A look at The Gap’s store brands…

Image representing YouTube as depicted in Crun...

Image via CrunchBase

I feel like I am becoming quite the technology guru.  (Well, at least I am impressing my IT educated husband).  Although it seems like it’s been a lot of additional work, the social media lessons I have learned in my Strategic Management class have been very helpful and applicable in this day and age.  It is lessons I know I will take with me for the future whether for personal or entrepreneurial reasons.

In addition to the research you have seen in previous posts, one of our blog assignments was to create a Youtube video using pictures we took related to our company.  I’d like to thank my teammate, Jennifer Kolbe (http://www.jenniferkolbe.com/), who photographed, and generously shared, the pictures you will see in the short video I created using Stupeflix.  Check it out: http://youtu.be/DpasTWNh8yQ

Image representing Stupeflix as depicted in Cr...

Image via CrunchBase

Both Jennifer and Talia Lambarki (http://bizebeebuzz.wordpress.com/), our other team member created videos.  See how the same pics can be displayed in different ways:



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What’s the “gap” between The Gap’s brand sales and sales by segment and geographic region?


Gap (Photo credit: Wikipedia)

As described in The Gap, Inc.’s Disclosure statement (specifically, the report dated September 6, 2011), “The Gap, Inc. is a global specialty retailer offering apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, and Athleta brands.  Most of the products sold under its brand names are designed by the Company and manufactured by independent sources.  The Company also sells products that are designed and manufactured by branded third parties.  The Company operates in two segments: Stores, which includes the results of the retail stores for Gap, Old Navy, and Banana Republic, and Direct, which includes the results for its online brands, both domestic and international.  The Company has franchise agreements with unaffiliated franchisees to operate Gap and Banana Republic stores in many other countries around the world.  Under these agreements, third parties operate or will operate stores that sell apparel and related products under its brand names.”

The Gap, Inc. and its competitors in the retail apparel industry are minimally, or not at all, segmented.  As mentioned above, Gap operates in two segments and reports only nominal financial information by segment.  The competitors we chose to focus on, Abercrombie and Fitch Co. and American Eagle Outfitters, Inc. only report financial information for the company as a whole.  Abercrombie notes sales and sales growth by store brand in their annual report, but any further detail is not required and not volunteered.

One of the areas Gap is focusing its strategic resources on is franchise agreements, as alluded to in the description above.  The annual report as of FY2010 (ended January 29, 2011) does not specifically breakout currents sales and financial performance for franchises.  It is included in “Other” along with its wholesale businesses, its online-only brand Piperlime, and Athleta.  The FY2011 (ended January 28, 2012) annual report does breakout franchise and wholesale sales, but no further financial information.

The following charts reflect Gap’s sales breakdown by brand, segment, and geographic region.  These figures are according to the information found in the FY2010 Annual Report (the most recent report available at the time this research project began).  The first chart notes sales and % of total sales by brand for the company.  The second and third charts represent the segment breakdown by geographic region for the company.

The Gap, Inc. - Sales by Brand - FY2010

The Gap, Inc. - Sales by Region - FY2010 - Stores Segment

The Gap, Inc. - Sales by Region - FY2010 - Direct Segment

There are a couple “take-aways” from these charts.  The first is that Old Navy is actually Gap’s largest brand sales producer.  Personally, this was something I was not aware of before this project.  Gap’s “Other” brands account for the lowest percentage of its sales.  This group includes its franchise and wholesale businesses, Piperlime (its online only brand), and Athleta (recently acquired women’s active wear brand).  Recall, franchises are an area the company would like to focus some of its growth strategies.  If the existing brands Gap is known for continue to bring in higher, or at least consistent, sales while Gap focuses more of its strategic resources on the “Other” brands, it will position itself nicely in the family retail apparel market.  Additionally, the opening statement to this blog notes the strategic focus is swinging toward international expansion.  In both the Stores and Direct segments, we can see there is great room for growth.  Again, assuming the domestic sales remain steady, this is another area that should prove to move Gap to greater market share and higher stock prices.

