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Tiêu đề Predicting Consumer Taste with Big Data at Gap
Tác giả Nguyễn Phương Duyên, La Thế Anh, Trịnh Quốc Thịnh, Nguyễn Thúy Vy, Nguyễn Bùi Quỳnh Anh, Nguyễn Lê Anh Thư
Người hướng dẫn Master. Nguyễn Thế Đại Nghĩa
Trường học University of Economics and Law
Chuyên ngành Digital Transformation and Artificial Intelligence
Thể loại Report of Case Analysis
Năm xuất bản 2021-2022
Thành phố Ho Chi Minh City
Định dạng
Số trang 30
Dung lượng 3,47 MB

Cấu trúc

  • I. OBJECTIVE ORIENTATION (4)
  • II. KEY ISSUES TO TACKLE (5)
  • III. EVALUATE OPTIONS (8)
    • 1. Criterion (8)
    • 2. List of options (9)
    • 3. Evaluation of the option (12)
  • IV. RECOMMENDATIONS (13)
    • 1. Recommendations (13)
    • 2. Our recommendation solves the issues (14)
    • 3. Market analysis (15)
      • 3.1. Five forces (15)
      • 3.3. SWOT (20)
      • 3.4. Business model canvas (24)
    • 4. Financial analysis (24)
  • V. IMPLEMENTATION (26)
    • 1. Timeline (26)
    • 2. Resources estimation (26)
    • 3. Contingencies (28)
    • 4. Risk mitigation (29)
  • VI. CONCLUSION (29)
  • VII. EVALUATION OF THE CONTRIBUTION OF MEMBERS IN TEAM (30)

Nội dung

Secondly, Gain insight into customer behavior and deliver a better customer experience by driving data- iven decision-making and drutilizing big data to analyze consumer tastes Gap Inc..

OBJECTIVE ORIENTATION

Gap Inc is an American worldwide retailer of clothing and accessories, has faced a decline in sales since 2015, and is under pressure from market competition due to its use of analysis strategies of traditional and individual focus models Therefore, Gap Inc.'s new strategies are needed to turn the tide

To get this, the proposals should achieve the following objectives:

Firstly, recover the declining sales of clothing products provided by Gap Inc and boost sales by promoting analysis of consumer tastes Secondly, Gain insight into customer behavior and deliver a better customer experience by driving data- iven decision-making and dr utilizing big data to analyze consumer tastes Gap Inc aims to build a technology-modernized business model, especially focusing on developing Product 3.0

Finally, increasing competition with new competitors such as H&M and Zara as well as strengthening partnerships with businesses specializing in e-commerce and applying technology in business to create the foundation for the use of big data analytics consumer tastes Based on the above goals, in order to increase practicality, businesses need to set goals that are proven specifically through numbers:

According to revenue figures from 2015, Gap Inc continues to decline in revenue with an average of 2.35% per year Therefore, with the strategy, businesses must achieve growth of at least 10% per year and be offset by the annual decline rate from 2015

In effective business, customers always play an important role, so it is necessary to increase the customer retention rate by 10-35% with Gap and Banana Republic brands because currently, the dislike rate of these brands is higher than the number of customers like

Strengthen external relations, take advantage of cooperation with electronic markets (Amazon, Alibaba, ), and win 15% of online shoppers of Gap branded products through online platforms its.

KEY ISSUES TO TACKLE

Declining sales following two years since 2015 - The main issues of GAP

Since 2015, GAP has faced a serious challenge of declining sales and profitability Net sales for fiscal 2015 decreased 4 percent to USD 15.8 billion compared with USD 16.4 billion for fiscal 2014 Gross profit for fiscal 2015 was USD 5.7 billion compared with USD 6.3 billion for fiscal 2014 If we look at Gap’s two most important segments - Gap Global and Banana Republic - we see that both have seen a decline in comparable sales of 4.0% and 12.0%, respectively Not only in 2015, but for the next two years, Gap still struggled with negative sales growth Meanwhile, Gap’s peers in apparel retailing, including TJX Companies, L Brands, and Ross Stores have reported positive comparable sales growth in their last fiscal years compared to a flat growth by Gap TJX Companies had 2.0% organic growth, while Ross Stores and L Brands had 3.0% and 4.0% growth, respectively These numbers pose a big challenge for Gap to find a solution to recover and regain market share before it is too late

