The Gap,

Inc. ​

“Get it at the Gap. For every generation there's a Gap”

Introduction

Table of Contents

​1 ​2 ​3
Industry Overview ​Company Overview ​Recommendation
• Porters Five Forces • Key Success Factors & • Strategy/ Risks/ Mitigation

• Indicators
P.E.S.T Analysis
• Analysis Of Diamond E
• Company Description/Key
Components
Players/Generic Strategies
• Opportunities & Threats

2
 Porter’s Five Forces
​ Buyer ​ Moderate ​ Threat Of ​ Strong ​ Degree of ​ Strong
Power Impact New Entrants Impact Rivalry Impact
 Mid-range retailers must offer promotions to attract  Gap is a well-established competitor in the  The Industry is composed of a large number of
low-income customers, as they are sensitive to price industry2, and can easily adapt to new consumer similar retailers, that very in size from small
changes.1 needs, which would prove difficult for new independent retailers to large corporations.1
entrants.1
 Buyers have low-switching costs, as there is a high   Large retailers have a competitive advantage as
Low capital requirements for clothing retailers, and
level of choice within the industry.1 they collect large amounts of consumer data and
a specialized consumer demand signify that the
provide them with what they want.1
 With rapid changes in the industry, players are barriers to enter are low.1
 Channel for online retailers to enter has grown,  Growth of the apparel industry is forecasted to
forced to offer what buyers demand, which
strengthens has the power of buyers increased. 1
allowing for new entrants to capitalize on the have accelerated growth from 2023-27, easing the
trend.1 overall rivalry in the industry going forward.1
 A balance is created between buyers and sellers
 The low level of product differentiation amongst all  The establishment of lifestyle brands through
as both cannot forward or backward integrate.1
competitors, makes it easier for new entrants to innovation, has caused a resurgence of some
exist with existing players.1 brands.1
 Key suppliers are manufacturers and wholesalers, retailers' source  No substitutes for apparel.1
from both, and both suppliers are fragmented.1
 Alternatives do exist however, for instance instead of using
 Retailers decrease supplier power, as the industry has generally
retailers' consumers can purchase products directly from the
low switching cost caused by the vast choice of suppliers from manufacturer, or in some cases a niche alternative is to have
low-wage regions and the low threat of oligopoly.1 home-made or custom-made clothing.1
 A possibility of forward integration from suppliers, as often larger  Counterfeit or secondhand clothes found on various sites could
companies manufacture and retail their own products .1 also be detrimental to profits and revenues of some retailers. 1
 Consumers and non-government organizations have put higher
importance on Corporate Social Responsibility seeking clarity
of company supply chains.1

​Supplier ​ Moderate ​ Threat Of

​Weak Impact
Power Impact Substitutes

Industry Overview Company Overview Recommendation 1

 External Factors Throughout the Strengths Weaknesses
Industry
 Industry Faces a steady trend of medium regulation. 3
 Strong management both in  High levels of competition as distinct
P:  Manufacturers face most of the regulatory standards in corporate and retail locations competitive is hard to obtain5
comparison to retailers.3  High profit vs. Sector average4  A dependence on foreign vendors 6

 Receive governmental support for The Canadian Apparel

 Low customer class concentration,  Brick and mortar stores are in fierce
Federation (CAF) who provide resources and support for
manufacturers, wholesalers, and retailers.3 willing to target any consumer4 competition with e-commerce, which
 Inflation remains at high level throughout the Canadian  Expansion of online shopping has leads to subdued margins for both
E: economy, and economic projections show the economy getting allowed retailers to access new groups4
worse.3
 Customer purchasing power has reduced with rising inflation markets and demographics
and interest as households are now struggling.3
 GAP Canada could see a decrease in revenue and a possible
increase in costs with the economic outlook.3
Opportunities Threats
 Online shopping became primary point-of-sale for consumers
S: during the pandemic.3
 Expected increase in growth of  Consumer confidence expected to
 Online shopping has encouraged many to shift their shopping revenue through the years 2023- see a plummet this year and next4
preferences due to the convenient and simplistic methods of 20284  Market has become overly.
purchase.3
 Largest demographic of 20–64- saturated with online retailers, as
 Family clothing stores have changed with the technological
T: advancement and introduction of e-commerce platforms.
year-olds expected to grow overhead costs are low, allowing

