Gap (clothing retailer)

Gap, Inc.
Type Public (NYSE: GPS)
Founded 1969 in San Francisco, California
Headquarters San Francisco, California
Key people Founded by Donald Fisher and Doris F. Fisher
Robert J. Fisher, Chairman
Glenn K. Murphy, CEO
Marka Hansen, President, Gap
Tom Wyatt, President, Old Navy
Jack Calhoun, President,[1] Banana Republic
Industry Retail
Products Apparel
Revenue ▲$15.8 billion USD (2007)
Employees 152,000 (across all Gap Inc. brands)
Website http://www.gapinc.com

The Gap, Incorporated (NYSE: GPS) is an American clothing and accessories retailer based in San Francisco, California, and founded in 1969 by Donald Fisher and Doris F. Fisher. The company has five primary brands: Gap, Banana Republic, Old Navy, Piperlime and Athleta. As of September 2008, Gap Inc. has approximately 150,000 employees and operates over 3,100 stores worldwide. Gap Inc. remains the largest specialty apparel retailer in the U.S., though it has recently been surpassed by the Spanish-based Inditex Group as the world's largest apparel retailer.[2]

Despite its publicly-traded status, the Fisher family remains deeply involved in Gap Inc.'s business. Donald Fisher served as Chairman of the Board until 2004; when he stepped down, he was succeeded by his son, Robert J. Fisher. Both Donald and Doris Fisher remain on Gap Inc.'s Board of directors, and the Fisher family collectively owns a significant portion of the company's stock.[3]

Glenn K. Murphy is the current CEO of the company. Previous Gap Inc. CEOs include Millard Drexler and Paul Pressler.

Contents

History

Founded in 1969 by Donald and Doris Fisher, Gap's name originated from "the generation gap," a popular phrase in the late 1960s used to describe the generational differences between baby boomers and their parents.

1969-1980

In 1969, Donald Fisher opened the first ever Gap store on Ocean Avenue in San Francisco. The store's merchandise consisted of Levi's blue jeans and records and tapes; however, the audio products were sold for a mere three months before being removed from the store.

By 1970, Gap's sales had reached $2 million and a second store was opened in San Jose, California. Along with this second store Gap established its first corporate headquarters in Burlingame, California, employing only four employees. Gap continued to expand rapidly and by 1972-1973, had grown to over 25 stores and had expanded to areas outside of California and was entering the East Coast market with its store in Voorhees, New Jersey. In 1974, Gap began to sell private label merchandise in its stores.

1975 saw the creation of the chain of stores which specialized in selling discounted apparel, as well as the acquisition of "You & You" which had formerly been a New England-based casual apparel brand.

1976 was a landmark year for Gap with the company going public in both the New York and Pacific stock exchanges with an initial public offering of 1.2 million shares. With the arrival of 1977 Gap introduces the labels "Fashion Pioneers", "Eaton Hill", and "Foxtails" which are sold in its stores. The company also launches two sub-brands; "Logo," based in California and Missouri, as well as "Brands" based in New York and New Jersey. In this year also, Gap moves its headquarters from Burlingame to San Bruno, California.

1980 saw the incorporation of the "Brands" and "Pants %ff" chains into Gap's new "Tagg's" chain.

Brands

A typical Gap G2K Style store

Banana Republic, formerly a small retailer selling safari-themed clothing, was purchased by the company in 1983, and eventually was rebranded as an upscale clothing retailer in the late 1980s. Old Navy was launched in 1994, as a value chain with a specialty flair. Forth & Towne, the company's fourth traditional retail concept, was launched on August 24, 2005, featuring apparel targeted toward women 35 and older.[4] On February 26, 2007, after an 18-month trial period, Forth & Towne was discontinued, and the 19 stores were closed.[5] A fifth brand, the online footwear retailer Piperlime, was created in 2006. [6]

Store count

There are 3465 Gap Inc. stores. Stores in Canada, France, Ireland, Japan, UK, and US (and Puerto Rico) are company-owned stores. Stores outside of these countries are owned and operated by franchisees.

Gap
Banana Republic
Old Navy

Marketing strategy

The Banana Republic stores try to convey a more sophisticated image for an upscale customer seeking "modern, accessible luxury," whereas Gap stores appeal to a broader demographic of customers. The Old Navy chain is designed to appeal to families and younger customers by emphasizing "fun, fashion, and value" through a store experience that aims to deliver "energy and excitement." Although Gap Inc., along with other retail-store chains, has been criticized for blandness and uniformity in its selling environments, the company maintains that it tailors its stores "to appeal to unique markets" by developing multiple formats and designs.[9]

Products

When Gap was founded in 1969, it was unique and new. Its target customers were younger generations. Gap's hottest seller at the time was its "basic" look, which consisted of its signature blue jeans and white cotton t-shirts. Its founders realized that jeans were becoming popular among the younger generation of customers. Nevertheless, the company recognized that despite its popularity among the youth, there were not enough assortments of jeans in the clothing outlets. Capitalizing on this deficit was merely the next step in expanding. Gap's founders were sure that jeans could be sold through a chain of small stores devoted solely to that product.[10] As this business idea became successful, Gap expanded its line of offering and now Gap offers a range of clothing for men, women, and children. As Gap's business began to boom, it also began to expand and send its manufacturing jobs abroad. Gap Inc. added two new entities to its company, Banana Republic and Old Navy.

