Restructuring / Turnaround Strategies Case Study

Case Title:

GAP's Turnaround Strategies: Winning Back its Customers?

Abstract:
Gap Inc., leading retailer in the US, had ruled the apparel market since the 1960s. Gap offered garments for men, women and children, and by the end of 1990s, the company was operating in 42 countries around the globe. In the early 2000s, due to the changing fashion trends, Gap started loosing customers. Gap’s customers moved away to other youth-oriented retailers. This posed a threat to Gap’s market position. To gain its customers back and to sustain its market position, Gap started planning a turnaround under Paul S. Pressler that included brand differentiation, revamping of stores, promotions, and expansions. As a result, Gap’s sales increased by 7% in 2004. However, from 2006 onwards, Gap’s same-store sales started declining. Analysts felt that this was because Gap was unable to bring back its customers. To win back customers, Gap planned to incorporate store-expansion strategy as a part if its turnaround efforts. However analysts opined that it would take time for Gap to gain its customers back.

Pedagogical Objectives:

• To understand the changing fashion trends of the US Apparel industry
• To analyse the turnaround styrategies of an apparel retailer
• To analyse the importance of customer satisfaction parameter in a business turnaround.

Keywords : Restructuring / Turnaround Strategies Case Study; US Apparel Industry; Consumer Preferences; Growth of Apparel Industry; Competition; Performance; Turnaround Strategy; Store Sales; Millard Drexler; Paul S. Pressler; Customer satisfaction parameter; price comparison; brand differenttiation; Brand personality; Revamping stores