Internal Analysis
Gap's inbound logistics consist of over 800 vendors from 30 different countries. With the
large majority of Gap’s products coming from different countries. The majority of purchases
come from Vietnam, China and Indonesia (GAP Inc.). Gap has started to make shipping more
efficient by using souring countries that are closer to the final destination. They utilize
co-location, where garment production happens in the same country as raw material processing,
reducing transit time between mills and vendors. (Gap Inc Co-location). This starts to bring
together inbound and operations which streamlines production and reduces cost. Gap's
operations rely mostly on independent manufacturers. The company closely manages quality
control, efficiency, and benefits from economies of scale with its many vendor partnerships.
Gap’s Marketing and Sales tries primarily to focus on the younger generations, but they
make clothes that can appeal to everyone. In Gap’s advertisements they use real people rather
than professional actors and models in hopes of trying to connect with people more. They try to
position themselves as an integrated cost leadership who can provide customers with good
quality clothes that are affordable. Gap often creates clothes that are inspired by new trends and
new pop culture.
Customers who order online also have the option to pick up in store which can speed it
up for the consumer. Gap tries to ship with the most efficient carrier for the order, and doesn't
seem to prefer one over the other (Gap shipping). Gap has over 3,000 stores in varying countries.
Gap also has a large number of their sales coming from their website. As of 2021 Gap has over
100,000 employees (GAP Inc.). Moving to customer service, Gap’s service for returns is aligned
with the industry. Gap, Athleta, Old Navy, and Banana Republic have a return policy of 30 days
of purchase(Gap Inc. Return Policy). This is attractive to customers that might be skeptical of
their products. On top of all that, they’ve improved in-person sales by incorporating more
technology into making the purchase and finding process easier. They’ve done this by
incorporating buy online pick-up in store, order-in-store, find-in-store, and ship-from-store (K-10
pg 1,25)
External Analysis
Five Forces:
Threat of new entrants: Moderate. According to the website Human B, clothing brands
could be fully started and operational in 6 months. The increasing online presence of shoppers is
providing a very attractive opportunity for new entrants. There are significant challenges for new
entrants to compete with Gap at the level of a large corporation, including having capital and
distribution capabilities.
Bargaining power of suppliers: Gap has identified that bargaining power of suppliers is
weak, though there is great potential for Gap to be “adversely affect[ed]” in regard to its “sales
and… operations” (K-10 pg 12). “Independent third parties manufacture all of” Gap’s
merchandise providing a large potential threat to the company if demand is to increase or there is
a need to replace an existing vendor (K-10 pg 12). Changing one individual supplier would be
easy, and Gap has done this in the past.
Threat of substitutes: The threat of substitution is quite low. There are a couple potential
substitutes for new clothing: thrift shop clothes or used clothes, and handmade clothing. Gap has
strategically involved itself in many different clothing lines, limiting the threat of substitution.
Bargaining power of buyers: Gap has identified that if it is unable “to respond
effectively… to changes in retail markets or customer expectations…, operations would be
adversely affected” (K-10 pg 9). The customer base for Gap has many options in who it chooses
to buy from but Gap doesn’t rely on any one buyer, making the bargaining power of buyers low.
Competitive rivalry: Gap has identified that they compete with “local, national, and
global department stores” among others (K-10 pg 9). This means they have a wide variety of
competitors to look at on many different levels of sales. Gap competes with companies such as
Ross, TJ Maxx, Macy’s, Dillard’s, Fabletics, and Nike. There are some companies that pose a
bigger threat than others.
General Environment: The overall attractiveness of the clothing industry for Gap is
moderate. Gap has a high level of competition, but the other five forces are in favor of Gap. Gap
is currently facing a difficult environment due to tariffs being placed on many of its supplier
nations. This creates a great threat to the supply chain of Gap. Another potential threat that Gap
is considering is the changing of customer tastes and preferences (K-10).
Business Level Strategies
Gap’s Strategy: Their strategy is best described as an integrated cost leadership strategy,
blending affordability with trendy and differentiated clothing. Gap appeals to a broad customer
base and encourages one stop shopping through a wide product variety. Unlike low quality fast
fashion brands, Gap emphasizes better materials and craftsmanship to ensure longer lasting
clothing (Flanagan). While Gap has been primarily brick and mortar stores, the retail landscape
changes. Gap is adapting to this by investing heavily in its online presence, offering digital deals
and reaching customers beyond its physical store locations (GAP).
Old Navy’s Strategy: They follow a cost leadership strategy. They focus on offering
stylish clothing at affordable prices. Their marketing efforts span TV, print, and social media,
reinforcing their brand image as both trendy and cost effective. To support accessibility, Old
Navy maintains a widespread network of physical stores along with a strong e-commerce
platform, ensuring customers can easily shop for affordable fashion wherever they are (GAPinc).
Banana Republic’s Strategy: They employ a differentiation strategy. Their apparel is
designed for modern, style conscious consumers that are seeking sophisticated, timeless fashion.
Recently, their efforts to reinforce its premium positioning include upgrading product materials,
modernizing store layouts, and enhancing its online presence to create an aspirational and refined
shopping experience (GAPinc).
Athleta’s Strategy: They follow a focused differentiation strategy by offering high quality
and performance driven athletic apparel specifically for women and girls. Key elements of their
approach include product innovation, premium materials, customer feedback, and a mission
driven brand identity ([Link]). Athleta also strengthens customer loyalty through community
engagement, such as fitness events like the “Move with Athleta” series([Link]).