In general, the main problem leading to Gap's sales decline during this period was an inability to keep up with trends Its clothing has failed to entice shoppers, swinging from uber-trendy to boring basics The company no longer seems to know what sets it apart from competitors

Figure 1: The decrease in sales in 2015 of Gap Inc in general and Gap brands

Figure 2: Sales growth at Gap Inc.’s main brands

The delicate balance between creativity and commercialization

Upsetting the delicate balance between creativity and commercialization, between designers and merchants, that existed at most fashion brands and that had supported Gap Inc.’s fashion cycles for decades Creative directors are aesthetic designers, highly trained in design, and use their unique eyes, attitudes, and personalities to shape tomorrow's fashion As arbiters of taste, they have provided legitimacy and credibility to new trends with their seal of approval Compared to creative directors, merchants or salespeople, the fashion industry is closer to the market, with a more commercial orientation They are responsible for selecting products to create a consistent product assortment for each store in order to reach a specific target consumer at a particular price location The merchants are market-aware, while the creative directors are the market leaders The differences in the function between creative directors and merchants lead to conflicts in working styles and an imbalance in the division of responsibilities

Lack of ability to analyze and predict customer behavior

Since the early 2000s this company’s inability to take into account the dynamics of clients’ behaviors in the apparel market According to the case given, Gap failed to put in place an appropriate product assortment mechanism in line with customers’ changing needs and expectations in the fashion sector (Israeli and Avery 5) As a result, competitors such as Zara and H&M could easily gain a considerable share of the apparel market in the United States by offering fast fashion items at low prices compared to the case of Gap

The application of traditional methods of predicting customers’ future tastes and behaviors was ineffective for Gap As a result, clients shifted to rival companies that provided trendy apparel for both basic and fashion-forward items Gap’s use of conventional market research approaches was ill-informed Such methods could not allow this company to predict its clients’ future behaviors and deploy factors that could influence their tastes and fashion preferences

The rapid growth in e-commerce

When it comes to e-commerce, competition is always high The rapid growth in e-commerce poses a great challenge for apparel companies in meeting customer needs Many consumers were shifting their purchasing from brick-and-mortar stores to online channels As online sales grew, brands did not need the same number of physical stores At that time, GAP had over 3000 stores A large number of stores puts pressure on Gap to transform its business model The increase in online shopping also requires Gap to balance resources to operate online shopping channels and physical stores at the same time, otherwise, it is easy to lead to losses

Rise of Fast-Fashion model

The rise of the new clothing industry business model fast-fashion – – makes the products of traditional apparel companies like Gap lag behind the trend While Gap's product cycle is ten months, fast fashion brands need only four weeks to design and deliver their new products to customers The nature of Gap’s supply chain, which wasn’t designed for a fast-fashion world, makes it difficult for Gap to get its merchandise to market quickly Major competitors, such as Zara and H&M, became even stronger as they quickly adapted and converted to this new model

The transformation from asset to ability

Gap’s size and ubiquity were transforming from asset to ability Consumer tastes change with the increasing demand for personalization and uniqueness, making Gap’s classic and mass products no longer suitable.

EVALUATE OPTIONS

Criterion

To build the basis for the formation of options, we need to provide specific, selective, and close- -target evaluation criteria In this case of Gap Inc, the to necessary criteria for the options evaluation process include:

Firstly, feasibility and effectiveness To ensure that the change process can take place successfully, the proposed options must be based on the available resources of the company At the same time, options must have a positive effect on the process of creating change Combining the two factors above, in order to come up with the most optimal solution, the company must know how to utilize and allocate resources effectively

Secondly, creativity, originality, and collaboration A prerequisite in the innovation process is to create uniqueness and excellence in products as well as work processes, thereby constructing a premise to build competitive advantages and regain market share Besides that, collaboration is a factor that helps accelerate the change process

Thirdly, the ability to diversify experiences and meet customer needs

In order to solve the problems of customer tastes, the proposed solutions must achieve the goal of improving the customer experience, offering a variety of product segments and supply channels

Fourthly, the ability to accurately predict consumer behavior Accurate judgment of consumer behavior is the basis for deciding on actions to innovate and improve products and business models

Finally, maintaining a beneficial relationship between consumers and the company.

