Joe DavidSWOT analysis of GAP (GAP Inc. SWOT analysis)
This detailed SWOT analysis of GAP aims to analyse the strengths and the weaknesses of GAP Inc. It also aims to examine the opportunities and the threats facing the company. The GAP Inc. is an American fashion retailer, headquartered in San Francisco, California, the USA. It was founded in 1969 by Donald Fisher and Doris F. Fisher
Strengths of GAP
GAP has been growing rapidly since its inception in 1969. It has grown from a single store to a global brand name. Its clothes are available in more than 90 countries worldwide. It has around 3,000 stores of its own, 500 franchisee-owned stores, and e-commerce sites to take its products to customers (GAP Inc., 2022).
Gap Inc. offers a wide range of products that cater to men, women, and children and covers casual fashion to premium lifestyles. Its products are well known for quality and durability. It operates under different brand names i.e. Old Navy, Gap, Banana Republic, Athleta, Intermix, Janie and Jack, and Hill City. This helps the company reach out to a wide range of customer segments. Likewise, this branding strategy is also useful to safeguard all other brands when one is affected by any macro or micro-environment challenges.
GAP Inc. has won a number of awards and accolades over the years. For instance, it was included in the 2019 Bloomberg Gender-Equality Index for the second consecutive year as a recognition for its commitment to transparency in advancing the equality of women, and gender reporting. Likewise, it ranked 7th a number of times in Fortune Magazine’s list of America’s Most Admired Companies, and one of the World’s Most Ethical Companies by Ethisphere Magazine.
Weaknesses of GAP
The brand reputation of the GAP Inc. was badly affected by the news of workers working under unsafe conditions. Likewise, some suppliers of the company were accused of using child labour, forced labour, and not paying workers for over-time work. While GAP Inc. terminated its relations with some suppliers, it was not enough to restore the confidence of many customers who took the issues very seriously.
Though branding has been behind the success of GAP, it created problems for it as well. For instance, many people perceive the company as one catering for the up-market customers only. Consequently, their interaction with the products of GAP is somewhat limited.
GAP Inc. has some stories of failure to share which have sent negative messages to its customers. For instance, it announced in early 2019 its decision to shut 230 GAP stores worldwide to save the brand as like-for-like sales at Gap continued to fall (BBC, 2019). It also announced closing all stores in Australia in 2018 and all Old Navy stores in Japan in 2016.
GAP’s financial performance has not been great recently. Many analysts argue that the company is weak to adapt and innovate. They also argue that the management is optimistic of its progress while any real plans are simply absent. While big competitors are focusing on innovation, GAP’s lack of innovation is a cause of concern.
Opportunities for GAP
Focus on online retailing in the UK and Ireland may offer cost effective opportunities to take the company further. It is worth mentioning that it has announced closures of all 81 of its high street stores in the UK and Ireland by the end of 2021 to become a fully online retailer (Finnis, 2021).
GAP Inc. has opportunities to grow its business in the USA and beyond with some of its brands if not all. For instance, it has announced plans to grow its Athleta and Janie and Jack brands outside the USA with franchise agreements. This should help the company have a strong footing in the Central America and the Caribbean.
Fast fashion, discount clothing and athletic apparel are high in demand worldwide. This is an opportunity for GAP Inc. to use market penetration strategy to drive sales up. The company can make use of this opportunity by focusing its efforts on Old Navy and Athleta brands. Likewise, selling on globally recognised online giants is also worth exploring.
Gap Inc. has recently unveiled its Power Plan 2023 to achieve strong operating cash flow and expand further. It has planned and has confidence to reach almost 80% of the addressable market in the USA across all ages, sizes and demographics with all its brands collectively (Gap Inc., 2022).
Threats to GAP
Threat is the last element to address in the SWOT analysis of GAP. The main threat GAP faces is the intense competition in global markets. In fact, the company has been having a tough time in the USA because of the challenges posed by retailers such as Zara and H&M. These two competitors challenge GAP in the UK as well. Other notable competitors in the UK are Primark, Sports Direct, Next, TK Maxx, and M&S.
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Last update: 18 January 2022
References:
BBC (2019) Gap to shut shops and hive off Old Navy, available at: https://www.bbc.co.uk/news/business-47392738 (accessed 07 December 2019)
Finnis, A. (2021) Gap stores closing, available at: https://inews.co.uk/news/business/gap-stores-closing-uk-store-closures-list-when-shutting-explained-1081006 (accessed 18 January 2022)
GAP Inc. (2022) About us, available at: https://www.gapinc.com/content/gapinc/html/aboutus/ourbrands.html (accessed 18 January 2022)
Photo credit: Retail Gazette
Author: Joe David
Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.
M Rahman
