SWOT analysis of GAP Inc.

I thought about SWOT analysis of GAP Inc. in strategic marketing class. Here is the analysis. What do you think?

Strengths:

  • Global brand recognition
    GAP is globally recognized as american style, pop culture and the emotional affinity.
  • Stores located in worldwide
    GAP has 3,095 stores in worldwide as of January 30, 2010.
    Company-owned stores are located in United States, United Kingdom, Japan, Canada, France and Ireland.
    Franchisees-owned stores are located in other countries such as Turkey, United Arab Emirates ans so on.
  • Franchising system easily to expand Gap store internationally
    GAP has franchise agreements with unaffiliated franchisees to operate Gap or Banana Republic brand stores worldwide.
  • Multiple brands and brand extensions for a wide range of segments
    GAP has 5 distinct brands such as Gap, Old Navy, Banana Republic, Piperlime and Athleta and
    brand extensions such as GapKids, babyGap, gapbody and GapMaternity.
  • Huge customer and vendor base

Weaknesses:

  • Nearly all merchandise depend on third-party vendors, which is outside of the US.
    Approximately 1000 vendors in 60 countries. 27 percent is produced in China.
    Third-party vendors can cause products shortage, shipment delay and increased costs.
  • Huge store base including unaffiliated franchisees
    Gap is limited to keep up with fashion trends, to train some methods and to control quality.
  • Less attractive in trendy clothing
    Gap’s product lines are less attractive clothing to consumers who are interested in trendy clothing than competitors
  • Uncontrollable production processes
    Control of production processes is a key factor among fast fashion retailers

Opportunities:

  • Global new market in Europe and China
    GAP is planing to open the 1st store in Italy and China and additional outlet stores in Europe and Asia
  • Penetration of e-commerce
    Gap has introduced web-based stores and has two additional online based stores.
    Sales related to Athleta in 2009 increased 9 percent while total sales of Gap decreased 3 percent
    Online sales in 2008 increased 14 percent compared with 2007.
  • Difficult anticipation of fashion trends and changing consumer preferences
    Many companies have experienced to misjudge the market.

Threats:

  • Economic downturn directly affect apparel retail business
    Continuing economic downturn could make consumer spending remain depressed for an extended period.
    Apparel sales were off by -9% compared to 2008
  • Global specialty apparel retail industry is highly competitive
    J. crew, Abercrombie & Fitch, Urban Outfitters, etc
  • Emerging fast fashion retailers
    H&M, Forever21, Inditex(Zara), Primark
    Zara delivers new items twice a week to the stores.
  • The market for prime real estate is competitive
    The location of GAP stores is a key factor of it’s strategy.

Recommendation: How about the following as one of recommendations.
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.

Reference:
Annual report:

http://www.gapinc.com/public/documents/GPS_AR_09.pdf

Wikipedia:

http://en.wikipedia.org/wiki/Gap_%28clothing_retailer%29

http://en.wikipedia.org/wiki/Fast_fashion

Apparel market report:

http://www.mastercardadvisors.com/us/advisors/en/pdf/SP_Apparel_MAY-09.pdf

Wikiinvest:

http://www.wikinvest.com/stock/Gap_%28GPS%29

http://www.wikinvest.com/stock/Abercrombie_%26_Fitch_Company_%28ANF%29

http://www.wikinvest.com/wiki/Urban_Outfitters_%28URBN%29

Industry report:

http://news.morningstar.com/articlenet/article.aspx?id=337795&pgid=rss

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2 responses to “SWOT analysis of GAP Inc.

  1. nice done!

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