Gap (clothing retailer)

The Gap, Inc.
Type Public (NYSE: GPS)
Industry Retail
Founded San Francisco, California, U.S. (December 7, 1969)
Founder(s) Donald Fisher
Doris F. Fisher
Headquarters San Francisco, California, U.S.
Key people Glenn K. Murphy, Chairman and CEO
Marka Hansen, President, Gap
Tom Wyatt, President, Old Navy
Jack Calhoun, President,[1] Banana Republic
Art Peck, President, Outlet
Products Clothing
Revenue increase US$14.5 Billion (FY 2009)[2]
Operating income increase US$1.58 Billion (FY 2009)[2]
Net income increase US$967 Million (FY 2009)[2]
Total assets decrease US$7.56 Billion (FY 2009)[3]
Total equity increase US$4.39 Billion (FY 2009)[3]
Employees 135,000 (2009)[4]
Divisions Gap, Banana Republic, Old Navy, Piperlime, Athleta
Website http://www.gap.com/

The Gap, Inc.[5] (NYSE: GPS) is an American clothing and accessories retailer based in San Francisco, California, and founded in 1969 by Donald G. Fisher and Doris F. Fisher. The company has five primary brands: the namesake Gap banner, Banana Republic, Old Navy, Piperlime and Athleta. As of September 2008, Gap, Inc. has approximately 135,000 employees and operates 3,465 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.[6]

Despite its publicly-traded status, the Fisher family remains deeply involved in Gap, Inc.'s business and collectively owns a significant portion of the company's stock.[7]

Donald Fisher served as Chairman of the Board until 2004 and remained on the board until his death on September 27, 2009. His wife and their son, Robert J. Fisher, also serve on Gap's Board of directors. Robert Fisher succeeded his father as chair in 2004 and also took over as president and CEO on an interim basis following the resignation of Paul Pressler in 2007.

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

Contents

History

On August 21, 1969, Donald and Doris Fisher opened the first Gap store on Ocean Avenue in San Francisco. The store's merchandise consisted of Levi's and LPs. The Fishers had raised $63,000 to open the store,[8] and in one year, Gap's sales had reached $2 million. In 1970, Gap opened its second store, in San Jose, California, and established its first corporate headquarters in Burlingame, California with just four employees. Gap grew rapidly. By 1973, it had more than 25 stores, including areas outside California -- entering the East Coast market with a store in Voorhees, New Jersey. In 1974, Gap began to sell private-label merchandise.

Brands

GAP store in Westfield Valley Fair, San Jose, CA.

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.[9] On February 26, 2007 after an 18-month trial period, Forth & Towne was discontinued, and the 19 stores were closed.[10] A fifth brand, the online footwear retailer Piperlime, was created in 2006.[11] A sixth brand, Athleta, a women's athletic wear line was added in 2009.[12]

Gap's Sales by Division in Q1 2009[13]

Divisions Total revenue
Gap North America $834 million
Banana Republic North America $475 million
Old Navy North America $1.18 billion
International $369 million
Gap Inc Direct $267 million

Current

Gap

Non-Gap

Discontinued

Store count

There are 3465 Gap stores. Those 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 franchises.

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.[21]

Products

When Gap was founded in 1969, its targeted customers were younger generations (hence the name of the store, which refers to the generation gap of the time[22]). 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.[23] As this business idea became successful, Gap expanded its offerings 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, as well as the shoe retailer Piperlime in 2006.

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,[24] which the company is attempting to win back. Gap was the only national retailer to spend more than 2% of its marketing budget for online marketing in 2003.[25] As a result, the company's Internet commerce website has been cited numerous times as a model of stylish efficiency. Gap promotes its products through gift cards, catalogs, advertising programs on television 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.[26]

In addition, Gap's garment designs and products varies from North America and Europe. Products sold in Europe are targeted towards a European sense of style, whereas the Gap's North American garments and accessories are designed particularly for North Americans. This has recently changed and the firm has as of Summer 2009 reverted back to an ethnocentric marketing model, based on North America.