Corporate Level Strategy
Gap is using a related constrained diversification strategy. The subsidiaries of Gap each
provide less than 70% of total revenues: Old Navy contributing 53%, Gap 24%, Banana
Republic 13%, and Athleta 10% (Gap Inc Supplemental Earnings). With its subsidiaries all being
in the same industry of clothing, they are able to utilize the same supply chain and distribution
processes along with sharing websites and technology used to run the companies.
Cooperative Strategies
In 2007 Gap and Banana Republic expanded into Saudi Arabia and Turkey with over a
hundred stores through a partnership with local retailers(GAPinc). These countries had strong
growing economies with consumers taking an interest in fashion. In these locations the store
would be operated by the retailers they made deals with, but have access to all the resources from
Gap. These partners were the only ones in these countries allowed to sell Gap and Banana
Republic products, but they were also held to quality standards. This wasn’t the last time that
Gap Inc expanded internationally though, in 2014 they announced more plans to expand into the
middle east into different countries(GAPinc). The partners chosen for these expansions had
excellent tract records while they already manage more than one brand. This time Old Navy
expanded, because they thought that values best matched these countries.(GAPinc). The
cooperative strategies used were to help Gap Inc. and its other associated companies grow while
maintaining minimal risk. By using retailers that were already established in these regions they
can minimize cultural misunderstanding. Both of these expansions were times that Gap was
having a lot of success, and was able to take a risk that had a very high upside (GAPinc).
Governance and Leadership
GAP Inc.:Richard Dickson is the current president and CEO of GAP Inc. and is the
acting CEO of Banana Republic. He moved into the position of CEO at GAP Inc. in August of
2023. Previously, Dickson has worked at Mattel as COO, Branded Business as CEO, co-founded
[Link] and worked as an executive at Bloomingdale’s (GAP Inc.). Richard Dickson is over
GAP Inc. along with all of its subsidiaries.
GAP Brand: Mark Breitbard is the CEO of Gap. He began his tenure over Gap Global in
2020 after having many successful years with GAP Inc. including a three-year stint as the CEO
of Banana Republic (GAP Inc.). Breitbard’s current focus is on turning around the Gap brand
“through new positioning and a new operating model” (GAP Inc.).
Banana Republic: Richard Dickson is currently serving as the acting CEO of Banana
Republic, following a mutual decision between him and former CEO Sandra Stangl to conclude
her tenure with the company (Danziger, 2024). The leadership change was attributed to Stangl’s
unsuccessful effort to expand the brand into the home furnishings market (Danziger, 2024).
Dickson will continue in the interim role until a permanent CEO is appointed.
Old Navy: Haio Barbeito, the current President and CEO of Old Navy, brings over 26
years of international leadership experience from Walmart. At Old Navy, he oversees key areas
including merchandising, marketing, supply chain, and store operations, with a focus on
delivering stylish, affordable clothing. His leadership centers on customer empathy, operational
excellence, and innovation, helping the brand stabilize after challenges like a 12% same-store
sales decline in 2022 and positioning it for future growth (GAPinc)
Athleta: Chris Blakeslee, the current President and CEO of Athleta. He brings a strong
background in industrial manufacturing, apparel retail, and distribution. Blakeslee oversees
product innovation and champions the brand’s mission to empower women and girls through the
"Power of She" initiative. He is focused on strengthening Athleta’s market presence, enhancing
its product line, and expanding its omnichannel shopping experience (GAPinc).
Suggestions for the Future
Gap has been trying and failing to target a younger demographic for their product. The
first step Gap should do to fix this is define for themselves what makes them cool and unique.
They need to find their niche. Secondly, they could collaborate with celebrities who are relevant
to the younger generations, probably content creators. Thirdly, they could increase their digital
presence. As times change people are buying more from the internet and less in person. Lastly,
Gap should have a focus on restructuring its corporate structure to better align with the above
priorities.
Citations:
1. Flanagan, Joe, et al. “Loved by Millions, Is Gap a Good Brand?” 90s Fashion World,
December 21, 2021. [Link]
2. GAP Inc. Gap Official Website. [Link] Accessed February 21, 2025.
3. GAP Inc. Form 10-K.
[Link]
[Link]. Accessed February 21, 2025.
4. University of Nebraska-Lincoln. Athleta B Corporation Case Study. Digital Commons.
[Link]
5. Waldow, Julia. "Athleta’s Revamped 2024 Strategy Includes Fitness Classes, Product
Drops." Modern Retail, 2024.
[Link]
-classes-product-drops/.
6. Danziger, Pamela N. "Banana Republic CEO Departs, Signaling a Return to Fashion
Fundamentals after Misstep into Home." Forbes, May 6, 2024.
[Link]
aling-a-return-to-fashion-fundamentals-after-misstep-into-home/. Accessed March 20,
2025.
7. Gap Inc. "Executive Leadership Team."
[Link] Accessed
March 20, 2025.
8. Gap Inc. [Link] Accessed March 20, 2025.
9. The Gap, Inc. Q4 2024 Earnings Supplemental, March 4, 2024.
[Link]
[Link].
10.Gap Inc. Return Policy. April 13, 2025.
[Link]
kid=13192220b737626a01403031b6aa633f.
11.Gap Inc. Co-location: Three Ways Gap Inc. Is Using Scale to Speed Up Its Supply Chain.
April 14, 2025.
[Link]
-up-its-?utmc.
All group members contributed equally.
Appendix:
