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Gap Inc.

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The Gap, Inc.
Company typePublic
NYSE: GPS
IndustryRetail
FoundedSan Francisco, California, U.S.
December 7, 1969
FounderDonald Fisher
Doris F. Fisher
Headquarters
San Francisco, California
,
U.S.
Number of locations
3,246 (2010)[1]
Area served
Worldwide
Key people
Glenn K. Murphy
(Chairman and CEO)
ProductsClothing
RevenueIncrease US$ 14.664 billion (2010)[1]
Increase US$ 1.968 billion (2010)[1]
Increase US$ 1.204 billion (2010)[1]
Total assetsDecrease US$ 7.065 billion (2010)[1]
Total equityDecrease US$ 4.080 billion (2010)[1]
Number of employees
134,000 (January 2011)[1]
DivisionsGap
Banana Republic
Old Navy
Piperlime
Athleta
WebsiteGap.com

The Gap, Inc.[2] (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 3,076 stores worldwide, of which 2,551 are in the United States.[3] 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.[4]

Despite the company's publicly traded status, the Fisher family remains deeply involved in Gap, Inc.'s business and collectively owns a significant quantity of the company's stock.[5]

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 became 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.

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,[6] 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

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.[7] On February 26, 2007 after an 18-month trial period, Forth & Towne was discontinued, and the 19 stores were closed.[8] A fifth brand, the online footwear retailer Piperlime, was created in 2006.[9] A sixth brand, Athleta, a women's athletic wear line was added in 2009.[10]

Gap's Sales by Division in Q1 2009[11]

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

Store count

The Gap
Company typeDivision of The Gap, Inc.
IndustryRetail
Founded1969 in San Francisco, California
FounderDonald Fisher
Doris F. Fisher
HeadquartersSan Francisco, California, U.S.
Number of locations
1,430 (January 2011)[1]
Key people
Glenn K. Murphy (CEO)
Art Peck (President)
ProductsClothing
WebsiteGap.com

As of October 30, 2010 there were 3,082 Gap Inc. stores.[12] Those in Canada, Croatia, France, Italy, Ireland, Japan, UK, and US (and Puerto Rico) are company-owned. Stores outside of these countries are owned and operated by franchises.

Gap
Banana Republic
Old Navy

Marketing strategy

File:Gapstore.jpg
GAP store in Westfield Valley Fair, San Jose, CA.

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.[17]

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[18]). 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.[19] 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,[20] 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.[21] 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. Its marketing efforts to reach out to upperclass, luxury consumers is blamed for recent problems in the company.[22]

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 in mid-2009 reverted 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.[23] As of February 3, 2007, The Gap, Inc. operates a total of 3,131 store locations.[24] In January 2008, Gap signed a deal with Marinopoulos Group to open Gap and Banana Republic stores in Greece, Romania, Bulgaria, Cyprus and Croatia.[25] In February 2009, Elbit Imaging, Ltd. secured a franchise to open and operate Gap and Banana Republic stores in Israel.[26] In August 2010 GAP will be opening its first store in Melbourne, Australia at Chadstone Shopping Centre.[27]. In September 2011, Komax will be opening the first GAP store in Chile, due to a franchise. [28]

Online

The domain www.gap.com attracts over 18 million visitors annually, according to a 2008 Compete.com survey.[29]

The Gap Trademark

Original The Gap service mark, filed February 29, 1972
The 1969-1986 Logo

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.[30]

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.[31] A settlement of 20 million dollars was reached whereby The Gap did not admit liability.[32]

In 2007, Ethisphere Magazine (an industry publication) chose Gap from among thousands of companies evaluated as one of 100 "World’s Most Ethical Companies."[33] 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.[citation needed]

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.[34] 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.[34]

unfortunately my son has taken to not wearing their clothes not because he doesnt like them but the stick from other kids who tell him he is gay as they are telling him it stands for gay and proud kids are cruel and no matter what you are when they say things like this to you you do anything to avoid it so part of the problem i feel is that as soon as kids start something like this it spirals. I had never heard the expression before and still try to encourage him to wear what he wants and not because of what people say to him but its hard when they are at the growing up stage and want to fit in and not stand out. I'm proud of my kids no matter who or what they are but will listen to them when they make choices about what makes them happy and comfortable in their environment

On October 28, 2007, BBC footage showed child labor being used in Indian Gap factories.[35] 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.[36]

Product Red support

Gap took part in the Product Red campaign (www.joinred.org). In early 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.[37]

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.[38]

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 Shoppers 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.

The new logo lasted for a week

On October 6, 2010, Gap debuted a new logo in an attempt to create a more contemporary presence in the retail market. The new logo was made with Helvetica typeface and did away with the blue box that had become iconic with the brand. There was a public outcry against the new logo, especially in the graphic design community. The company returned to its previous "blue box" logo on October 12, only a week after the new logo's debut.[39][40] Marka Hansen, the executive that oversaw the logo change resigned February 1, 2011.[41]

Board of directors

File:Thegapheadquarters.jpg
Gap headquarters in San Francisco, California.

