Predicting consumer taste with bigdata at gap

Additionally, we willconduct a thorough analysis of Gap Inc.''''s competitors and industry trendsto identify potential opportunities for growth and innovation:By leveraging advanced data an

VIET NAM NATIONAL UNIVERSITY OF HO CHI MINH UNIVERSITY OF ECONOMICS AND LAW

REPORT OF CASE ANALYSIS Summer Semester: 2022-2023 DIGITAL TRANSFORMATION AND ARTIFICIAL INTELLIGENCE

PREDICTING CONSUMER TASTE WITH BIG

DATA AT GAP

LECTURE: Master Nguyễn Thế Đại Nghĩa

Course ID: 212IS2110 MEMBERS IN GROUP 9

1 Nguyễn Phước Đăng Khoa K224111487

2 Nguyễn Hoàng Nguyệt Cát K214070510

Ho Chi Minh City, July 4 2023 th

I OBJECTIVE ORIENTATION

II KEY ISSUES TO TACKLE

III EVALUATE OPTIONS

1 Criterion

2 List of options

3 Evaluation of the option

IV RECOMMENDATIONS

1 Recommendations

3 Market analysis

3.1 Five forces

3.2 5C Analysis

3.3 SWOT

3.4 Business model canvas

4 Financial analysis

V IMPLEMENTATION

1 Timeline

2 Resources estimation

3 Contingencies

4 Risk mitigation

VI CONCLUSION

VII EVALUATION OF THE CONTRIBUTION OF MEMBERS IN GROUP

CATEGORY OF FIGURES

Figure 1: Gap Inc.’s Competitive Landscape

Figure 2: Business Model Canvas of Gap Inc

Figure 3: Gap Inc.’s Financial Performance

Figure 4: Gap Inc.’s Sales and Net Income

CATEGORY OF TABLES Table 1: The timeline of our recommendation

Table 2: Contingencies maybe happen with our recommendation

Table 3: Evaluation of group

I OBJECTIVE ORIENTATION

The retail giant, Gap Inc., has faced numerous challenges since 2000,prompting the need for a transformative approach to regain its formerposition Also, it was required to assess clothing trends and modifycustomer preferences Their ability to determine consumer preferencesand quickly supply goods that meet those needs is a key factor in theirsuccess

The purpose of this report is to evaluate the solutions mentioned in thecase study Besides, our team will analyze the market and finances of GapInc., from which we will offer suitable solutions Additionally, we willconduct a thorough analysis of Gap Inc.'s competitors and industry trends

to identify potential opportunities for growth and innovation:

By leveraging advanced data analytics and market researchtechniques, we can uncover valuable insights into consumerpreferences and behavior, enabling Gap Inc to tailor its productsand marketing strategies accordingly

By promoting data-driven decision-making and utilizing big data toanalyze consumer preferences, Gap Inc will gain insight intocustomer behavior and provide a better customer experience To bemore specific, product 3.0 is a cutting-edge innovation thatcombines advanced technology with Gap Inc.'s expertise in theretail industry

Lastly, we will explore the potential benefits of strategic partnerships andcollaborations with other industry leaders to expand Gap Inc.'s reach andenhance its competitive advantage

II KEY ISSUES TO TACKLE

Slow growth in core market

GAP has been dealing with a significant challenge of declining sales andprofitability since 2015 One of the key factors contributing to thisdownturn is the company's failure to keep up with evolving fashiontrends Responding to this, Peck - CEO of Gap Inc affirmed that there is

a noticeable shift in consumer shopping habits, indicating a significantdeparture from the need to constantly add new clothes to their wardrobe.This change in behavior has disrupted the traditional fashion industry, asconsumers no longer seek out attractive fashion trends that once drove thebusiness forward Consequently, Gap Inc has experienced a notabledecline in revenue, highlighting the urgent need for innovative strategies

to adapt to this evolving landscape

Competition in the market

The apparel industry in the mid-tier was dispersed and crowded Withnumerous players vying for market share, such as Primark and Uniqlo,etc,Gap Inc had to find innovative ways to stand out from the crowd.Moreover, despite being a well-known retail giant, Gap Inc finds itselfgrappling with its own brand image In an increasingly competitivemarket, the company has faced challenges staying relevant and appealing

to consumers

The rapid growth in e-commerce

For apparel companies, it has never been more difficult to satisfycustomer demand given the explosive growth of e-commerce Themajority of consumer purchases were being made online instead of inphysical stores With Amazon leading the way, consumers were

increasingly turning to the convenience and variety offered by commerce As a result, traditional brick-and-mortar retailers struggled tokeep up The empty storefronts that once housed bustling stores nowstood as a stark reminder of this changing industry Even establishedbrands like Gap were not immune to this trend Recognizing the potential

e-of online sales, Gap Inc made significant strides in expanding theirdigital presence By 2017, their online sales had surpassed $2.5 billion