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, Indonesia and Mexico.[27] As of February 3, 2007, The Gap, Inc. operates a total of 3,131 store locations.[28] In January 2008, Gap signed a deal with Marinopoulos Group to open Gap and Banana Republic stores in Greece, Romania, Bulgaria, Cyprus and Croatia.[29] In February 2009, Elbit Imaging, Ltd. secured a franchise to open and operate Gap and Banana Republic stores in Israel.[30] In August 2010 GAP will be opening its first store in Melbourne, Australia at Chadstone Shopping Centre.[31]

Online

The domain www.gap.com attracts over 18 million visitors annually, according to a 2008 Compete.com survey.[32]

The Gap Trademark

Original The Gap service mark, filed February 29, 1972
The drawing stylized word The Gap mark is a registered service mark at the USPTO, and owned by The Gap

The original trademark for The Gap was as a service mark for retail clothing store services. The application was filed with the USPTO on February 29, 1972 by The Gap Stores located in Burlingame, California. First use anywhere was on August 23, 1969 and commercial use on October 17, 1969. Registration was granted on October 10, 1972.

A second application was file by Gap Stores, Inc. on September 12, 1974. This time, the new application was for a trademark filed for Shirts. First use and commercial use for shirts and clothing products was on June 25, 1974. Trademark registration was granted on December 28, 1976.

Both the service mark and trademark are registered and owned by Gap (Apparel), LLC of San Francisco, California.

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.[33]

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.[34] A settlement of 20 million dollars was reached whereby The Gap did not admit liability.[35]

In 2006, an online advocacy group, Labor 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 Labor 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.[36]

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. The company also inspects factories for compliance with its internal standards.[37] 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 evaluated as one of 100 "World’s Most Ethical Companies." [38] 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.[39] However, most of these allegations were directed at Wal-Mart (who mostly ignored the claims), while Gap immediately looked into the matter to remedy the situation.[39]

On October 28, 2007, BBC footage showed child labor being used in Indian Gap factories.[40] 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.[41]

Product Red support

Product Red logo

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.

Public figures in ad campaigns

Gap frequently features public figures in its print and television advertisements. They have featured over 308 celebrities of various stature in their campaigns. Their commercials featuring songs such as "Lovely Day" remain some of the most successful and memorable usages of television advertising in history.

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.[42]

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.[43]

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

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

Gap headquarters in San Francisco, California.

Leadership

The current leadership is:[44]