Leadership

The current leadership is:[42]

  • Executive Vice President, Corporate Strategy and Business Development: Art Peck
  • Executive Vice President and Chief Financial Officer: Sabrina Simmons
  • Executive Vice President and Chief Information Officer Tom Keiser
  • Executive Vice President, Human Resources and Corporate Communications: Eva Sage-Gavin
  • Senior Vice President, Gap International Sourcing: Stan Raggio
  • Senior Vice President & General Counsel: Michelle Banks

References

  1. ^ a b c d e f g h "2010 Form 10-K, The Gap, Inc". United States Securities and Exchange Commission.
  2. ^ Legal name as stated in the company's SEC filings (such as its 2010 10-K report). For non-regulatory purposes the company usually refers to itself as "Gap Inc."
  3. ^ Full Gap Store Count http://www.gapinc.com/public/Investors/inv_re_storecount.shtml
  4. ^ "Gap And Zara Battle For Top Spot - News Markets". Portfolio.com. 2008-09-11. Retrieved 2010-08-07.
  5. ^ "Gap Explores Alternatives, Including Possible Sale: CNBC's Faber". CNBC.com. January 8, 2007.
  6. ^ "Media - Press Releases". Gap Inc. Retrieved 2010-08-07.
  7. ^ More Information
  8. ^ "Gap Inc. Announces it will close Forth & Towne Store concept" (press release). Gap Inc. 2007-02-26.
  9. ^ Duxbury, Sarah (2006-10-06). "Piperlime — the shoe fits, Gap wears it". San Francisco Business Times. Retrieved 2009-08-21.
  10. ^ Rosenbloom, Stephanie (2008-09-22). "Gap Acquires Athleta for $150 Million". New York Times. Retrieved 2009-08-21.
  11. ^ Breakdown of net sales by Division from company 8Ks
  12. ^ a b c d e f g h i j k l m Gap Inc. Store Count by Brand Cite error: The named reference "GapIncStoreCount" was defined multiple times with different content (see the help page).
  13. ^ Fiba Group - Gap
  14. ^ Al Tayer Group
  15. ^ a b Template:Hr icon "Take a peek at Zagreb's Gap and Zara Home". tportal.hr. 2010-11-04. Retrieved 2010-11-05.
  16. ^ Fiba Group - Banana Republic
  17. ^ 1960s: Commerce: Gap | 100 Years of Pop Culture
  18. ^ Morning Edition (2009-09-28). "Gap Inc. Co-Founder Donald Fisher Dies At 81". NPR. Retrieved 2010-08-07.
  19. ^ Gap: Information and Much More from Answers.com
  20. ^ brandchannel.com | The Gap | Retail Clothing| brands | brand | branding news
  21. ^ iMedia Connection: Revisiting Retail: National Chains Online
  22. ^ [1][dead link]
  23. ^ Error - LexisNexis Publisher
  24. ^ http://stocks.us.reuters.com/stocks/fullDescription.asp?symbol=GPS&WTmodLOC=C5-Profile-1. {{cite news}}: Missing or empty |title= (help)
  25. ^ Shields, Amy (2008-01-22). "Gap signs Greek franchise partner | News". Retail Week. Retrieved 2010-08-07.
  26. ^ Elbit Imaging to franchise Gap, Banana Republic in Israel By Robert Daniel, February 18, 2009
  27. ^ Smart Company - Retail, Accessed, 22 July 2010[dead link]
  28. ^ "Gap abrirá primera tienda en Chile e inicia desembarco en Sudamérica". La Tercera. 17 November 2010. Retrieved 2 April 2011.
  29. ^ "Site Profile for gap.com (rank #238) | Compete". Siteanalytics.compete.com. Retrieved 2010-08-07.
  30. ^ "The Gap Boots Bootleg!".[dead link]
  31. ^ abc040100.html
  32. ^ [2][dead link]
  33. ^ 2007 World’s Most Ethical Companies | Ethisphere Magazine
  34. ^ a b NLCNET
  35. ^ "Gap pulls 'child labour' clothing". BBC News. October 28, 2007. Retrieved May 3, 2010.
  36. ^ Gap accused of child labor. CBS News. 2007-10-29.
  37. ^ "CEO Pressler's out at Gap Inc." MarketWatch
  38. ^ "Gap flagship brand to be run by company veteran" MarketWatch
  39. ^ http://www.huffingtonpost.com/2010/10/06/gap-logo-new_n_753009.html
  40. ^ http://www.huffingtonpost.com/2010/10/12/gap-gets-rid-of-new-logo_n_759131.html
  41. ^ "Head of Gap brand out, outlet executive in line: source". Reuters. February 1, 2011.
  42. ^ About Gap Inc.
  43. ^ Gap Inc. - About Gap Inc. - Executive Leadership Team Biographies
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