entrant
of
well-established
international brands might pose a significant threat, but subject to their target market
and the pricing strategy.
Low switching cost
High supplier accessibility
High distribution channel accessibility
segments
The products in the clothing and apparel sector are in-differentiable. The threat of substitute
products is low competitive force towards GAPs success. Players in the family apparel industry
share functionally the same products with the entire clothing sectors, so there are no substitutes.
As a result competition in the sector is extremely intense.
3. Bargaining power of buyers
Consumers enjoy high buying power in the apparel industry because of the intense competition.
Furthermore, because of the Gaps mid-level prices for the type of clothing it sells, the Gaps
strength
is
in
its
quality.
Still,
buyers
power because of the numbers of competitors and the ease at which buyers can
have
switch to
a different retailer.
Or
Overall the bargaining power of buyers is considered high because even though individual
buyers are small, and have little say in the prices of the product, they make the final decision on
whether or not to purchase the product.
4. Bargaining power of suppliers
Most of the 97% production is done overseas and multi fiber arrangements (MFA) which is
limited number of textiles that could be imported from a developing country resulted in chasing
quota. If production cost or wages increase, the companies start producing in another country.
Therefore, supplier power overall can be judged to be low. There is also little threat of vertical
integration by suppliers, as they are not residing within U.S. As such, the suppliers have limited
power to dictate the price and quality standards of the products as Gap Inc. has little dependence
on single sourcing.
5. Rivalry of competitors
Industry made up of thousands of small, local retailers that have fragments of market shares and
the top four family clothing retailers in the U.S. are Abercrombie & Fitch 63.40%, Nordstrom
17.55%, American Eagle Outfitters 16.67% and GAP inc. 16.22% each of these retailers offered
different styles of clothing and had different pricing strategies. All the evidence above leads us to
believe that rivalries and competitors is high competitive force. GAP is constantly competing
with its rivals to take the top spot in the family clothing industry.
SWOT ANALYSIS
Strengths:
Weaknesses:
1. Global brand recognition GAP is 1. Nearly all merchandise depends on thirdglobally recognized as American style, pop party vendors - which are outside of the US.
culture and the emotional affinity. It also offers Approximately 1000 vendors in 60 countries.
products to brand-switchers who like to 27 percent is produced in China. Third-party
experiment with different brands.
3. Franchising system easily to expand GAP franchisees - Gap is limited to keep up with
store internationally - GAP has franchise fashion trends, to train some methods and
agreement with unaffiliated franchisees to to control quality.
operate GAP or Banana Republic brand stores 3. Less attractive in trendy clothing - Gaps
worldwide.
4. Multiple brands and brand extensions for consumers who are interested in trendy
a wide range of segments - GAP has 5 distinct clothing than competitors.
brands such as Gap, Old Navy, Banana 4. Uncontrollable production processes Republic, Piperlime and Athleta and brand Control of production processes is a key factor
extensions
such
as
GapKids,
Threat:
2. Population growth - The new brand focuses interest rate, credit availability, and other
on women over age 35 and would offer a broad commodity prices has adversely affect the
range of sizes, with a focus on fit, and customer disposable income and decline in the
assortments that serve a variety of occasions. A purchase
of discretionary
items,
rapidly growing segment of the population, this including merchandise. Such condition could
groups
spending
about39%
of
power
womens
accounts
total
at
the
state,
federal,
and
four test stores in the Chicago market and one international levels frequently change, and the
in New York in fall of 2005.This represents an ultimate
cost
of
compliance
cannot
be
important long-term growth opportunity for the precisely estimated. The impact that may result
company.
from
changes
in
the
regulatory
or
improve
flexibility
in
obtaining
IFAS
Strength:
Weaknesses:
2.
EFAS
Stores
located
in depends
worldwide
on
third-party
vendors
expand
GAP
internationally
4.
Multiple
and clothing
Huge
processes
customer
and
vendor base
6. Good reputation among
Opportunity:
suppliers
S1,S2,O1 Market Penetration
1. Globalization
S3,S4,O4
W1,O1
2. Population growth
Development
3. Technology advancements
S5,O1,O2
4. WTO
diversification
5. NAFTA
Threat:
S2,T2
1. natural disasters
Management
2. Currency fluctuation
3. Government regulations
4. Terrorism
Market
Human
Resource
strategy
business
Financial
W2,T3
Strategy
Restructuring
Store remodels.