COMPANY PROFILE -Gap
Business Sector :Fashion and Apparel products
Operating Geography :United States, North America, Global
About Gap :
Gap Inc is one of the leading Global retailers which offers clothing, accessories and personal care products for men and women of all age groups, as well as children. The company is headquartered in San Francisco, California and its major business comes from the United States where it was founded. When the company was founded in 1969 by the couple Donald Fisher and Doris Fisher, it was a franchise exclusively for Levi's jeans. The company slowly expanded to venturing with its own brands with the name of the company itself. As the company grew it expanded by acquiring different brands, like Old Navy and Banana Republic, which were relevant to its business. The fisher family still holds a significant portion of the company and four members of the family are on the board of directors of the company. The fisher family still holds a significant portion of the company and four members of the family are on the board of directors of the company. In November 2020, Gap Inc. partnered with Afterpay to improve digital shopping experience.
The Gap had become a household name in the US, but since the past few years the company shares have gone down remarkably. The major reason being quoted for the poor performance in the recent past has been the outdated fashion of its brands particularly the gap and Banana Republic. However, with change of management in the year 2020, the company is expected to bounce back to its original glory. Gap has approx. 129,000 employees as of early 2021.
GAP’s mission statement is “to democratize fashion and make shopping fun again. To bring incredible style and quality to families the world over.” GAP’s vision statement is “creating opportunities for the people and communities touched by our business throughout the world.”
Gap Revenue :
US$ 16,383 million – FY ended February 1, 2020 (y-o-y growth negative 1%)
US$ 16,580 million – FY ended February 2, 2019
Competitive Analysis of Gap
Gap Inc. is one of the leading Global retailers which offers clothing, accessories and personal care products for men and women of all age groups, as well as children. It has become a household name with its leading brands amazing the costumers with its products. SWOT/TOWS analysis of GAP analyses the brand/company with its inherent strengths and weaknesses alongside its external factors of opportunities and threats. SWOT analysis is a fundamental tool to benchmark GAP’s performance for its potential consumers. GAP has developed long-standing vendor relationships which help high scale operations through its distinct portfolio, being its inherent advantage. In recent times the retailer has been unable to keep up with the new trends in fashion resulting in negative growth. During the lockdown in 2020, the company has to withstand closure of about 90% of its stores, which has also hugely impacted the company’s financial result. In order to gain advantage in the ongoing times, the company realizing this opportunity, launched an online subscription service called Style Passport. Many apparel retailers including GAP are facing problems of mounting inventory. The whole category of fast fashion is struggling which is a trend partially driven by changing consumer taste threatening the retailer.
The SWOT analysis for Gap is presented below
Strengths | Weaknesses |
1. Portfolio of distinct set of strong brands
2. Long-standing vendor relationships which help scale operations
3. Leading omni-channel capabilities
4. Well positioned to take charge post pandemic crisis
| 1. Health and profitability of Gap and Banana Republic brands
2. Large amount of low-quality debt
3. Failure of Gap and Banana Republic brands to shift online amid store closures due to pandemic
4. Continuous discounts diluting the perceived value of the brand
|
Opportunities | Threats |
1. Increasing popularity for rental subscription services
2. Growing potential activewear and athleisure segment
3. Opportunities in Asia Pacific market
| 1. Struggling fast fashion segment
2. Mounting inventory levels due to economic slowdown amidst pandemic
3. US apparel industry most affected among retail
|
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Detailed SWOT Analysis of Gap
Strength
This section is available only in the 'Complete Report' on purchase.
Weakness
1. Health and profitability of Gap and Banana Republic brands: The Gap and Banana Republic, which are the flagship brands of the company, have been consistently performing poorly for the past few years. Brands have recorded negative comparable sales since 2017. The Gap’s comparable sales reduced by 1% in 2017, 5% in 2018 and 7% in 2019. Similarly, Banana Republic recorded a negative growth of 2% in sales in comparable in the year 2017 and 2019. Both these brands were the major contributors in the overall decline of The Gap, Inc.’s comparable sales 3%, as well as a decrease of 1% in net sales. The major reason being cited for the poor performance of these brands is that these brands have become outdated and unable to keep up with the new trends in fashion. Customers don't seem to be attracted to the look of the stores and which makes them even less likely to make a purchase. This is especially the case with the Gap and some consultants are even suggesting to close its namesake stores and transit to an online only retailer brand.
