As a leading U.S. apparel company, Gap Inc. achieved a great success in brand building, retail network expansion and marketing positioning. Behind the success story, we also identified some uncertainties and hidden risks:
Uncertainty in gauging fashion trend and determine consumption pattern;
A highly competitive industry, the market leadership may not sustain for long-term;
Profit margin relatively low compared with other top retailers;
Unpredictable macro economic conditions;
Risk of losing fast-fashion market due to inefficient production turnover;
Large number of domestic and overseas retail stores increase the difficulty in central management;
Unsatisfactory dividend payout rate may affect shareholders confidence;
International expansion, especially franchising of stores in new markets ,may be unsuccessful ;
Uncertainty of the newly launched brand – Forth & Towne.
To Gap Inc. the most valuable asset is the brand name. It is recommended that the company further invests in brand building and product initiatives. In the meanwhile, Gap Inc. may develop new business lines and brands while trying to minimise the overlap between brands. Gaps people is another intangible asset. Recruiting talented employees, retaining experienced staff and cooperating with fashion designers should be a long-term strategy for Gap Inc. International expansion and franchising are an evitable trend for fashion companies to survive in this highly competitive industry.
In the short-term, Gap is recommended to focus on improving supply chain efficiency, returning excess reserves