The evolution of fast fashion

It was impossible to keep up with the dizzying speed and tempo of thefashion cycle, which saw new trends hitting stores every week as part of

an ongoing cycle of renewal Due to decentralized buying and quickresponses to client requests, Zara can supply items to store systemswithin as short as 4 weeks, while Gap Inc takes up to 10 months This lag

in Gap's product cycle time puts them at a disadvantage in the fast-pacedfashion industry As a result, Gap Inc found themselves falling behind inthe race to meet ever-changing fashion preferences

Big and regular discounts

Retail analysts were concerned about an excess of price promotions atGap, where 40% discounts were frequent This excessive reliance onprice promotions raised concerns among retail analysts, who feared thatGap's brand image could be negatively impacted While offering frequent40% discounts may attract bargain hunters in the short term, it couldpotentially erode the perceived value and quality of Gap's products.Moreover, such a heavy reliance on price promotions may create aperception that Gap's regular prices are inflated, undermining customertrust and loyalty

-100% (7)

45

[221MI5217] Group 7 CASE GROW

100% (5)

17

Practical 02 Google Teachable Machine

Chuyền

đổi số 100% (1)

4

222IS2102 Group6 ewewewew

Outdated products

The classic products offered by Gap were losing favor with customersseeking to establish a distinctive identity Instead, they sought out nichebrands and independent designers that could provide them with a sense ofindividuality Gap's once reliable and iconic styles were no longerappealing to this new generation of consumers, who craved authenticityand personal expression As a result, Gap found itself struggling to keep

up with the rapidly changing fashion landscape

III EVALUATE OPTIONS

1 Criterion

To build the basis for the formation of options, we need to providespecific, selective, and close-to-target evaluation criteria In thiscase of Gap InFirst, there's feasibility and efficiency To ensure asuccessful change process, the proposed options must be based onthe company's available resources At the same time, the optionsmust have a positive impact on the change-making process Inorder to provide the best solution, the company must understandhow to use and allocate resources effectively

Second, there is creativity, originality, and collaboration Aprerequisite in the innovation process is to create uniqueness andsuperiority in products as well as work processes, thereby creating

a foundation for building competitive advantages and regainingmarket share Furthermore, collaboration is a factor that contributes

to the acceleration of the change process

Third, the ability to broaden experiences and meet the needs ofcustomers To address customer taste issues, solutions must aim to

Báo Cáo Thực Tập Ngôn Ngữ Anh Tại…

Quan TriKinh Doan… 100% (1)

22

improve customer experience by diversifying product segmentsand supply channels.

The fourth characteristic is the ability to accurately predictconsumer behavior Accurate consumer behavior judgment is thefoundation for deciding on actions to innovate, improve products,and business models

Finally, the consumer and the company must maintain a mutuallybeneficial relationship

2 List of options

Option 1 – Big Data in, creative directors out

Peck eliminated the position of creative director and spread theresponsibility for design of the brand’s seasonal lines to acollaborative team informed by hard data Due to this option, thefuture of the company does not depend on any individual Big Datahelps to produce products that are suitable for the individualpreferences of consumers instead of just depending on thesubjective aesthetic eyes of the creative director However, without

a creative visionary leading a company, it can’t establish aconsistent look over a period of time and reinforce a brand’spurpose Moreover, Data science simply isn’t sophisticated enough

to predict whether a product will be a hit

Product 3.0: “a clear brand vision with a common operating model.Gap used data analytics to inform its rebuys: after products weredesigned and placed into stores, real-time sales data was analyzed

to determine which items to reorder and which to abandon On theother hand, it needs products for testing and unpredictable for rawmaterial storage, rapid production

In imitation of his fast fashion competitors, Peck wanted Gap toincrease its competence at “combining spotting trends with readingreal-time performance data and acting faster on that”, using real-time data from its registers and e-commerce purchase data toinform what the company reduced for inventory going forwardthrough the brand’s vision statement as a filter Though, this option

is difficult to follow trends and deliver products to market in atimely manner like competitors

Product 3.0 shortened the development cycle down to 8-10 weeksenabled Gap to be much more nimble and responsive purchasingdata

Option 2 - Big Data and Predictive Analytics in Marketing

Digital Data streams allowed companies to observe theirconsumer’s purchase journeys and collect a detailed trail of dataabout their online behavior The mining of big data could yieldmany actionable insights to inform managerial decisions making

by uncovering patterns in past customer behaviors orcharacteristics It allowed “remarketing”or “retargeting” Thismeans that the company can also optimize marketing campaigns asthey can identify segments, potential customers, customerbehaviors to reduce risks in marketing Furthermore, based onaggregated data using similar users, or purchases, to recommendproducts to customers and decide on the optimal price for a product

is a way of optimizing marketing campaigns

As digital data streams became more accessible and robust,companies were exploring how to use data - mining and machine -learning to induct consumer preferences and predict futurebehaviors Moreover, using predictive analytics is to sell existing

products and for new product development Nevertheless, itrequires the company to have their own data systems and take a lot

of resources to process

Option 3 - Predicting Consumer Preferences

Predicting consumers' future fashion tastes was a difficultproposition Relying on past purchase behavior was alsoproblematic as research in consumer psychology showed thatconsumers’ preferences were constructed rather than revealed,subject to marketers’ manipulation, unstable over time, andtherefore unpredictable A consumer’s individual’s tastes developedwithin the context of social influences, including the tastes ofothers, their membership in a variety of subgroups, and theprevailing fashions of the time

