Wednesday, May 27, 2009
For today's post, we will talk more about how category management works for Gap as a retailer.
Firstly, we would like to introduce the different product categories available at Gap. Gap has divided its products into different sections in their stores based on age and gender. They have products for:
- Women
- Men
- GapKids (Boys, Girls)
- BabyGap (BabyGirl, BabyBoy, ToddlerGirl, ToddlerBoy)
Category management works for Gap as it caters and provide wider range for its target segments. For example, women not only have basics ( tshirts, jeans), but also other products such as dresses, skirts, and more.
Under GapWomen alone, products are further divided into:
- Shirts & Tops
- Sweaters
- Dresses
- Skirts
- Shorts
- Pants
- Jeans
- Hoodies & Jackets
- Yoga & Sport
- Swim
- Scarves, Hats & Belts
- Handbags
- Shoes
- Socks & Leggings
Under GapMen, products are further divided into:
- Jeans
- Pants
- Shorts
- Swim
- Shirts
- Polos
- T's & Tanks
- Graphic T's
- Sweaters
- Fleece
- Blazers & Vests
- Outerwear
- Underwear & Socks
- Sleep & Lounge
- Fragrance
The products are also further divided for GapKids & GapBaby and they are quite similar to the ones for GapWomen & GapMen, according to the gender. For example, for GapKids for Boys, the products are also further divided into jeans, shirts, pants, outerwear, underwear, graphic t's, and so on.
Definition:
Category management involves strategically managing 'product groups' or 'categories' to ensure that shopper and consumer needs are fully met or exceeded at the point of purchase. Retailers and suppliers work together in collaboration to grow the total category, maximising sales and profits for all parties.
Others may define category management as a term describing a method of managing retail operations. Category management is an organisational approach in which the management of a retail establishment is broken down into categories of like products. Under category management, decisions about product selection, placement, promotion and pricing are made on a category-by-category basis with an eye to maximising the profit of the category as a whole.
For example, when a shopper enters into the store and into the Women section, Gap may have placed some other promotions or offers around that area to attract the shoppers to purchase other products as well.
Another example would be, Gap placing the GapKids section right beside the WomenMaternity section so that when a consumer goes to the Maternity section to buy her clothes, she might be tempted to go into the GapKids or GapBaby section to browse at the clothes there too. Here, we see that Gap is trying to get their customers to buy more or get more shoppers to buy (increasing penetration).
The main aim of category management is to meet shopper and consumer needs. Thus, it is critical that category managers keep updated of all shopper and consumer research. They must also consider political, economic, social, technological and environmental issues, and gauge their relevance and potential impact on the category and retailers.
The purpose of category management is to allow customers find and select their desired item. It is also to help retailers and manufacturers reach consumers. Trading partners need to leverage the power of categories to drive higher shopper penetration, increase shopping frequency and encourage larger basket size. Shoppers go to the store to buy products. Retailers must figure out what categories will drive desirable behaviour in the store. For example, if there is a category with high penetration and high frequency, retailers must focus on having those products in the right location because consumers want them.
Category management has to be used strategically in order to achieve success. Through consumer research, Gap understands their customers better and are aware of what they want. Through these consumer information, Gap will then come out with ways and strategies of how to categorise their products in their stores in such a way that consumers will notice the products when they enter the store. Gap is known to place their promotional items near the entrance of their stores so as to attract the attention of their customers and also the passers-by who, some of them may just be window-shopping. However, if these passers-by get attracted by the products on display at the entrance, they will enter the store and browse at many more products available in the store.
;9:26 AM
Wednesday, May 20, 2009
3 Elements of Gap's Retail Store Strategy:
(1) Target Market (customers' needs)
Gap has three distinct brands; each with its own target market and unique challenges. Banana Republic offers higher-priced clothing, Old Navy offers lower-price, and Gap falls in between. In 2007, Old Navy accounted for 42% of sales, with Gap responsible for 40% accounting for about 40%.
Gap has stores in Singapore at 4 major locations; Wisma Atria, VivoCity, Centrepoint and Suntec City. The Gap's brand main focus is on casual attire and targets consumers between the ages of 18 and 25. These are the places that most families and young Singaporeans like shop in. Additionally, Gap has store utilizing the brand which target narrower segments of the retail apparel industry, including GapKids, BabyGap and GapBody. Through narrowing down segments, Gap is able to cater to the different segment needs better and easier.
(2) Retail Format (method for satisfying needs)
Their retail format is specialty stores. The definition of specialty store is a store, usually retail, that offers specific and specialized types of items. These stores focus on selling a particulat brand, or a particular type of item. Sometimes it includes chain retail stores that sell a specific brand of clothing. This would make retail outlets like Gap, Old Navy, Eddie Bauer, and Victoria's Secrets specialty store, because all the clothing sold there is manufactured specifically for that store. If you buy something From The Gap, it will have a Gap label.
