Gap Inc. 2010
Gap Inc. 2010Short Case Analysis of
Gap Inc. in 2010: Is the Turnaround Strategy Working?
Author of the article Annette Lohman of the California State University, Long Beach
The Gap Inc. In 2010 Case Summary
This case study describes the business environment of the apparel market and how Gap Inc. tried in this highly competitive market environment to manage a turnaround in the time between 2000 and 2010. The U.S. clothing store sector accounted for approximately $156 billion in the year 2009 and had slightly declined compared to 2008 due to the worldwide recession. Average before-tax profits estimated by IBIS-World were around 3% in the year 2009. The level of globalization in the market is relatively low and made up by a large number of small and few major, domestically owned companies. The family clothing store industry is the most important sector, as it is responsible for more than half of the revenues in the U.S. clothing market. Concerning the gender woman clothes are most interesting, due to their will to spend more. Women clothing accounts for 50% of the market, followed by men and children with market shares of 37% and 13%. Hereby more than one third of the adult population has to be considered obese. According to price sensitivity 65% of the market is value-priced driven and targeted by family stores of companies such as Ross Stores or TJX Companies. They focus on still wanted brand names and discounts by delivering off-season styles. More emotional driven fashion and brand-conscious customers rather shop at Gap or Abercrombie & Fitch and are influenced by marketing efforts. These four companies are the major rivals in the family clothing store industry. These big players account for 40% of the Market, the rest is highly fragmented and consists of thousands of small local or regional retailers with little individual market shares.
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