THE GAP INCORPORATED Leann Bustamante Jeffrey Bertinetti Mary Cassidy

GAP

Gap Incorporated  Leading international specialty retailer  Founded 1969  More than 3,800 stores worldwide  May 19, 1976 initial public offering $18 per share  Began trading on the NYSE 1976  Ticker symbol GPS  Also listed on the Pacific Exchange

Provides customers with:  Clothing  Accessories  Underwear  Loungewear  Personal care items  For women, men, children, and infants  Under the Gap (GapKids, babyGap, GapBody)  Banana Republic  Old Navy

Why they lost market share:  Increasing competition in the retail industry  Not keeping up to date with current trends and fashion  Decreasing economy due to September 11 th events

Interview  20 Gap Customers  10 females, 10 males  How long have you been shopping at Gap?  Are you satisfied with the quality of Gap’s clothing?  Do you feel it’s consistent with the modern trends?  Do you feel it is adequately priced?  Have you noticed any decrease in overall satisfaction in the recent years?

Results:  Customers of over 5 years  Decrease in overall satisfaction  Prices increased  No quality increase  Have stayed with modern trends  But competitors doing a better job

THE GAP INCORPORATED  AHP ANALYSIS

AHP Analysis  Strategy A: Marketing Brands  Strategy B: Design and Merchandise Products  Strategy C: Shopping Environment

AHP Analysis  Three criterion: 1. Cost Control 2. Quality 3. Service

AHP Analysis

THE GAP INCORPORATED Future Sales Predictions

Quarterly Sales (Observe Seasonality)

Gap Inc. Annual Sales ( )

Linear Regression  A linear model can be used because the data shows a clear trend  High R Squared variable shows strong relationship between annual sales and year

Linear Regression Analysis  Y = X  Predicted Sales(all sales in millions)  2001 = $  2002 = $  2003 = $

MATERIALS REQUIREMENTS PLANNING

New MRP  SAFETY STOCK  20% of sales should be kept on reserve for unexpected situations  LEAD TIME  Should be shortened to get them to customers when needed  IMPROVES CUSTOMER SATISFACTION!!

NEW MRP  Lot-Sizing-Rule  Minimum Order Size  Lowest amount of inventory possible means NO EXTRA COST!

TOTAL QUALITY MANAGEMENT

CODE OF VENDOR CONDUCT  Clearly laid out set of rules which must be followed  Enforcers of the Code: Vendor Compliance Officers (VCO’s)  Inspect sewing machines for safety guards  Review Payroll Records  Interview Employees

PROBLEMS WITH GAP INC.’S TQM  Workers see the VCO’s as “watchdogs”  Workers may hide mistakes  Workers may pass blame onto their peers  LEADS TO TOO MANY CONFLICTS!!

THE NEW TQM  Incorporate Deming’s 14 point program  Break down barriers between departments  Eliminate numerical goals/quotas  Remove barriers that hinder the hourly worker  This Leads to More FREEDOM!!

THE NEW TQM  Quality Circles  Groups of workers meet regularly/share information about the company  House of Quality  Finds out the attributes that a customer likes  Benchmarking  Compares Gap Inc.’s products with the competitors (J. Crew, Abercrombie)