 It is considered to be a medium change as retailers now utilize significantly in the coming years4 free entry into the market4
phones and tablets for checkout, and QR codes for easy access  Consumer spending is supposed to  Children's retail in Canada
to product info.3
rebound and climb in the coming expected to take a hit as birth rates
 Radio-frequency identification (RFID) are being used by
retailers to monitor and restock inventories more efficiently. 3 years4 continue to be low in Canada4

Industry Overview Company Overview Recommendation 2

 Industry Information

Company Information Key Players Generic Strategies

TJX Companies: operates in Canada
Market Share: Gap has a market As for Porters Generic strategies, Gap
with a market share of 15.8%.7 They make
share of 11.5% in Canada7 uses a mix of cost leadership and
use of the cost leadership and differentiation
differentiation.10
Revenue: Annual Canadian revenue strategies.11
for Gap Canada was 1.38 Billion CAD Gap Inc : has a market share of 11.5 Gap has a major emphasis on the price
in 20227 percent7 and uses a mix of cost leadership and availability of its products around
Split between 3 main companies and differentiation10 the world, which promotes high brand
• Old Navy = $576.4 Million8
awareness, rapid sales growth, and a
• Gap = $306.4 Million8 PVH Companies: takes up 3.2% of the
market share7 and uses a mix of cost
solid competitive edge. Gap routinely
• Banana Republic = $260.3 Million 8
leadership and differentiation12 distributes coupons and discounts to
meet sales goals and gain an
Products & Services: GAP Canada advantage over their competitors. This
Roots: operates with a 1.9% market share7
offers a variety of products that cater also increases brand recognition and
and employs the use of cost leadership and
all demographics. For women, they differentiation7 leads to increased consumption. 10
offer dresses, tops, accessories, active
wear etc. As for men, they offer a Private/Smaller Companies: These Gap also uses differentiation to create
variety of shirts, t-shirts, accessories, individual and private companies take up products different from their
active wear etc. Gap also caters to 69.5% of the market share as there is much competitors in hopes of attracting
toddlers and babies selling different competition13 and smaller firms use a
more consumers and gaining a
shirts, sweatshirts, one pieces etc. 9 differentiation strategy due to their size.
competitive edge. 10

Industry Overview Company Overview Recommendation 3

 Opportunities and
Challenges
Gaps Within the Factors to reduce
Key Trends
Market Profitability
 Decline in profit is imminent as
 As a result of the pandemic, pre- governments have begun to introduce
 Being in the family clothing industry, existing trends were accelerated and measures to mitigate the effects of the
companies offer products for all, continue to grow like business pandemics16
however a stronger emphasis on casual attire15  The increase of minimum wage
women's apparel can lead to an  Consumers are moving away from a throughout the country are anticipated to
increase in revenue as they account cut into the profit of the industry4
formal style and have increased
for 33% of the market14 interest and spending in athleisure,  Volatile economic drivers, such as
 Implementing casual shoes activewear, and sportswear attire 15 disposable income, have also contributed
to the decline of the industry16,
throughout stores have become a  Both the apparel and footwear specifically rising interest has affected
fast fashion that is still underserved industry are sought to return to pre- disposable incomes throughout
in the industry14 pandemic growth patterns this households, and rising inflation has
 The personalization of year15 reduced the purchasing power of
technology to enhance customer consumers17
 Fast fashion and the use of e-
experience has not been effectively  Certain retailers have begun cannibalize
commerce expected to continue as a
adapted by any companies14 robust sales channel, with their sales, with the introduction of
discount stores, ultimately hindering
manufacturers continuing to adapt
profit17
quickly to the always changing
preferences of consumers15  Overhead costs are seeing an increase
due to demand of sustainable and eco-
friendly products17