2. Large amount of low-quality debt: Moody’s and S&P Global both have downgraded Gap’s credit risk rating BB- and Ba1 respectively. This especially happened after the company took a loan of $ 2.3 billion, after which the rating agencies placed the company in the speculative, or junk category. Although the company's debt-equity ratio is 0.37 it has a lot of other liability items in its balance sheet which downgrade the credit risk of the company. A lower credit rating means higher risk for the company, which means that financial institutions would be very off landing to the company. It also means that whatever earnings that the company the cruise right now would be used to playback the existing loans rather than invest in capital assets. The downgrading of the company's credit risk also means that the loan that the company has taken is speed utilized for low-return investments.
The remaining section of “Weakness” is available only in the 'Complete Report' on purchase.
Opportunity
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Threat
This section is available only in the 'Complete Report' on purchase.
PESTEL/PESTLE/PEST analysis is a strategic tool to analyze the macro environment of GAP Inc.. PESTLE stands for: P-Political, E-Economic, S-Social, T-Technological, L-Legal & E-Environmental factors that impacts the sound health of any company. Macro environment can have both direct and indirect impact on the organization. PESTLE analysis provides great details about operating challenges, faced by Gap in the macro environment.
Political factors play an important role in Gap’s functioning. Gap Inc. operates in more than a dozen countries exposing itself to many political risks. Tax rates, political instability in the market, government interference are some areas of concern for the company.
Keeping in mind the current economic crisis due to the pandemic, Gap one of the retail apparel giants is facing huge inventory costs and losses in revenue.
Society largely creates an impact on the working of an organization in an environment. Gap champions equality for everyone in workplace setting an example for its competitors.
Technology factors like omni channel retailing and growing ecommerce, has proved to be a boon in these challenging times as they have helped Gap maintain its spot in the industry. Online portals being available anytime anywhere has done wonders for the company.
Gap being an international organization has to fulfill legal and statutory compliances and come clean from any allegations. Any shortcomings have to be dealt with utmost care and diligence.
Environmental factors can be both detrimental and beneficial for an organization impact The US retailer’s profitability. With each passing day water is increasingly becoming a scarce resource; Gap realizing the importance of this diminishing resource, committed itself to work only with those suppliers who help the company in saving at least 10 million litres of water by 2020.
The PESTLE/PESTEL analysis of Gap is presented below:
Political | Economical |
1. Impact of Tax Cuts and Jobs Act
2. Participation in political and regulatory processes to support business perspectives
| 1. Impact of Covid-19 on economy and business
2. Changing trade policies in the United States
|
Social | Technological |
1. Bifurcation of retail into price-based and premium segments
2. Championing equality for everybody in workplace
| 1. Technology enabled Omni-channel retailing
2. Effective but less-visible technologies
|
Legal | Environmental |
1. Allegations of abuse and harassment at supplier factories | 1. Sustainable raw material sourcing as a trend
2. Apparel manufacturing heavily water intensive process
|
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Detailed Pestle Analysis of Gap
Political
This section is available only in the 'Complete Report' on purchase.
Economic
This section is available only in the 'Complete Report' on purchase.
Social
This section is available only in the 'Complete Report' on purchase.
Technological
This section is available only in the 'Complete Report' on purchase.
Legal
This section is available only in the 'Complete Report' on purchase.
