Please develop recommendations for the new Gap Inc CEO, Glen Murphy.
Please first summarize why Gap Inc. lost revenue and market share during CEO Pressler's tenure.
Please develop recommendations for the new Gap Inc CEO, based on your SWOT analysis, External and Internal Analyses, and your assessment of strategic choices made during CEO Pressler's tenure.
Pressler's tenure is marked by slow down in sales. For example since May 2004, Gap's corporate same-store sales have risen only in two months. After they fell 8% in December, Gap reduced its fourth-quarter earnings projections for the second time in as many months and they are now expected to be US$200m lower than first forecast. That's on top of an 11% drop in third-quarter profits. Hence its market share is going down.
Its revenues peaked at $16.27bn in 2004 and fell to $16bn last year. Through the first three quarters of 2006, they were off 1.7%, to $11bn. Pressler adapted more of the cost cutting rather than focusing on needs of customer.
For example Banana republic tried to woo the same high-end consumers as J. Crew but its merchandise lacked variety in offering luxury fabrics, like cashmere, that those shoppers wanted.
In 2005, while department stores couldn't sell enough $100-plus premium jeans, the Gap skipped denim and tried to push khakis. "Pressler went too far in focusing on costs at the expense of merchandising," says Christine Chen, senior research analyst at Pacific Growth Equities.
Rather than trying to be everything to everyone again, says David Bassuk, retail consultant at Kurt Salmon Associates, Gap ought to focus its brands on a narrower group--shoppers in their 20s and 30s.
Moreover GAP's reaction time is slow as compared to its competitors such as Zara, Mexx etc. due to its huge size and operations. The SWOT is as follows:
- Strong Brands
- Customer Intimacy
- Multiple sourcing
- Socially responsible
- Law suits
- Multiple vendors
- Human resource issue
- Economic development of Asia and other developing countries
- Demographics favoring consumerism
- Opening up through WTO
- Increasing government regulations
- Emotional issues
- Technological changes
- Cultural differences especially in foreign country
Glen Murphy has to adapt the product differentiation strategy by providing unique benefits to the consumer. This can be done by being more customer focused. It has to adapt itself as per the needs of the customers. Its product portfolio should delight the customers. One of the most important elements in creating a successful business is having happy, satisfied customers that keep coming back and it also leads to word of mouth advertising. It has to improve the customer service by laying down the customer standards. Customer service which is "the behaviors and attitudes of a company and its ...
Almost 1500 words give recommendations for the new CEO of Gap, including an analysis of why they lost revenue and a SWOT analysis to help shape the company moving forward.