SWOT Analysis of Gap Inc

Summary of the SWOT Analysis of Gap Inc.

A SWOT Analysis of GAP highlights the brand’s evolving position in the global apparel market. GAP’s strengths include its established reputation as a top player in the clothing sector, supported by promising sales trends across its core brands—Gap, Banana Republic, and Old Navy. The company’s adoption of just-in-time manufacturing and enhanced supply chain flexibility enables it to respond quickly to new fashion trends, a capability that narrows the gap with fast-fashion competitors like Zara and H&M. GAP’s global reach is significant, with products available in 90 countries through thousands of owned and franchised stores, as well as robust e-commerce platforms.

However, GAP SWOT Analysis reveals persistent weaknesses, particularly in the UK, where store closures and the withdrawal of Banana Republic signal declining brand popularity. The company has struggled to attract customers in the face of rising competition from fast-fashion retailers, leading to a reduced presence and waning influence in key international markets.

Opportunities for GAP include leveraging its high dividend yield to attract investment for further expansion and innovation. Strategic celebrity partnerships and creative marketing campaigns, such as collaborations with style icons and film productions, offer the chance to boost brand visibility and appeal to younger consumers.

Nonetheless, threats to GAP’s position remain. The rise of digital-first fashion brands and the shift towards online retail challenge GAP’s traditional business model. Centralising operations in the US and reducing local merchandising teams may also compromise store quality and competitiveness, especially against agile rivals with strong local teams.

GAP Strengths

• The Global Winter Clothing Market 2017 report for the USA indicates Gap is a top player in the 2017 clothing market. However, Inditex and American Eagle Outfitters are key players in the industry (World of Wall Street, 2017).
• Promising sales trends for Gap, Banana Republic and Old Navy as a result of improvements in the quality of the fit. Plus, the look of products and better flexibility in the supply chain allows them to adopt new trends quickly. This is a quality that rivals Zara and H&M were traditionally better at (Wahba, 2017).
• Gap Inc’s merchandise is now manufactured on a just-in-time basis. Ultimately, a third of all stock is manufactured in a quarter as opposed to the nine months it once took. Plus, Gap Inc uses more streamlined inventory systems (Wahba, 2017).
• Gap Inc. clothes are available in 90 countries worldwide, with this being through 3300 stores operated by the company, and 400 franchise stores, as well as ecommerce sites (Gap, 2017b).

GAP Weaknesses

• In the UK, a large number of Gap outlets have closed down, with the latest closure being reported at Preston’s capital centre (Blog Preston, 2017). This indicates a sign of the waning popularity of the brand in the United Kingdom.
• Banana Republic shops went away in the UK in order to focus on North America to revive its sales. Plus, the year saw a further 75 Banana Republic and Old Navy stores closing overseas (Reuters, 2016). While all 8 of the Banana Republic stores closing by the end of 2016, the regional Banana Republic website remains functional (Reuters, 2016).
• Gap is struggling to draw in customers over the past few years. In fact, shoppers in the U.K. market are increasingly turning to fast-fashion retailers such as Forever 21, Inditex’s Zara and H&M (Reuters, 2016).

Opportunities for Gap Inc.

• Gap Inc. are currently experiencing a high dividend yield, which makes investment in the company an attractive proposition for investors based on the firms focus on leveraging the brand and supply chain improvements (Olson, 2017). This additional investment could provide Gap Inc. with the funds it needs to grow and expand the brand to new markets, or to innovate its current product offerings (Olson, 2017).
• In 2016, Gap utilised international style icon Olivia Palermo as the first-ever women’s global style ambassador of the brand (Gap, 2017b). As a well-known celerity, this move served to increase the visibility and image of the brand, and is likely an opportunity for the brand to maintain a higher celebrity following and access to celebrities after Palermo wore a Gap piece to the 2017 CFDA Awards in New York (Gap, 2017b). Research shows that celebrity association to a brand can often allow for growth, increased visibility, and the capture of younger, image oriented consumers (Reimann, Wagner and Reisinger, 2017).
• In 2017, Gap announce it was launching a film cast styled and directed by Edward Enninful and featuring a number of well-known celebrities, including Priyanka Chopra, Wiz Khalifa and Christie Brinkley (Gap, 2017b). This presents the opportunity to in the future, produce more productions and present itself as a dynamic company that thinks outside of the box.

Threats to Gap Inc.