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Keeping an Eye on and an open Mind to The Gap, Inc.

Español: Mapa mental de las directrices para u...

Español: Mapa mental de las directrices para un mapa mental. English: Mind map of the mind map guidelines. (Photo credit: Wikipedia)

Keeping an eye on and an open mind to The Gap, Inc. will take on a whole new meaning as you continue reading this post.

The Gap, Inc. is made up of five brands and two reporting segments.  Gap brands include its namesake branded apparel known for its jeans and khakis, GapKids, and babyGap.  Old Navy and Banana Republic complete the list of brick and morter stores (although Athleta – specializing in women’s active apparel and footwear – is slowly opening retail stores in select areas of the U.S. as I write this post).  Collectively, these retail avenues form the “Stores” reportable segment of the company.  Stores are located all over the world, including the U.S. and Puerto Rico, Canada, Europe, Asia, and other regions.

Its second and final reporting segment is known as the “Direct” segment.  This includes all online brands, both domestic and international, and especially Piperlime – an online only brand which offers footwear for the entire family.

To demonstrate the weight of each of the brands and reporting segments, I have created a mind map using xmind of the FY2010 (ended 1/29/11) sales revenue by segment, brand, and region.  What is a mind map, you ask?  A mind map is a diagram that presents words, ideas, etc. visually in such a way to emphasize the relationship between the different concepts.

Following is the Embed Code for this mind map:

<iframe id=’xmindshare_embedviewer’ src=’http://www.xmind.net/share/_embed/TSchikoraMBA/the-gap-inc-1/’ width=’900px’ height=’300px’ frameborder=’0′ scrolling=’no’>

Including the above text in the HTML portion of a blog post will display the mind map within the post.  (See below).  I would highly recommend creating your own account at www.xmind.net.  The basic service is free and you can share maps amongst your colleagues and friends.

Do you understand my “eye”-catching heading now?  Oddly enough, this “mind” map displaying the revenue flow of The Gap, Inc. for FY10 looks like an eyeball.  Presenting the information in this manner clearly demonstrates how the Stores reporting segment compares in size to the Direct reporting segment.


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The gap The Gap is creating: SWOT Analysis

The 1969-1986 Logo

The 1969-1986 Logo (Photo credit: Wikipedia)

Deutsch: Logo von GAP

Deutsch: Logo von GAP (Photo credit: Wikipedia)

Founded in 1969 by Doris and Don Fisher of San Fransisco, CA, Gap, Inc. went public in 1976.  The company’s popularity boosted in the 1990’s with the help of its trendy jeans and khakis.  I can still remember the first pair of Gap jeans I owned.  I wore them past their prime – until the holes in the back pockets became too large to hide with an over-sized shirt.

The Gap family grew in the twenty-plus years since it began being publicly traded.  Banana Republic was acquired in 1983 and features upscale apparel.  The kiddos began enjoying fashionable clothing in 1986 when the first GapKids store opened.  In 1989, the company went global and became the second-largest branded apparel in the world by 1992.  Having joined the Gap family in 1994, Old Navy was the solution to capturing the family, value- yet fashionably minded, market.

Fast forward to today.  Like most retailers, The Gap has felt the pressures and the presence of competitors in these tough economic times.  By knowing where the company stands in relation to its rivals, the Gap can better position itself to keep or improve its market share.  Hence, an analysis of its SWOT: Strengths, Weaknesses, Opportunities, and Threats is essential.  Strengths and weaknesses are derived from a company’s internal environment, whereas opportunities and threats are based on external factors.  Strengths enhance a firm’s competitiveness in its industry and weaknesses are deficiencies of the company or competitive liabilities.  Opportunities can open the door to help formulate company strategies and threats can close them.  Let’s take a look at The Gap, Inc. and see how it is creating a “gap” amongst the competition with its SWOT breakdown:

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