Through setting up these stores, they are able to reach out to their customers effectively. Customers will know where they can get their apparels they want easily instead of searching high and low the departmental stores just for a piece of apparel they wish to purchase. They can also cater to their customers' needs better as they are able to get first-hand feedbacks from customers on ways to improve on their stores.
(3) Bases for Building Sustainable Competitive Advantage
(defending position against competitors)
There are 2:
Location
-More centralised & at popular shopping malls eg Wisma Atria & Vivocity
-Reach out more to their target market (families mainly middle-income & above)
-Even at the shopping malls itself, GAP outlets are located at strategic locations,where people have to pass-by in order to get to the other end of the shopping mall
Exclusive Merchandise
-Exclusive merchandise every few seasons
-Cater to customers that prefers unique products (eg last seaso's "White" campaign)
-Environmentally-friendly(eg "Go Green"campaign)
;5:55 PM
Monday, May 18, 2009
Company Background
The Gap Inc. is an American clothing & accessories retailer based in San Francisco, California, and founded in 1969 by Donald Fisher & Doris F. Fisher. The company has 5 primary brands: the namesake Gap banner, Banana Republic, Old Navy, Piperlime and Athleta. As of September 2008, Gap Inc. has approximately 150,000 employees and operates over 3,100 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.
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 & Doris Fisher remain on Gap Inc.'s Board of Directors, and the Fisher family collectively owns a significant portion of the company's stock.
Glenn K. Murphy is the current CEO of the company. Previous Gap Inc.'s CEOs include Millard Drexler and Paul Pressler.
In 1969, Donald Fisher opened the 1st ever Gap store on Ocean Avenue in San Francisco. The store's merchandise consisted of Levi's blue jeans & records & tapes. However, the audio products were sold for a mere 3 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 his second store, Gap established its first corporate headquarters in Burlingame, California, employeeing only 4 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 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 "Fox Tails" 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 "Brands" and "Pants %off" chains into Gap's new "Tagg's" chain.
;11:26 AM
Friday, May 15, 2009
In an on demand world, specialty retailers face many different challenges. Below, we explain in more depth regarding 2 challenges specialty stores encounter.
2 Challenges Specialty Stores Face:
(1) Maintaining Customer Loyalty
- To broaden their customer base without neglecting their core customers and lower-income group.
- For every retail stores, it is only normal that they want to expand their customer base & try to reach out to other segments of customers.
- For example: From only targeting working adults, a company might now have the intention to attract youths to use their products in a bid to expand their customer base.
- However, when doing so, we tend to ignore our core customers, who are the working adults, in our previous example.
- In addition, specialty store tends to have products with prices that are quite steep and this actually have an impact on the lower-income group. They will tend to avoid from patronising specialty stores.
- One solution to help build customer loyalty for specialty stores could be to have wireless kiosks that allows consumers to browse a "virtual inventory" or learn more about in-store offerings.
- Retail store specialty customers expect high quality service but employee turnover often gets in the way.
- This is due to the fact that every time a new employee joins the store, training has to be carried out every now and then.
- This leads to inconsistency in the service provided.
- For example: Service from a trainee might be totally different from an employee who has been working for 5 years.
- It is rather obvious in terms of product knowledge.
- A trainee would have to slowly adjust to the working style, how to serve, etc, & also has to learn more about the product knowledge; whereas a 5 years of experience employee should already be comfortable with the working style & knows about the products at the tip of his/her fingers.
- This could also minimise time & money that has to be spend on training.
- Upon serving, the 5-years-experienced employee can already apply all the value-added customer service & also gives suggestions & opinions wherever needed.
- This is important as customers that patronise specialty stores tend to ask more questions as they have quite an adequate knowledge of the products through the internet and might already have done some comparisons with other stores.
;2:00 PM
Wednesday, May 13, 2009
Definition of a Specialty Store
A specialty store is a store, usually retail, that offers specific and specialized types of items. These stores focus on selling a particular brand, or a particular type of item.
For example, a store that exclusively sells cell phones or video games would be considered specialized. Sometimes, it includes chain retail stores that sell a specific brand of clothing. This would make retail outlets like Gap and Victoria's Secret specialty stores, because all the clothing sold there is manufactured specifically for that store. For example, if you buy something from Gap, the product will have a Gap label.
In this definition, the specialty store can carry a diverse range of products. Though Gap specializes in clothing, their clothing is marketed for children, teenagers and also adults. You might also occasionally find Gap shoes or socks.
;6:00 AM
Thursday, May 7, 2009
STAY TUNE FOR UPDATES! (:
;8:19 AM
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