Gap also owns an online shoe store called Piperlime, selling shoes for all ages.

Promotion

Gap's promotion strategy has been blamed for the company's bust. Due to lack of a clear message, it has been alleged that Gap has lost contact with its core customers[11] which the company is attempting to win back. Gap is the only national retailer to spend more than 2% of its marketing budget for online marketing.[12] As a result, the company's e-commerce website has been cited numerous times as a model of stylish efficiency. Gap promotes its products through gift cards, catalogs, advertising programs on TV channels and magazines. Gap tries to position itself as a stylish casualwear retailer in a fair price. However, its marketing efforts to reach out to upperclass, luxury consumers is blamed for recent problems in the company.[13]

In addition, Gap's garment designs and products varies from North America and Western Europe. Products sold in the United Kingdom and Western Europe are targeted towards a European sense of style, whereas the Gap's North American garments and accessories are designed particularly for North Americans.

Place

Gap's main opportunity to reach its customer is through its stores. Gap operates stores in the United States, Canada, the United Kingdom, France, Ireland, Korea and Japan. The Gap, Inc. also has franchise agreements with unaffiliated franchisees to operate Gap or Banana Republic stores in Singapore, Malaysia, United Arab Emirates, Korea, Kuwait, Qatar, Bahrain, Oman, Saudi Arabia,Cambodia and Indonesia. As of February 3, 2007, The Gap, Inc. operates a total of 3,131 store locations.[14]

Online

The domain gap.com attracted at least 18 million visitors annually by 2008 according to a Compete.com survey.

Trademark dispute

The company owns a trademark to its name, the "Gap," which is also a common English word with multiple definitions. This has led to conflicts over use in other products and locations. For example, the company threatened litigation against Bootleg Gap, a golf course in Kimberley, British Columbia, named after the visible gap in the nearby Bootleg Mountain. After three years of negotiations, and lacking the funds to defend itself in court, the golf course agreed to remove the word "Gap" from its restaurant and 27 holes. It also renamed its clothing line "Bootleg Golf." The legal costs from the negotiations and rebranding delayed landscaping and cart paving projects for the golf course.[15]

Labor practices

In 2003, Gap, along with 21 other companies, was involved in a class action lawsuit filed by sweatshop workers in Saipan. The allegations included "off the clock" hours, where workers were not paid for working overtime, unsafe working conditions, and forced abortion policies.[16] A settlement of 20 million dollars was reached whereby The Gap did not admit liability. [17]

In 2006, an online advocacy group, Labour Behind the Label issued a report naming The Gap a top-rated company among 37 UK retailers it evaluated. www.cleanupfashion.co.uk, a group working in conjunction with Labour Behind the Label, reported that although not complete, the supply chain compliance is the most sophisticated they had seen, and that the company has taken significant steps to resolve the systematic abuses of worker's rights.[18]

Gap actively participates in the "Joint Initiative on Corporate Accountability and Workers Rights" and is independently assessed by the Social Accountability International (SAI) and Verite. The Gap encourages its vendors to be SA8000 certified based on standards of [[International The company also inspects factories for compliance with its internal standards. [19] These standards include requiring suppliers not to employ persons under the age of 14, that wage payment is clear, regular, and in accordance with work contracts, and that factories do not permit physical or non-physical abuse.

In 2007, Ethisphere Magazine (an industry publication) chose Gap from among thousands of companies evalued as one of 100 "World’s Most Ethical Companies." [20] Gap Inc. was ranked 25th by CRO Magazine, another industry publication that is a successor to Business Ethics magazine, in its “100 Best Corporate Citizens” list in 2007.

Nevertheless, the company draws continued criticism over labor practices. In May 2006, adult and child employees of Western, a supplier in Jordan, were found to have worked up to 109 hours per week and to have gone six months without being paid. Some employees claimed they had been raped by managers.[21]

On October 28, 2007, BBC footage showed child labour being used in Indian Gap factories[22]. Gap has denied that it was aware of such happenings and that it is against its policy to use child labour. The one piece of clothing in question - a smock blouse - was removed from a British store and will be destroyed. Gap also promised to investigate breaches in its ethical policy.[23]

Product Red support

Gap took part in the Product Red campaign (www.joinred.org). In spring 2006, they released a special RED collection, including a T-shirt manufactured in Lesotho from African cotton. The expanded Gap Product Red collection was released October 13, 2006. 50%-100% of the profits went to the Global Fund; depending on the item. Gap continued on with Gap Product Red items into the 2007 New Year, especially in the lead up to Valentine's Day, using slogans such as "Admi(RED)" and "Desi(RED)." Product Red has now contributed over $45 million to the Global Fund, more than any other private donation received to date.

