Gap Inc in 2010: Is the Turnaround Strategy Working Essay Example
The strength of competition in the U.S. family clothing stores industry is revealed through a five-force analysis. In this highly competitive industry, buyer power emerges as the strongest force. The availability of materials for manufacturing is abundant, which limits supplier power and allows for price negotiations. With a low cost of entry, the industry is saturated with competitors and knock-off substitutes. However, the ultimate decision about what is fashionable and trendy lies with the consumer. Customer loyalty plays a crucial role in driving the retail clothing industry, which must promptly respond to the economic needs of its customers.
Successful factors in the U.S. family clothing stores industry include the ability to develop new product lines reflecting current fashion trends and efficiently bringing them to market, maintaining a wide network of retail stores in prime locations, fostering brand loyalt
...y, and possessing strong financial and inventory management skills to manage cash flow, minimize debt, and control expenses.
According to the competitive strength assessment conducted using the methodology from Chapter 4, Gap Inc. emerges as the most powerful competitor in the U.S. family clothing stores industry. On the other hand, Abercrombie & Fitch is identified as the weakest contender among all four major competitors. Gap Inc. currently holds a market share of 15%, while Abercrombie & Fitch only possesses 4.1%, which is the lowest percentage compared to its rivals. This can be attributed to Abercrombie & Fitch catering to a specific category that is currently experiencing low demand due to economic decline.
Gap Inc. implements a strategy that offers customers various casual and high fashion products at different price points, aiming to provide ample option
and gain a competitive advantage. Furthermore, the company prioritizes improving their online presence and website to optimize efficiency, functionality, and convenience for online shoppers.
5. The company should increase the amount of money allocated to marketing and advertising to attract new customers and develop brand loyalty and awareness. The competitive advantage Gap aims to achieve is offering a variety of casual and fashion products for their customers, as well as providing more convenience in online shopping.
5. The SWOT analysis reveals that competition in the industry is increasing, both from domestic and international companies. Therefore, Gap needs to be vigilant and develop new strategies to overcome this competition.
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