gap Inc's number one competitor because they both offer children clothes, they both have several brands that are able to cater to a range of demographics, and they both specialize in casual apparel. Store Visit : I visited a Gap store located in a suburban area. The store was in Yorktown Mall in Lombard, IL. I went on Wednesday, May 23 rd at around 5:00pm. The business in the store was very slow, there were only two other people in the store at the time I was there and no one was making any purchases. I chose to do my departmental information based upon the women's department and the product assortment that was being offered for summer. Product Assortment : Classification Sub-Classification Prices Sizes Colors Women's Tops Tanks, Halter, Short Sleeve, Long Sleeve $19.50, $22.50 $24.50, $26.50 XS, S, M, L, XL, XXL Pink, Yellow, Blue, Green, Black, Brown, White, Stripes Sweaters Cardigans $39.50, $44.50 XS, S, M, L, XL, XXL Navy, Gray, Yellow, Black Shorts Classic Khaki, Madras, Denim $39.50, $44.50 $ ,2,4,6,8,10,12, 14,16,18 Black, White, Khaki, Denim, Yellow/Pink, Green/Blue, Blue/Pink Capris Skinny Legged, Wide Legged, Cuffed, Classic Fit $44.50, $49.50 $54.50, $ ,2,4,6,8,10,12,

5 14,16,18,20 Black, White, Khaki, Denim Dresses Babydoll, Strapless, Empire Waist $59.50, $69.50 XS, S, M, L, XL and sizes 0,2,4,6,8,10,12, 14,16,18,20 Black, Gray, Cream, Pink, Navy, White Pricing : The products in the women's department at Gap were positioned in a better format. The prices at Gap were moderate and consistent with one another. Pricing for classification and sub-classification for the product assortments are listed above in the table. Fabrication/Embellishment: The product assortment in the women's department at Gap was made up of primarily of basic cotton merchandise. When merchandise is embellished is some way or is made of a different kind of fabric the prices on the merchandise tend to go up $5.00 to $10.00 depending on the embellishment or the fabric. An example are the madras shorts which are colorful patchwork shorts, they cost $44.50 compared to other plain solid color shorts that cost $ Gap has several dresses to offer in various styles and cuts. They have a few babydoll styled dresses to choose from with different fabrications. The only cotton dress costs $59.50, where as the silk and cotton dress costs $ Brands : Gap is a private label retailer and carries only the Gap brand. All the merchandise sold at Gap including the merchandise in the women's department is Gap brand merchandise. Size/Color :

6 In the women's product assortment Gap carries sizes XS, S, M, L, XL, and XXL in tops and dresses, and sizes 0, 2, 4, 6, 8, 10, 12, 14, 16, 18, and 20 in bottoms and dresses. The bottoms also come in petite and tall variations for particular sizes. The colors carried in the store included black, white, brown, gray, blue, pink, green, orange, and yellow. In other retailers I would expect to see very similar sizes and colors. Although compared to many specialty retailers Gap does carry larger sizes. As for the colors they would more then likely be the same expect that the shade of the color will more than likely vary from store to store. Visual Presentation : The visual presentation of the merchandise at Gap was disassociated and there was not real conformity to the layout of the store. The windows on the outside were promoting madras shorts, but once inside the shorts were practically hidden in a corner of the store and were not displayed on the mannequins inside. The mannequins themselves were clumped together rather awkwardly at the two entrances of the store. The one group was displaying khakis and white tops, while the other group had on brightly colored tops and shorts. They had a lot of fashionable dresses to offer, but they were shoved on to racks so tightly that it was almost impossible to take one off to look at it. The tables and racks were also in very close proximity to one another and there was barely any room to walk around expect for one main aisle in front of the cash wrap. The entire store seemed like it was in shambles and did not have any logic to the product grouping. It was as if they just put the clothes wherever they wanted to. In Gap Inc's mission statement they speak of creating an experience for the customer and I do not think the experience I had at this particular store was the exact experience the mission statement speaks of. Besides the clothes being placed in disarray, I was not even spoken to at all by any of the employees. If an emotional connection

7 with a customer is going to be established I would assume it would start with the people that Gap Inc employs to work at their stores. I found the whole store layout to be distracting and even more irritating knowing what their mission statement is and knowing that it was not being practiced within this store at all. Marketing Strategy : The marketing for Gap Inc is in my opinion extremely good and I think it relates back to their customers and has the ability to draw in new customers. They use television mainly but they will also have ads in magazines. Their marketing strategy for Gap the past few years has been to use celebrities in commercials and magazines. They use television commercials for Old Navy as well usually featuring the latest fashion style with a corky theme song. Banana Republic is advertised in magazines and also has a catalog. The latest celebrity ad for Gap was for the boyfriend trouser and featured Claire Danes with no pants and a white woven shirt and Patrick Wilson wearing a white shirt and the boyfriend trouser. They proceed to dance and sing Anything You Can Do and by the end of the spot Danes has ripped off Wilson's pants and is wearing them. Other celebrity spots have included Sarah Jessica Parker, Lenny Kravitz, Madonna, and Missy Elliot. This past Christmas Gap commercials featured Common and Bow Bow for their Holiday in Your Hood campaign. The commercial featured an original rap by Common and the celebrities were shown with their loved ones to emphasize peace, love, and Gap. Gap has recently started to sell (Product) Red collection at selected stores. This yet again brings in celebrity names like U2's Bono. Besides more celebrities Gap is targeting conscience consumers because a large portion of the profits are go directly to the Global Fund to Fight AIDS. Annual Report: Gap Inc's 2005 fiscal year began on January 30 th 2005 and ended on January 28 th