Other launch partners included American Express, Apple, Inc., Converse, Hallmark, Emporio Armani and Motorola.

Celebrities in ad campaigns

Gap frequently features celebrities in its print and television advertisements. They have featured over 300 celebrities of various stature in their campaigns.

Management reshuffle

On January 23, 2007, Gap announced that it was replacing CEO Paul Pressler with Robert J. Fisher, chairman of the board and son of the company's founders, and who would lead Gap on an interim basis as it searched for a new CEO. The board's search committee would be led by Adrian Bellamy, chairman of The Body Shop International and include founder Donald Fisher. The company said it would "focus [its] efforts on recruiting a chief executive officer who has deep retailing and merchandising experience ideally in apparel, understands the creative process and can effectively execute strategies in large, complex environments while maintaining strong financial discipline." Robert Fisher stressed his personal ties and 30-year professional history in operating roles at the company and as a board member. He started with the company in 1980 as a store manager and worked his way up the company's merchandising ranks and senior executive leadership positions, including president of Banana Republic and the Gap units. He had joined the board in 1990 [24].

On February 2, 2007, CEO Bob Fisher announced that Marka Hansen, a 20-year veteran of the company who headed the Banana Republic unit, was chosen to lead the Gap unit, replacing Cynthia Harriss, who had been hired by former CEO Pressler in 2004. Hansen had held a variety of positions with the company, mostly in merchandising. Jack Calhoun, an executive vice president for marketing and merchandising became interim president of the Banana Republic unit [25].

In May 2007, Old Navy laid off approximately 300 managers in the lower volume Old Navy stores to help streamline costs in stores.

On July 26, 2007, Gap announced that Glenn Murphy, previously CEO of Shopper's Drug Mart in Canada, was announced as the new CEO of Gap Inc.

New lead designers were also brought on board to help define a fashionable image. Patrick Robinson (fashion designer) for Gap Adult, Simon Kneen for Banana Republic, and Todd Oldham for Old Navy.

Board of directors

Leadership

The current leadership is:[26]

References

  1. ↑ Gap Inc. Names Jack Calhoun President of Banana Republic - SmartBrief
  2. ↑ http://www.portfolio.com/news-markets/top-5/2008/08/12/Gap-and-Zara-Battle-for-Top-Spot
  3. ↑ "Gap Explores Alternatives, Including Possible Sale: CNBC's Faber", CNBC.com (8 January 2007). 
  4. ↑ More Information
  5. ↑ "Gap Inc. Announces it will close Forth & Towne Store concept" (press release), Gap Inc. (2007-02-26). 
  6. ↑ "Gap hires Egon Zehnder to find new CEO" (reprint), Associated Press (2007-03-05). 
  7. ↑ Fiba Grubu
  8. ↑ Fiba Grubu
  9. ↑ 1960s: Commerce: Gap | 100 Years of Pop Culture
  10. ↑ Gap: Information and Much More from Answers.com
  11. ↑ brandchannel.com | The Gap | Retail Clothing| brands | brand | branding news
  12. ↑ iMedia Connection: Revisiting Retail: National Chains Online
  13. ↑ [1]
  14. ↑ Gap Inc (GPS) Full Description | Stocks | Reuters.com
  15. ↑ "The Gap Boots Bootleg!".
  16. ↑ abc040100.html
  17. ↑ http://www.gapinc.com/social_resp/ifpr/faqs_body.shtm#q8
  18. ↑ Clean Up Fashion - Gap
  19. ↑ GAP Social Responsibility[2]
  20. ↑ 2007 World’s Most Ethical Companies | Ethisphere™ Magazine
  21. ↑ NLCNET [3]
  22. ↑ BBC NEWS | World | South Asia | Gap pulls 'child labour' clothing
  23. ↑ Gap accused of child labor. CBS News.
  24. ↑ "CEO Pressler's out at Gap Inc." MarketWatch
  25. ↑ "Gap flagship brand to be run by company veteran" MarketWatch
  26. ↑ About Gap Inc.
  27. ↑ Gap Inc. - About Gap Inc. - Executive Leadership Team Biographies

External links

Gap
Brands

Gap · Gap Outlet · GapKids · babyGap · GapBody · GapMaternity · Love (Gap Accessories)
Banana Republic · Banana Republic Factory Store · Old Navy · Piperlime

 ‎‎
People

Donald Fisher · Doris F. Fisher · Robert J. Fisher Chairman of the Board · Glenn Murphy CEO · Marka Hansen President, GAP
Tom Wyatt President, Old Navy · Jack Calhoun President, Banana Republic
Discontinued and
former brands

Forth & Towne · Old Navy Outlet · Gap Warehouse · Brands · Hemisphere · Pants %ff
Pottery Barn (sold to Williams-Sonoma) · SuperGap · Tagg's · You & You
Annual revenue ▲ $15.779 billion USD (2007) · Employees 152,000 · Stock symbol NYSE: GPS