• In the increasingly digital world, one of the largest threats to Gap can be seen in entrepreneurial digital fashion brands. For example: Modern Citizen, the brand that was established by a formed Gap employee and which has seen explosive growth since its establishment in 2014. Growth, in fact, that allows the organisation to open its first store (Lieber, 2017). Accordingly, digital brands are increasingly filling the void in fashion retail and forming digital revolutions to rival brands such as Gap and their other competitors such as Zara or Mango (Lieber, 2017).
• With Gap placing its entire UK-based merchandising team into consultation through a focus on the centralisation of its global operations in the United States, effectively closing down its UK merchandising operation, the quality and presentation of Gap stores as opposed to competitors such as Zara, who have a strong merchandising team in the UK, is threatened (McGregor and Hounslea, 2017).

References for SWOT Analysis of Gap Inc.

A-O Sources

• Abrams, R. (2017) ‘Protests in Bangladesh shake a global workshop for apparel.’ New York Times. [Online] [Accessed on 16 July 2017] https://www.nytimes.com/2017/01/22/business/bangladesh-protest-apparel-clothing.html?rref=collection%2Ftimestopic%2FGap%2C%20The%2C%20Inc. 
• Blog Preston. (2017) ‘Gap Outlet in Preston displays a closing sign.’ [Online] [Accessed on 27 July 2017] https://www.blogpreston.co.uk/2017/07/gap-outlet-in-preston-displays-a-closing-sign/
• Gap Inc. (2017a) ‘aDressed.’ [Online] [Accessed on 21 July 2017] https://adressed.gapinc.com/lgbtq-equality
• Gap Inc. (2017b) ‘Be the World’s favourite for American style.'[Online] [Accessed on 19 July 2017] https://www.gapinc.com/content/gapinc/html/aboutus.html
• Hemmingham, C. (2017) ‘These Asda, Gap and B&M kids clothes are sparking controversy among shoppers.’ Hull Daily Mail. [Online] [Accessed on 19 July 2017] https://www.hulldailymail.co.uk/whats-on/shopping/asda-gap-bm-kids-clothes-179565
• Ion, F. (2017) ‘The future of augmented reality may actually be in shopping apps.’ Android Central. [Online] [Accessed on 28 July 2017] https://www.androidcentral.com/future-augmented-reality-may-actually-be-shopping-apps
• Lieber, C. (2017) ‘The Former Gap Employee Creating the Ultimate Zara Competitor.’ Racked. [Online] [Accessed on 17 July 2017] https://www.racked.com/2017/7/7/15929830/modern-citizen-zara
• McGregor, K. and Hounslea, T. (2017) ‘Gap to close down UK merchandising operation.’ Drapers. [Online] [Accessed on 14 July 2017] https://www.drapersonline.com/news/gap-to-close-down-uk-merchandising-operation/7018370.article
• Olson, F. (2017) ‘Is the Gap Inc (GPS) In Sound Financial Health?’ Simply Wall Street. [Online] [Accessed on 25 July 2017] https://simplywall.st/news/2017/07/25/is-the-gap-inc-gps-in-sound-financial-health/

P-Z Sources

• Reimann, O., Wagner, U. and Reisinger, H. (2017) ‘The Impact of Celebrity Endorsement and Celebrity Co-branding on Perceived Quality: The Role of Celebrity Application Frequency Within a Brand.’ In: Advances in National Brand and Private Label Marketing (pp. 55-63). Springer, Cham.
• Reuters. (2016) ‘Gap to shut all Banana Republic shops in the UK.’ The Guardian. [Online] [Accessed on 19 July 2017] https://www.theguardian.com/uk-news/2016/oct/18/gap-to-shut-all-banana-republic-shops-in-the-uk
• Robin, C. (2017) ‘Think Trump is an authoritarian? Look at his actions, not his words.’ The Guardian. [Online] [Accessed on 19 July 2017] https://www.theguardian.com/commentisfree/2017/may/02/donald-trump-authoritarian-look-actions-not-words 
• The Guardian. (2017) ‘The Resistance Now: Big corporations come at Trump on climate.’ [Online] [Accessed on 15 July 2017] https://www.theguardian.com/us-news/2017/mar/31/the-resistance-now-corporations-donald-trump-climate 
• Wahba, P. (2017) ‘Gap CEO Insists the Company Is Neither Sick nor Dying.’ Fortune. [Online] [Accessed on 24 July 2017] https://fortune.com/2017/02/24/gapinc-results/ 
• World of Wall Street. (2017) ‘Global Winter Clothing Market 2017 top players: GAP, American Eagle Outfitters, Backcountry.com and Inditex.’ [Online] [Accessed on 27 July 2017] https://www.worldofwallstreet.us/global-winter-clothing-market-2017-top-players-gap-american-eagle-outfitters-backcountry-com-and-inditex/5820