Gap, Inc. Swot Essay Example

potential competitors to enter the market and offer clothing products to consumers. Consequently, The Gap and Banana Republic may see their revenues decline during these times since they cater to a higher-priced product line.

Old Navy will generate higher revenue for The Gap due to its focus on budget-conscious consumers. Furthermore, all of The Gap's subsidiaries enjoy a strong brand loyalty in the fashion industry. Devoted customers trust that they will discover the latest fashion trends and receive high-quality products when shopping at The Gap's stores. Another factor that boosts brand loyalty is The Gap's strategy of employing popular figures to promote their products to their specific target audience. This tactic reinforces The Gap's ability to create obstacles that hinder potential competitors from entering the clothing market successfully.

Rivalry in the Retail Market

The main concern for The Gap should be competition from other established retail companies that have the necessary resources to be strong competitors. According to Hoovers (2008), the top 50 companies in the industry operate a total of 30,000 stores, which contribute to about 65% of the industry's revenue. These large companies have the advantage of being able to exploit certain market segments that might pose challenges to The Gap's strategic decisions. The retail clothing industry in the US comprises approximately 40,000 companies that collectively run 90,000 stores and generate a combined annual revenue of $130 billion. Notable large companies in this industry include Gap, Limited Brands, Talbots, and Abercrombie ; Fitch.

In the highly concentrated industry of Banana Republic, the 50 largest companies operate a total of 30,000 stores which generate 65% of the industry revenue. However, most companies in

this industry have only one store each and on average, these stores earn $2 million annually.

Abercrombie and Fitch could pose strong competition to Banana Republic as they also cater to customers looking for luxurious clothing options. In 2006, Abercrombie and Fitch exceeded Banana Republic's net sales by over $900 million. With their considerable resources, Abercrombie and Fitch can employ competitive tactics such as pricing strategies to differentiate themselves from Banana Republic.

Both Banana Republic and The Gap may need to adjust their pricing strategies in response to underpricing, which is a process that cannot be accomplished overnight and may lead to the loss of potential customers. Furthermore, all retail companies, including The Gap, must consider the impact of customer bargaining power on various aspects such as store stocking and production. It is crucial for companies to stay updated with rapidly changing styles so they can promptly deliver new trends to their stores and meet customer demand. Additionally, a successful company must have the ability to anticipate customer preferences in order to be prepared for meeting those demands. The products available in stores are dependent on what the customer wants to buy rather than what the company "wants" to produce. With numerous options available in the external environment, customers have the freedom to choose where they want to spend their money.

Conclusion

In summary, The Gap should consistently analyze the external environment to identify ways to address threats and seize opportunities. Being an established company, The Gap faces competition primarily from other well-established companies that may pose significant challenges in the future. To stand out from competitors, The Gap can concentrate on implementing pricing strategies that offer customers

better value for the same quality product. It is advised that The Gap also emphasize other unique aspects of its different brands to justify their higher prices. Additionally, it is crucial for The Gap to assess the effectiveness of using renowned celebrities in their advertising campaigns as a means to gain an advantage over competitors. Moreover, The Gap should discover techniques to minimize buyers' ability to negotiate and decrease their profit margin.

The Gap should highlight the unique qualities of their products to distinguish them from similar products available elsewhere. Additionally, they should leverage the marketing strength of all their brand stores to ensure that each specific market is well-represented in the product offerings at one of their stores.

Bibliography

1. Abercrombie ; Fitch 2006 Annual Report. 2006. 2 Mar. 2008 http://library.corporate-ir.net/library/61/617/61701/items/246067/2006
2. Annual_Report.df "Banana Republic." Gap Inc. 1 Mar. 2008
3. http://www.

The text below remains unchanged except for the added punctuations:

"gapinc.com/public/OurBrands/brands_br.shtml" - Gap. Gap Inc. 1 Mar.

2008

2008 Gap Inc.

Historical Sales by Division.

The Gap Inc. website published the document "GPS Quarterly Sales" on March 1, 2008.

The Gap Inc - Competition. Hoovers. 3 Mar. 2008


http://www.hoovers.com/the-gap/--ID__11469--/free-co-competition.xhtml