SWOT Analysis of Gap Inc - Essay Example

The Gap's biggest growth period occurred between 1994 and 1999. As more companies adopted casual dress codes, Gap’s sales increased. It is now the largest US clothing chain with over 3,000 stores. Its core brands are The Gap, Old Navy, Banana Republic, and the online shoe store - Piperlime. The Gap is one of the most recognizable names in any industry. In 2008, the Gap announced that it was returning to its classic design style.
The Gap is expanding both internationally and through the Internet. The first Banana Republic store opened in the United Kingdom in 2007. It has 75 franchise stores in the Middle East and Asia. Toby Lenk has grown Gap’s online business over the past 5 years. Piperlime, its online shoe store, carries over 200 brands of shoes. The Gap’s private label credit cards also assisted online sales.
Weaknesses: The Gap has suffered an identity crisis since 2000. It has cycled between its core business and following the latest “fashion trends.” (“GAP: Good Genes May Not Be Enough.” 28) The revolving product line confused consumers. By attempting to appeal to everyone, the Gap lost its appeal to anyone. It is a brand known by all but desired by none. Gap Inc. lost its ability to connect with its customers. Every company, regardless of the industry, must stay focused on its core demographic. Companies that consistently monitor those groups are more successful than companies that follow the latest trend or “hot product.”
Poor management made Gap’s core stores its worst competition. Under CEO Paul Pressler, the same products were carried in the Gap, Old Navy, and the Banana Republic at different price points. Frustrated consumers stopped going. The Gap failed to keep its brands diversified. Originally Old Navy was the Gap’s bargain basement store. Consumers could go there and find cost-effective clothing. Thanks to Pressler, consumers went there to get discount prices on Gap products.
The Gap’s management continued to create more problems for the company. The Gap started cloning itself by creating the GapMaternity, GapKids, BabyGap, and others. This expansion hurt both the individual stores and the entire chain. Each new store requires employees, utilities, and rent. The deluge of stores with specialized Gap products cut into the corporation’s profitability.
Opportunities: Gap Inc is an international company. Having stores in several countries protects it from local economic downturns, recessions, or depressions.
Threats: The U.S. is experiencing a recession. Families are struggling with rising gas and food prices. Each dollar is carefully weighed before being spent. Retail spending is down across the board. Companies are fighting over a shrinking market share. The Gap’s competitors (including Target, JCPenney, H&M, Kohl’s, and J. Crew) provide better customer service and adapts better to the fickle fashion climate. All of these companies are significantly smaller than the Gap and can implement changes quickly. The Gap is also vulnerable to US government regulation. China apparel and textile restrictions are in effect until December 31, 2008. A change or increase in these restrictions could raise production costs.