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Gap Inc.

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This article is about the retail clothing company. For other uses, see gap.
Gap, Inc.
Company typePublic (NYSE: GPS)
IndustryRetail
FoundedSan Francisco, California, 1969
HeadquartersSan Bruno, California, USA
Key people
Founded by Donald Fisher and Doris Fisher
Glenn Murphy, Chairman & CEO
Sarthak PahwaEVP & CFO
Marka Hansen, President, Gap
Tom Wyatt, President, Old Navy
Jack Calhoun, President,[1] Banana Republic
ProductsApparel
RevenueIncrease$16 billion USD (2005)
Number of employees
152,000 (all Gap)
Websitewww.gapinc.com

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 Fisher. As of October 2006, Gap Inc. had approximately 150,000 employees and operated 3,139 stores worldwide in the United States, Canada, Mexico, France, Ireland, Indonesia, Japan, South Korea, Kuwait, Malaysia, Peru, Singapore, Turkey, the United Arab Emirates, and the United Kingdom.

Donald Fisher retired as Chairman of the Board in 2004 and was replaced by Sabastion Gravano. The Fisher family collectively owns 37% of the company stock.[2] The CEO of Gap, Paul Pressler, who previously ran the theme parks of Disney resigned on January 22, 2007. Glenn Murphy was appointed chairman and CEO of the company July 26, 2007.

History

Founded in 1969 by Donald Fisher, the name originated from the phrase "the generation gap".

1969-1980

In 1969, Donald Fisher opened the first ever Gap store in a theatre on Ocean Avenue near San Francisco State University, 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.[citation needed]

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 1972-73 Gap 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 its well known location at 900 Cherry Avenue in San Bruno.

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

Brands

File:Gapstore.jpg
A typical Gap G2K Style store

Banana Republic, formerly a catalog 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, in the Palisades Center in West Nyack, New York, featuring apparel targeted toward women 35 and older.[3] On February 26, 2007, after an 18-month trial period, Forth & Towne was discontinued, and the 19 stores were closed by June 2007. Gap, Inc. is expected to take a $40 million pre-tax expenses associated with the closing.[4] A fifth brand, the online footwear retailer Piperlime, was created in 2006. [5] On March 5, 2007 Gap Inc, hired Egon Zehnder International to coordinate the search for a new chief executive officer to replace Paul Pressler. No deadline was given for the search. In 2004, Gap sold all of its German operations to the Swedish H&M, its main competitor in Europe.

  • Gap
  • Gap Outlet
  • GapKids
  • babyGap
  • GapBody
  • GapMaternity
  • Love Me Gap
  • Love (Gap Accessories)
  • Hemisphere (discontinued)
  • Pants %ff (discontinued)
  • Pottery Barn (sold to Williams-Sonoma)
  • SuperGap (discontinued)
  • Tagg's (discontinued)
  • You & You (discontinued)

Store count

Gap
Banana Republic


Old Navy
Total 3,143

Marketing strategy

The Banana Republic stores try to convey a more sophisticated image for an upscale customer, whereas Gap stores appeal to a broader midrange of customers. The Old Navy chain is designed to appeal to younger generation of customers by emphasizing "fun, fashion, and value" through a store experience that delivers "energy and excitement." Although Gap, along with other retail-store chains, has been criticized for blandness and uniformity in its selling environments, the firm maintains that it tailors its stores "to appeal to unique markets" by developing multiple formats and designs.[6]

In some Major League Baseball parks, a Gap ad appears on outfield wall panels between left/right-center fields and centerfield, which is commonly termed "the gap."[citation needed]

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.[7] 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[8] 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.[9] 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.[10]

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.[11]

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 an opening 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 delayed landscaping and cart paving projects for the golf course.[12]

Contrary to the urban myth that Gap stands for Gay and Proud, the name originated from the phrase "the generation gap."[13]

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.[14] A settlement of 20 million dollars was reached whereby The Gap did not admit liability. [15]

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[citation needed]. 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.[16]

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. [17] 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." [18] 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.[19]

On October 28, 2007, BBC footage showed child labour being used in Indian Gap factories[20]. 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.[21]

Product Red support

File:Logogapred.jpg
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 "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 is well known for featuring 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 [22].

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 [23].

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:[24]

  • 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 Michael B. Tasooji
  • Executive Vice President, Human Resources and Corporate Communications: Eva Sage-Gavin
  • Senior Vice President, Gap International Sourcing: Stan Raggio
  • Chief Legal and Administrative Officer: Lauri M. Shanahan

References

  1. ^ Gap Inc. Names Jack Calhoun President of Banana Republic - SmartBrief
  2. ^ "Gap Explores Alternatives, Including Possible Sale: CNBC's Faber". CNBC.com. 8 January 2007. {{cite news}}: Check date values in: |date= (help)
  3. ^ More Information
  4. ^ "Gap Inc. Announces it will close Forth & Towne Store concept" (press release). Gap Inc. 26 Feb 2007.
  5. ^ "Gap hires Egon Zehnder to find new CEO" (reprint). Associated Press. 5 Mar 2007.
  6. ^ 1960s: Commerce: Gap | 100 Years of Pop Culture
  7. ^ Gap: Information and Much More from Answers.com
  8. ^ brandchannel.com | The Gap | Retail Clothing| brands | brand | branding news
  9. ^ iMedia Connection: Revisiting Retail: National Chains Online
  10. ^ [1]
  11. ^ Gap Inc (GPS) Full Description | Stocks | Reuters.com
  12. ^ "The Gap Boots Bootleg!".
  13. ^ Urban Legends Reference Pages: The Gap
  14. ^ abc040100.html
  15. ^ http://www.gapinc.com/social_resp/ifpr/faqs_body.shtm#q8
  16. ^ http://www.cleanupfashion.co.uk/companies/gap.php
  17. ^ GAP Social Responsibility[2]
  18. ^ 2007 World’s Most Ethical Companies | Ethisphere™ Magazine
  19. ^ NLCNET [3]
  20. ^ BBC NEWS | World | South Asia | Gap pulls 'child labour' clothing
  21. ^ Gap accused of child labor. CBS News. October 29, 2007.
  22. ^ "CEO Pressler's out at Gap Inc." MarketWatch
  23. ^ "Gap flagship brand to be run by company veteran" MarketWatch
  24. ^ About Gap Inc.
  25. ^ Gap Inc. - About Gap Inc. - Executive Leadership Team Biographies
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