8 2006. SWOT : Strengths: Gap has been around for almost 50 years and has brand recognition with customers for providing casual classics such as t-shirts, hoodies, khakis and denim. Women's Wear Daily named Gap and Old Navy the most recognizable brands in sportswear in In 2005 Gap Inc had nearly $1 billion in free cash flow which enabled them to support their share holders by purchasing $2 billion in shares and doubling the dividend to 18 cents per share. Gap Inc has low long term debt and since 2002 has been able to eliminate $2.9 billion in debt Gap Inc has local merchandising and marketing teams for their international locations, as well as an international design team. Gap Inc launched a new development program for their executives and are investing in leadership training for managers. This will allow for new people to come into the company with different prospective and innovated thoughts. Weaknesses: 2005 sales declined 2% from previous year's sales and there was a 5% decline in comparable store sales. Within the past year Gap Inc had to close over 100 Gap stores that were not meeting performance standards. Gap Inc is extremely dominant in North America and has become over dependent on it for the majority of their sales.

9 Gap does not have a clearly defined target market which can account partially for the decline in sales. The re-organizing of the executives and upper management will more then likely put the strain on the rest of the company. Opportunities: Beginning to remodel and redesign the top 200 Gap stores in order to improve customer experience within the stores. During the past year Gap Inc created a brand new online system and it has had continued positive customer feedback. Expansion overseas has taken place with 13 new Gap stores and the introduction of Banana Republic to Japan. Franchising has allowed Gap to reach smaller markets and has plans to expand to Singapore and Malaysia. The (Product) Red collection that gives the majority of the profits to fight AIDS in Africa will attract customers into the store. This shows Gap's commitment to be socially responsible and make a difference. Threats: Other affordable up and coming retailers like H&M are taking away customers not only in the United State, but in Europe as well. Gap Inc had to sell off their stores in Germany to H&M because they were performing poorly. Consumer spending has decreased in recent years and is expected to continue to decrease. Counterfit industry has been increasing significantly and branded merchandise such as Gap is very vulnerable. It reduces exclusivity,

10 and damages the brands image. Conclusion : In summarization of this buyer's journal about Gap Inc I feel that Gap a consumers back up shopping destination. When other retailers do not have what a consumer is in search of they may decide to take a look at what the Gap has to offer. In the over all retailer's landscape I think that Gap does not contribute anything because they do not do who their products are targeted toward. They do not have a defined target market, their age demographics have no boundaries, and without a clear definition of who to market to I think this is why they have experience declined sales. After their success in the 1990's I think that the Gap executives decided they did not need to concentrate on a specific market segment and because they did not chose to do so other retailers began marketing to these different segments and Gap became loss among the other retailers. Their recent marketing campaigns have shown this lack of focus on a specific market. The celebrities they have chosen are so broad in who they appeal to. They have used rap stars, pop icons, musicians, several actors, including an ad that featured an actress that has been dead for quite some time. Besides their lack of a target market they need a complete product and store renovations. Their stores are mundane with hardwood floors and white walls and that's about it. There has been a lack of product design as well. Gap was successful with selling basics but this became old with customers and Gap has still yet to develop unique product designs. I think that is Gap is to continue to be around in 10 years they are going to have to seriously rethink several factors. They need to define a target market and begin marketing to their specific customers. Gap will also have to do what they say they are doing in their 2005 annual report and rethink their product design and begin producing inspiring and unique new merchandise. Their store

11 being remodeled will help out as well giving the customer the experience that Gap Inc speaks of in its mission statement.

12 Bibliography: 1) "Woodstock." Encyclopedia Britannica. 29 May 2007 < search.eb.com>. 2) Neil Armstrong Encyclopedia Britannica. 29 May 2007 < search.eb.com>. 3) Richard Nixon Encyclopedia Britannica. 29 May 2007 < search.eb.com>. 4) The Beatles Encyclopedia Britannica. 29 May 2007 < search.eb.com>. 5) Gap Inc. 21 May 2007 < 6) Diehl, Matt. "Red Alert." Interview Wilson Web. 28 May ) Lippert, Barbara. "Dancing with the Stars." Adweek 19 Mar EBSCOhost. 26 May ) Wilson, Marianne. "Stuck in the Middle." Chain Store Age Wilson Web. 27 May ) "The Gap Inc." Marketline. 10 Apr < com>.

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