Brand breakdown
In 2012, The Gap Inc. (NYSE:GPS) decided to recreate its brand management structure under a long-term growth plan. This plan allows multiple brands to scale across streamlined channels while pushing into international markets that are fashion-hungry. As Gap continues to look for new growth opportunities, there are several markets which will maximize returns over the long haul. China, Brazil, and Japan each have a different target market, and with new branding structure, brands are targeted efficiently to maximize profit within each country.
Splitting up each country by brand maximizes effective growth in emerging markets. China spends billions of dollars on apparel while Japan is more focused on value. With each brand divided across the globe, The Gap Inc. (NYSE:GPS) has a breakdown model to scale in these developing markets.
Efficient supply chain model
In the age of digital, consumers are shopping online more than ever before. With rising online demand, The Gap Inc. (NYSE:GPS) is striving to make the best use of perishable inventory. With expiring seasonal merchandise, the new supply chain model makes use of inventory sitting in stores as well as maintaining a lean supply chain. Instead of products sitting on the shelves, this efficient method uses sitting inventory to fulfill online purchases and increase operating margins.
Specialty markets
With specialty chains like Piperlime and Athleta, The Gap Inc. (NYSE:GPS) hopes to capture specialty markets as well. With niche markets growing at a rapid pace, Gap hopes to cash in on new and emerging markets in North America, as well as gain market share in international markets.
Lululemon Athletica inc. (NASDAQ:LULU) has cornered the yoga apparel market well. With previous quarter’s revenue increasing 31% to $485.5 million and same-store sales increasing 10% on a constant dollar basis, Lululemon Athletica inc. (NASDAQ:LULU) has increased stores and market share in rough economic times while maintaining unusually high operating margins. Even with the recent news of quality control errors, the share price has bounced back and continues to dominate the yoga apparel industry.
Under Armour Inc (NYSE:UA) is also well known for high-priced athletic apparel. The company just stated that first-quarter net revenue increased 23% to $472 Million. Under Armour Inc (NYSE:UA) has reported a 20% or more increase over the last 12 quarters in apparel revenue. They attribute their strong performance to new innovation and design as well as increased momentum in Studio and ArmourBra, both in Women’s Apparel. This flourishing market for Women is quickly becoming a battle for market share between these three clothing brands.
The Gap app
With quality investments in new technology, The Gap Inc. (NYSE:GPS) is trying to enhance the customer experience in new and improved ways. With the recent addition of physical stores for Althleta, as well as a new shipping supply model, digital shopping is becoming the new trend. With in store sales decreasing as online shopping becomes more popular, the store hopes that the features in the app will drive more traffic inside the store. The app also uses the new supply chain model to help the customer find merchandise and connect with store associates.
The low down
Gap is well positioned to take on the market for global growth. With strong positions in global markets as well as the North American region, while implementing new management structure, I think that Gap will do well in the coming years. Their early position in emerging markets will continue to serve them well in the days ahead.
The article An Apparel Retailer You Shouldn’t Miss originally appeared on Fool.com and is written by Kaitlyn Tokay.
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