Gap Inc. Merchandise Plan and Competitive Analysis

Gap Inc. Merchandise Plan and Competitive Analysis
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Gap Inc. Merchandise Plan and Competitive Analysis Contents Table of Contents. 2 PART 1: Introduction, Economic Overview, Competitive Analysis. 3 Introduction. 3 Company Background. 3 Economic Overview and Competitive Analysis. 3 Competitive Advantage. 3 Swot Analysis. 4 PART 2: Merchandise Plan, Investment Summary, Model Stock Plan. 7 Merchandise Plan. 7 Investment Summary. 8 Model Stock Plan. 8 References. 9
PART 1: Introduction, Economic Overview, Competitive Analysis
Introduction
Company Background
Gap Inc. is an American multinational company headquartered in America that deals with clothing and accessories retailing. The company was founded in 1969 by Donald Fisher and Doris Fisher and had its headquarters in San Francisco, California (Gap Inc., n.d.). The company operates of over 3.700 stores worldwide, with over 2000 stores located in the U.S. Being a specialty company, it has been able to scale greater heights in the fashion retail industry where it operates other main divisions such as Intermix, Hill City, Banana Republic, Athleta, Gap, and Old Navy (Gap Inc., n.d.). Partnership with other brands like Levi's has boosted its market position by ensuring that its warehouses are constantly replenished with adequate apparel to meet customer demands.
Economic Overview and Competitive Analysis
Competitive Advantage
The competitive advantage of Gap Inc. is seen in its ability to maximize its profits without increasing the production costs compared to its competitors. The company has achieved its competitive advantage by venturing into new markets and expanding its line of business to run several divisions (Cegliński, 2017). For this reason, specialization has been the main focus of the brand under each division, hence meeting all customers' demands. Also, the ability to meet online supply orders has been an advantage since the company can sell even in countries where it does not have shops or manufacturing industries, thus meaning more revenue while production costs remain the same.
Swot Analysis
Strengths
1 Global brand recognition
As a multinational company, the brand has been recognized by many across different countries in which it operates its stores and even ships online orders. Therefore, it has been easy to build a vast clientele base that has promoted the company's high recognition. The company runs divisions that specialize in different types of fashions, thus promoting the brand name of Gap Inc.
2 Sustainable business
Having been in business since 1969 has benefited the company through effective manufacturing, which ensures reduced costs. Hence, there is an increase in the profit-cost ratio, meaning that efforts to minimize production costs have born fruits to help the brand remain in business. Sustainability has also been the main concern for the company, where there has always been a reduction in the amount of water used in manufacturing their products, thus promoting sustainability.
3 Effective supply chain
Investing in an effective supply chain has enabled Gap Inc. to remain outstanding against its competitors. The company has been able to run retail shops to ease the supply process upon order placement by the customers. Also, there are practices such as instant manufacturing under the just-in-time protocol where manufacturing products attend to urgent orders within a short-specified time to meet demands. Through such practices tied to the supply chain, the company has managed to be outstanding.
Weaknesses
1 Increasing competition
The fashion business is reliable since it is a continuous trend because people will always continue wearing clothes. Due to this interest, many companies have gotten into the fashion business and developed more effective strategies to beat the existing industry players. Due to this increase in the competition where competitors can implement new production and supply techniques, Gap Inc. has suffered because of the struggle to shift that seems to be a burden. Therefore, it becomes difficult to keep up with the techniques applied by competitors in the industry.
2 Decreased brand popularity
Gap Inc. has suffered a decrease in its popularity due to the rise of competitors and the lack of innovative ways of designing its products. For instance, other companies have beaten product pricing, thus leading to reduced market demand. For instance, divisional brands like Old Navy price identical products like jeans trousers at half the price of Gap Inc., a customer will consider the cheaper product since they are both identical.
Opportunities
1 The explosion of the online market
The online market has become a significant business aspect for many industries since it offers a wide range of access to customers. Therefore, Gap Inc. has the ability to utilize the online market to reach its customers all over the world and receive orders. This way, there is the advantage of reaching more customers without spending much on advertisement as was the case with traditional marketing while running only physical shops.
2 Focus for international market expansion
Due to the high quality of the products manufactured by the company, there is an advantage of venturing into the international market. For instance, the company has most customers from the international market in continents such as Asia. Therefore, manufacturing industries need to be developed in such huge markets to facilitate sales and ensure more expansion to other potential markets.
3 Endorsement by celebrities
The company has the advantage of being endorsed by celebrities over the quality of its products. Therefore, it becomes easy to sell its products since the endorsement is always a sign of good faith and trust in its quality levels. Several celebrities have been spotted wearing Gaps products during events such as awards and competitions, thus creating more awareness about its products.
Threats
1 Decreased sales and profit
Decreased sales and profits are a significant threat to the brand due to decreased brand awareness and popularity. Therefore, the company has recently announced a decrease in sales due to the COVID-19 pandemic and other obstacles such as increased living standards.
2 Failure to adopt technology
The company has not been able to efficiently adopt technology n its products, sales, and supply systems, thus posing a threat. Failure to adequately utilize technology has been linked with poor management, which has shown incompetency in developing efficient systems for the company and implementing new leadership and working policies.
PART 2: Merchandise Plan, Investment Summary, Model Stock Plan
Merchandise Plan
Merchandise Plan (Money units in thousands of $)
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-20
Apr-20
May-20
Jun-20
Beginning Inventory
55000
53021
43220
48610
52100
57900
69415
54804
51901
47610
42110
43276
Sales
77000
94600
83600
94600
136400
63800
88700
90000
95000
107000
98000
102500
Reductions
Employee Discounts
900
365
99
632
102
21
838
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