Industry Overview Company Overview Recommendation 4

 Key Success Factors

1 2 3 4 5 6
​Employee ​Customer ​Quality Products ​Innovation and ​Competitive Financial
Commitment satisfaction and Services Creativity Distinctive Performance
Advantage
Gap ensures the safety Gap Inc. has formed a In March 2020, Gap Gap has a diverse In 2022 GAP Inc
GAP Canada’s goal is
of their workers by special partnership with Inc shifted its focus to workforce that allows brought in about
to meet and surpass
monitoring signs of SGT, a textile quality a digital-first approach them to create 1.38Bn dollars in
customer expectations
verbal or physical management firm, to as online sales surged products that are revenue and a
and how they can
mistreatment when it implement new by 54% in 2020,
provide accessible affordable, durable, growth % change of
comes from practices that provide constituting 45% of
customer service to and relatable to 6.1. Gap
management or other essential quality control total sales, up from
people with disabilities. customers all over the strengthened its
colleagues. All facilities in the product 25% the previous year.
This create a sense of world. Their line of advertising
require grievance development cycle. This Recent data indicates
inclusion and belonging baby items is campaign in the last
channels and training way, Gap can stay that online sales have
for customers when particularly popular
on how to use certain ahead of the stabilized between five years, focusing
shopping. Gap also
machines. Additionally, competition and enjoy these two figures, as and receives on its 1969 denim
stood up for LGBTQ
a workplace various benefits. The physical stores re-open significant investment, line as a modern and
rights before the world
cooperation program is company recognizes and shopping habits with a consistent edgy take on its
decided to wake up to
used to improve that failing to monitor return to normal. 21 demand for their traditional products,
it. This ensures
worker-manager quality at the right time products regardless of
customer satisfaction which boosted
discussion and can result in wasted
by including market fluctuations21 sales.22
relationships18 time and money.20
marginalized people.19

Industry Overview Company Overview Recommendation 5

Gap Diamond E Framework/Analysis
Management
Preferences
• open mindset that drives
their business by including
people from all walks of life
•Believes equality is within
the fabric of their culture
•fortune 500 company to
Organization announce equal pay 27 Strategy
• Revamped its senior • belief in creating amazing Environment
leadership products for customers •Continue to innovate and • technologies like digital
•Barbie's pop cultural while ensuring the make changes in the digital fitting rooms and virtual
resurgence is attributed to sustainability of a healthy world to boost Gap’s online assistants and development of
Richard Dickson, Mattel's environment 27 presence Blockchain Technology,
former president, who is now •Since developing countries Artificial Intelligence 24
Gap CEO 23 are seeing increased • These technologies can assist
•taking considerations to the education and jobs, firms in releasing premium
long term & pursuing more Resources
consumers are willing to products into the market
trends spend more. Expanding into more quickly and generate
•Creative Director has said “As • 4th highest ranking apparel
these countries can increase more income. 24
a large organization, there’s a company in terms of sales • Threats include low revenue
in 2022 revenue.
corporate culture that, is still growth and low consumer
business-focused and • Accumulated 15,061,000 confidence index 25
inclusive.” 23 million dollars 26
• GAP Canada consists of 76
stores and 30 in Ontario26
• Banana republic consists of
56 stores 26
• Old Navy consists of 110
stores 26

Industry Overview Company Overview Recommendation 6

 Recommendation
Plan Risks
- Low Return on investment
​What Can We Do?
in terms of investing in
• Main threats:
media marketing
1. Competitive rivalry
- Risk of online reputation
1. High competition that is projected to increase
2. Manufacturers opening flagship stores damage
2. Threat of New Entrants
1. Smaller companies establish strong connections with - It increases the risk for
buyers legal action and fair use.
2. Online retailers undercutting prices
Mitigations
What Should We Do?​
• Social media becoming a prominent figure in today's marketing
strategies, and GAP has shown inability to follow trends. • Analyze the social media
platforms for potential
• Gap could boost their online presence by allocating resources
into creating a media presence through social media platforms risks.

• This can give Gap a competitive edge over competitors with a • Hire a publicity team to
weaker online presence. prevent any reputation
damages.
How Can We Do This?
• Gap can allocate more resources to their marketing team to • Enhance the utilization
effectively analyze trends on social media. (aligns with Gap of proper social media that
resources) caters to particular
• Create a Gap Canada social media account on platforms such as
TikTok and Instagram to tailor to more Canadians (aligns with
demographics.
Gap’s organization & management)
• Pay notable celebrities and content creators to market and
endorse Gap’s products. (Aligns with Gap’s resources) 9

Industry Overview Company Overview Recommendation 7

 References
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