Environmental
1. Sustainable raw material sourcing as a trend: Consumers around the globe have become increasingly environment conscious, and this consciousness has circulated down to the companies. According to a McKinsey report, executives are strongly demanding sustainable sourcing at scale as a must have in their kitty. According to the executives interviewed by McKinsey, sustainability needs to be woven as an integral part of the company fabric. It needs to be included as a social purpose of the company, and companies need to set stricter targets for themselves in sustainable sourcing. Since 2016, Gap Inc has been a part of BCI (Better Cotton Initiative), which is the largest sustainable cotton program in the world. Gap was ranked fourth by BCI in 2019 among the top companies sourcing sustainably sourced cotton. By 2021, the company has set its target to become a company sourcing hundred percent sustainable cotton.
2. Apparel manufacturing heavily water intensive process: With each passing day water is increasingly becoming a scarce resource. Depending on the country, water is either short in availability, or there is a lack of access to water due to inadequate infrastructure. The growth rate of water use has been twice the growth rate of population since the last century coma and it is the reason that many countries are at the limits to provide adequate supply of water. Water stress has not reached at a global scale till now till now but individual countries must take preemptive measures to conserve water as much as possible. Consequently, corporations must take the onus on their shoulders since a large part of the water which goes to waste is a result of their actions. Apparel manufacturing as an industry is especially heavily water intensive. As consumers are becoming aware of the processes involved in the manufacturing of their clothes, they are becoming more sensitive towards the environment and switching to two more sustainable clothing. to retain existing customers, companies like Gap will have to come up with innovations which show that they are committed to sustainable production. The Gap has done the same, and committed itself to work only with those suppliers Who help the company in saving at least 10 million litres of water by 2020.
Major Brands :
- Old Navy
- GAP
- Banana Republic
- Athleta
- Intermix
- Hill City
- Janie and Jack
On purchase the Gap SWOT and PESTLE Analysis PDF report will reach you within minutes. At rare times, a slight delay not exceeding 1 hour might be caused.
WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
The Gap SWOT and PESTLE Analysis report will offer the following:
- The analysis substantiates an understanding of the complex internal and external environment, its operations, business model, market strategy and growth trajectory.
- Gap’s SWOT analysis determines the strengths and opportunities that Gap Inc. holds and how it designs itself to overcome its weaknesses and threats in its operating macro environment.
- The report covers the initiatives taken by Gap, to stay ahead of its competitors and maintain its hold in the industry during the pandemic in spite of the challenges faced.
- The PESTLE analysis of the fashion and clothing industry helps to distinguish the factors that compel and interdict the retail market.
- The PESTLE/PESTEL/STEEPL analysis displays an in-depth analysis of all the external factors of the company specifically, political, economic, social, technological, legal and environmental.
- Synopsis of Gap’s business diversification, deriving its key business segments and highlighting its major competitors.
- Elucidation of Gap’s USP or unique selling proposition, mission statement and vision statement with a peek into Gap’s performance values success factors and core competencies.
- Discussion about company’s strategic alliances, partnerships, acquisitions and the business aims that were established.
- Recognizing the core values, key performance indicators, and success factors to escalate growth in the company.
- Discussion on Gap’s business model, extending to analyse key business segments and investigate thoroughly into its business case study.
You may also be interested in other analyses of Gap:
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Gap Porter's Five Forces Analysis |
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Gap Covid-19 Impact Analysis |
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Gap Segmentation, Targeting and Positioning (STP) Analysis |
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Gap Ansoff Matrix Analysis |
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Check Out Analysis of Other Relevant Companies
References used in Gap SWOT & PESTLE Analysis Report
1. Gap annual report 2019 - http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_GPS_2019.pdf
2. Gap annual report 2018 - http://www.annualreports.com/HostedData/AnnualReportArchive/g/NYSE_GPS_2018.pdf
3. Gap company profile - https://www.reuters.com/companies/GPS
4. Gap CSR report 2017 - https://www.gapincsustainability.com/sites/default/files/Gap%20Inc.%202017%20Report.pdf
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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Gap SWOT and PESTLE analysis has been conducted by Divyansh Kharadkarand reviewed by senior analysts from Barakaat Consulting.
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