Option 4 - Shifting the Distribution Model

Whether to partner with Amazon and allow it to sell Gap’s brandedproducts through its online platform Manufacturers typically hadtwo alternatives if they wanted to sell their product on Amazon.The first alternative was to become a third party seller onAmazon’s marketplace The second option was a wholesale model.Amazon could provide Gap with access to customers when theyweren’t shopping on the company’s own platforms Expand onlinedistribution by becoming a partner with Amazon and allow it to sellGAP - branded products through its online platform - a goodchoice to present the whole product assortments This solves thelimitation in reaching customers, and takes advantage of theopportunity to accompany consumers when the explosion ofelectronic devices is taking place After all, this may cause losingfocus on the Gap’s products when there are too many brands

3 Evaluation of the option

The solutions that Peck offers are all aimed at solving the problem ofdeclining sales, brand recognition and other difficulties that businessesface And Peck's solutions all have in common that they focus on digitaltransformation, leveraging Big Data to improve products and customerexperience And the application of technological achievements to theoperation of such enterprises is a suitable strategy in today's industry 4.0.Technology adoption will drive customer behavior predictions andexpected fashion trends Technology has also revolutionized the waybusinesses operate in the modern marketplace, as demonstrated by theadoption of online platforms to drive sales and gauge purchasing trendsand patterns consumer market Thus, by expanding its e-commerceengagements through online retailers like Amazon, GAP will not onlyincrease sales, but also mine data for market analysis purposes

Peck’s decision was wrong to fire his creative directors and replace themwith big data that drives the creative process, because creative directorscan very well create uniqueness for the product and they are considered to

be trendsetters who are responsible for creating fashion Many creativethinkers believe that big data will help companies create more powerfuland accurate forecasts Creative directors are also responsible for acting

as guardians of the company's image and product-related ideas andinspiration Not only that, creative directors tend to set the designdirection for each product line, create a small number of pieces ofinspiration, and oversee and approve the product's designs The creativedirectors' personal visions underpin and set the tone, feel, look and spirit

of the entire brand Furthermore, the tendency to grow Gap in fast fashion

is not the sustainable solution

IV RECOMMENDATIONS

1 Recommendations

Based on the synthesis of problems encountered by Gap Inc and analysis

of the solutions that enterprises pose, the following are suggestions toovercome the weaknesses in Gap's solutions: The use of Big Data to bringthe solutions to the problem making predictions about trends and productideas in line with consumer tastes with high accuracy but lacking inoriginality and novelty Therefore, Gap Inc should consider takingadvantage of the harmonious coordination between the roles of creativedirector and Big Data to be able to optimally exploit the strengths of eachparty in the research process Businesses will use Big Data in analyzingactual consumer behavior Based on the information that Big Data brings,the creative director will be the final decision maker for the next producttrend of the business according to his own perspective, experience andknowledge

As a manufacturer following fast fashion trends to increase itscompetitiveness with potential competitors, Gap should also considerimproving the value of its products through the use of moreenvironmentally friendly fabrics with increased high quality products.Not only will this help Gap fulfill its responsibility to the environment,but it can also help Gap stand out from the multitude of businesses thatare also following this fashion trend In addition to partnering with onlinefashion retailers online, e-commerce platform, Gap should also investresources in developing its own website in order to minimize the risk ofdependence on the above businesses, and at the same time create its ownmark among consumers, strengthen its brand awareness

Businesses should develop both offline and online platforms accordingly

to reach a wide range of customers and meet the shopping needs of each

customer group:

At physical stores: positioning products correctly (using AI Vision

to identify best-selling items and appropriate placements toincrease purchase rate)

On e-commerce platforms, promote user experience (UX) on thecompany's website, landing page, and app (using big data toevaluate traffic on these platforms and determine the bestconfigurations, layouts, and UIs)

3 Market analysis

Competitive rivalry: GAP Inc operates in a highly competitive industry,

with numerous competitors such as H&M, Zara, and Uniqlo This intenserivalry can lead to price wars, increased marketing efforts, and constantinnovation to differentiate themselves from competitors

Bargaining power of suppliers: GAP Inc sources its products from

various suppliers around the world In some cases, suppliers may havesignificant bargaining power due to their size, exclusive agreements, oraccess to unique raw materials This can result in increased costs for GAPInc or limited availability of certain products

Bargaining power of customers: Customers have numerous options

when it comes to clothing and fashion retailers This gives them thepower to demand competitive prices, quality products, and a satisfyingshopping experience GAP Inc needs to constantly meet customerexpectations to retain their loyalty

Threat of new entrants:

The fashion retail industry attracts new entrants constantly, especially in

13