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Gap Inc. Case Study

In: Business and Management

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Gap Inc.

Meghan McGowan

Simmons College

Introduction

Gap Inc. is a major player in the family clothing market worldwide. They have locations in the United States, the United Kingdom, Canada, France, Ireland, Japan and franchised locations in Bahrain, Indonesia, Kuwait, Malaysia, the Philippines, Oman, Qatar, Saudi Arabia, Singapore, South Korea, Turkey, the United Arab Emirates, Greece, Romania, Bulgaria, Cyprus, Mexico, Egypt, Jordan, and Croatia, and Israel. In 2009 they had the highest market share in the U.S. family apparel industry.

Five Forces Analysis

1. Competition from rival sellers is strong.

The rapid introduction of new trends in fashion causes the clothing industry to be in a state of constant change. The myriad of options for consumers of stores to purchase clothing causes switching costs to be low. It is essential the companies are able to respond quickly to new trends in order to appeal to consumers and create brand loyalty due to the high amount of competition in the industry.

2. Competition from potential new entrants is weak.

In the apparel industry the barriers to entry is very high. It is imperative for a company to have high brand loyalty, due to the low switching costs. This makes it difficult for new entrants to survive, because they will not have brand loyalty. Consumers tend to stick to clothing brands that they like and to continue to shop there if they trust the company. This is why it is important for a company to always be building their brand loyalty.

3. Competition from substitute products is weak.

There are not many substitute methods to attaining clothes other than shopping at clothing stores and it is because of this that competition from substitute products is weak. Some substitutes to purchasing clothing at apparel stores is making…...

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