I.

Market analysis
Gap Inc. is a multinational clothing and accessories retailer that operates several retail
brands including Gap, Banana Republic, Old Navy, and Athleta. The following is an
application of the 5C analysis to conduct a market analysis of Gap Inc.
1. Company:
● Strengths: Gap Inc. has a strong brand reputation, a large customer base, and a
diverse product portfolio. The company also has a strong e-commerce presence,
which has been beneficial during the COVID-19 pandemic.
● Weaknesses: Gap Inc. has been struggling with declining sales in recent years,
which has been attributed to increased competition and changing consumer
preferences. Additionally, the company has not been able to keep up with the fast-
paced changes in the fashion industry, resulting in a loss of market share.
● Resources: Gap Inc. has a large retail footprint, with over 3,700 stores globally. The
company also has a strong distribution network, a large and experienced workforce,
and a significant marketing budget.
● Capabilities: Gap Inc. has a strong supply chain and logistics network, which enables
it to quickly respond to changing market demands. Additionally, the company has a
strong design and product development capability, which allows it to create
innovative and high-quality products.
2. Customers:
● Target Market: Gap Inc. caters to a wide range of customers, from young adults to
families. The company's target market is diverse and includes individuals who value
high-quality, stylish, and affordable clothing and accessories.
● Buying Behavior: Gap Inc. customers are price-sensitive, and they are looking for
good value for their money. They are also influenced by fashion trends and are
looking for clothing that is both fashionable and practical.
● Motivations: Gap Inc. customers are motivated by a desire for quality, comfort, and
affordability. They also appreciate the convenience of shopping with the company,
both in-store and online.
3. Competitors:
● Direct Competitors: Direct competitors of Gap Inc. include other clothing and
accessories retailers such as H&M, Zara, and Forever 21.
● Indirect Competitors: Indirect competitors of Gap Inc. include discount retailers such
as Walmart and Target, as well as fast fashion brands such as Fashion Nova.
4. Collaborators:
● Key Suppliers: Gap Inc. has a large and diverse network of suppliers that produce its
products. The company has a strong focus on sustainability, and it works with
suppliers to reduce its environmental impact.
● Partners: Gap Inc. has partnerships with several companies, including credit card
providers and financial services companies. These partnerships help the company to
offer its customers additional benefits and services.
5. Climate:
● Economic: Gap Inc. operates in a highly competitive and dynamic market. The
company has been affected by economic slowdowns, including the 2008 financial
crisis and the COVID-19 pandemic. Additionally, the company has been impacted by
changing consumer spending patterns, as customers become more price-sensitive.
 ● Technological: Gap Inc. has been investing in technology to improve its e-commerce
capabilities and enhance the customer experience. The company has also been
using technology to optimize its supply chain and improve its operations.
● Legal: Gap Inc. is subject to various regulations and laws, including labor laws,
intellectual property laws, and environmental regulations. The company has a strong
commitment to compliance and operates in a responsible and ethical manner.
● Political: Gap Inc. operates globally, and its business can be impacted by political
instability and conflicts in different countries. Additionally, the company is subject to
trade policies and tariffs that can impact its operations.
● Social and Cultural: Gap Inc. is influenced by changing social and
II. Financial Analysis
- Overview
For the three-month period ended July 30, the retailer reported a net loss of $49
million, or 13 cents per share. A year earlier, it reported a net income of $258 million,
or 67 cents a share. Gap’s revenue for the period fell 8% to $3.86 billion from $4.2
billion a year earlier. That topped estimates for $3.82 billion, according to a Refinitiv
survey. Shares of Gap were up 7% in extended trading. Online sales dropped 6%,
representing 34% of total sales. Comparable sales, which track revenue online and
at stores open for at least 12 months, were down 10% from a year ago. That included
a 15% decline at Old Navy, which the company said was hit by inventory delays,
“product acceptance issues'' in key categories and slowing demand among lower-
income shoppers. The company ended the latest quarter with inventory of $3.1
billion, up 37% from the prior year. Some of this was intentionally packed away to be
sold in another season, and some of it is still in transit, Gap said.
- Fixed cost
Fixed costs and variable costs are two important components of a company's cost
structure. Fixed costs are expenses that do not change with changes in the volume
of production or sales, while variable costs are expenses that increase or decrease
with changes in the volume of production or sales.
Fixed costs for Gap Inc may include rent for retail locations, salaries and benefits for
employees, insurance, and property taxes.
Gap Inc.' s gap in the global garment industry, $ 9.5 trillion, accounting for gross
domestic product (gdp). The Canada market accounted for approximately $ 970
billion. (According to Macrotrend.net and Statista.com)
- Variable cost
Variable costs for Gap Inc may include the cost of raw materials, production labor,
and shipping expenses. Additionally, the company may incur costs associated with
marketing and advertising, which can be considered variable costs as they will
increase or decrease based on the level of investment in these areas.
Annual operating expenses of the Gap Inc increased 8.1% from 2021 to 2022 and
the quarterly operating expenses had a downward trend to 8% in the last previous
quarter of 2022.
It's important for Gap Inc. to understand its fixed and variable costs in order to make
informed business decisions and plan for the future. For example, by understanding
the company's fixed costs, management can make decisions about expanding into
new markets or investing in additional retail locations. Understanding the company's
variable costs can also help management make decisions about adjusting product
offerings and pricing strategies to optimize profitability.
- Revenue prediction
GAP Inc is active in the worldwide garment industry, which accounts for an estimated
2% of the world's gross domestic product and is valued at $3 trillion (GDP). The US
and Canadian markets represent more than $340 billion and are predicted to
increase by 2% each year until 2025. It is estimated that these two primary industries
account for around 84% of Gap's income. The younger generation has reduced
clothing expenditures. Gap's CEO, Peck, was not aware of the unfavorable response.
What a fashionable fad! Customers no longer feel the need to renew their wardrobes
as a consequence of a shift in their purchasing patterns, which causes a decline in
sales.