References

  1. ↑ Gap Inc. Names Jack Calhoun President of Banana Republic - SmartBrief
  2. ↑ 2.0 2.1 2.2 Gap (GPS) annual SEC income statement filing via Wikinvest
  3. ↑ 3.0 3.1 Gap (GPS) annual SEC balance sheet filing via Wikinvest
  4. ↑ "The Gap, Inc. | Company profile from Hoover's". Hoovers.com. http://www.hoovers.com/company/The_Gap_Inc/rrcjsi-1.html. Retrieved 2010-08-07. 
  5. ↑ Name as per the company's 2008 SEC 10-K filing. For non-regulatory purposes the company usually refers to itself as "Gap, Inc."
  6. ↑ "Gap And Zara Battle For Top Spot - News Markets". Portfolio.com. 2008-09-11. http://www.portfolio.com/news-markets/top-5/2008/08/12/Gap-and-Zara-Battle-for-Top-Spot. Retrieved 2010-08-07. 
  7. ↑ "Gap Explores Alternatives, Including Possible Sale: CNBC's Faber". CNBC.com. January 8, 2007. http://www.cnbc.com/id/16527837. 
  8. ↑ "Media - Press Releases". Gap Inc.. http://gapinc.com/public/Media/Press_Releases/med_pr_DonFisher09272009.shtml. Retrieved 2010-08-07. 
  9. ↑ More Information
  10. ↑ "Gap Inc. Announces it will close Forth & Towne Store concept" (press release). Gap Inc.. 2007-02-26. http://www.gapinc.com/public/Media/Press_Releases/med_pr_ForthTowne022607.shtml. 
  11. ↑ Duxbury, Sarah (2006-10-06). "Piperlime — the shoe fits, Gap wears it". San Francisco Business Times. http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2006/10/09/story3.html. Retrieved 2009-08-21. 
  12. ↑ Rosenbloom, Stephanie (2008-09-22). "Gap Acquires Athleta for $150 Million". New York Times. http://www.nytimes.com/2008/09/23/business/23gap.html. Retrieved 2009-08-21. 
  13. ↑ Breakdown of net sales by Division from company 8Ks
  14. ↑ 14.0 14.1 14.2 14.3 14.4 14.5 14.6 14.7 http://www.gapinc.com/public/documents/Store_Count_Brand.pdf
  15. ↑ Fiba Group - Gap
  16. ↑ Al Tayer Group
  17. ↑ "GAP trae por primera vez a la Argentina su línea de fragancias y cuidado corporal". El Guardarropas. http://www.elguardarropas.com/noticia/gap-trae-por-primera-vez-a-la-argentina-su-l%C3%ADnea-de-fragancias-y-cuidado-corporal-153.aspx. Retrieved 2010-08-07. 
  18. ↑ Fiba Group - Banana Republic
  19. ↑ "Banana Republic UK Store Locator | Banana Republic UK". Bananarepublic.gap.eu. http://bananarepublic.gap.eu/stores. Retrieved 2010-08-07. 
  20. ↑ [1]
  21. ↑ 1960s: Commerce: Gap | 100 Years of Pop Culture
  22. ↑ Morning Edition (2009-09-28). "Gap Inc. Co-Founder Donald Fisher Dies At 81". NPR. http://www.npr.org/templates/story/story.php?storyId=113265289. Retrieved 2010-08-07. 
  23. ↑ Gap: Information and Much More from Answers.com
  24. ↑ brandchannel.com | The Gap | Retail Clothing| brands | brand | branding news
  25. ↑ iMedia Connection: Revisiting Retail: National Chains Online
  26. ↑ [2]
  27. ↑ Error - LexisNexis® Publisher
  28. ↑ Gap, Inc (GPS) Full Description | Stocks | Reuters.com
  29. ↑ Shields, Amy (2008-01-22). "Gap signs Greek franchise partner | News". Retail Week. http://www.retail-week.com/News/2008/01/gap_signs_greek_franchise_partner.html. Retrieved 2010-08-07. 
  30. ↑ Elbit Imaging to franchise Gap, Banana Republic in Israel By Robert Daniel, February 18, 2009
  31. ↑ Smart Company - Retail, Accessed, 22 July 2010
  32. ↑ "Site Profile for gap.com (rank #238) | Compete". Siteanalytics.compete.com. http://siteanalytics.compete.com/gap.com?metric=uv. Retrieved 2010-08-07. 
  33. ↑ "The Gap Boots Bootleg!". http://www.mygolfwest.com/features/may_05/gap.htm. 
  34. ↑ abc040100.html
  35. ↑ [3]
  36. ↑ Clean Up Fashion — Gap
  37. ↑ GAP Social Responsibility
  38. ↑ 2007 World’s Most Ethical Companies | Ethisphere Magazine
  39. ↑ 39.0 39.1 NLCNET
  40. ↑ "Gap pulls 'child labour' clothing". BBC News. October 28, 2007. http://news.bbc.co.uk/1/hi/world/south_asia/7066019.stm. Retrieved May 3, 2010. 
  41. ↑ Gap accused of child labor. CBS News. 2007-10-29. http://www.webcastr.com/videos/whats-hot/gap-accused-of-child-labor.html. 
  42. ↑ "CEO Pressler's out at Gap Inc." MarketWatch
  43. ↑ "Gap flagship brand to be run by company veteran" MarketWatch
  44. ↑ About Gap Inc.
  45. ↑ 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  · Athleta

 ‎‎
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 increase $15.779 billion (2007) · Employees 152,000 · Stock symbol NYSE: GPS