List of options

In Peck's view, some options to help Gap Inc improve business performance include using Digital and Big Data, using Big Data and firing Creative Directors, using Predictive Analytics in marketing, predicting consumer preferences, Product 3.0, and Shifting the distribution model

Option 1 Using Digital and Big Data–

Considering the changes in customers’ shopping behavior, Peck decided to invest heavily in digital capabilities to address the consumer shift to omnichannel shopping, centralizing on removing the wall between the physical channel and the digital channel

The most important action of this option is promoting data-driven decision-making As the company moved into the digital realm, Peck pushed its managers to continually test and refine new features as the company listened to customers through its “voice of the customer” initiatives, which tracked customer feedback and usage This creates an opportunity to improve the product and enhance the customer experience For example, Gap collected data and discovered that customers wanted to buy online but still preferred to try on the clothes Gap worked with Google and Avametric to develop an augmented reality app that allowed shoppers to test out different looks to improve their online and mobile shopping experiences Besides that, Peck developed email programs to provide relevant, personalized messages to customers in order to personalize customers’ experiences Moreover,

10 using data-driven decision-making also helps Gap to manage the closing of underperforming stores The company used the collection of insights from consumers’ online browsing activity and engagement in social media platforms to help understand why consumers were not buying as much from Gap’s physical stores Based on a thorough analysis, Peck continued to develop Gap’s digital and mobile e- commerce platforms to drive customer engagement

Option 2 - Big Data In, Creative Directors Out

As we mentioned in the previous section, the creative director is the person responsible for creating the creativity and uniqueness of the product As arbiters of taste, they have provided legitimacy and credibility to new trends with their seal of approval Creative directors are always seen as an integral part of most companies, especially apparel companies However, Peck was always skeptical of Gap’s creative directors He advocated eliminating the position of creative directors and spreading the responsibility for designing the brand's seasonal lines to a collaborative team informed by hard data

Option 3 - Using Big Data and Predictive Analytics in marketing

Digital data streams allow companies to observe consumers' buying journeys and collect detailed data about their online behavior As digital data streams become more accessible and powerful, companies are exploring how to use data mining and machine learning to generate consumer preferences and predict future behavior in the marketplace The two main goals of using predictive data are to sell existing products and to develop products for the future

Predicting the future fashion tastes of consumers is a difficult proposition Traditional market research methods, such as surveys, focus groups, and interviews, are often inadequate, as consumers are notoriously poor at predicting their future behaviors Modern market data collection also has some problems because consumer psychology research shows that consumer preferences are built, not revealed, and subject to marketers’ manipulation, unstable over time, and therefore unpredictable So in order to ensure the most accurate customer taste prediction process possible, Gap must combine both traditional and modern market data collection methods

Option 5 - Product 3.0 at Gap: “A clear brand vision with a common operating model”

In a strategy Peck calls Product 3.0, he promises to combine “a clear brand vision with a shared operating model.” The new brand vision governs every design, sales, inventory, and manufacturing decision so Gap can identify trends, make them relevant to its customers, test them at stores and respond demand-buying more of what’s on sale and quickly get rid of what's not available with the goal of fewer fashion misses and markdowns In place of a creative director, each brand's vision statement acts as a filter so that trends can be consistently associated with the brand's image Besides that, to imitate its fast- fashion competitors, Peck wants Gap to enhance its ability to combine detected trends with real-time performance readings and act faster on them Moreover, in terms of characteristics, Product 3.0 is heavily based on the analysis of customer purchase data so it is necessary to find the correct data analysis tools Google Analytics data is also a source of inspiration

Option 6 - Shifting the Distribution Model

Another key decision being made is whether to partner with Amazon and allow it to sell Gap-branded products through its online platform

Figure 3: Traditional Model and New Model of Gap Inc

Evaluation of the option

According to our group's analysis, in general, the proposed options are consistent with the established criteria Those options are all aimed at addressing the decline in sales and improving Gap's business All options focus on digital transformation, application of big data, and other technological achievements to improve products and enhance customer experience This is a perfectly suitable plan to catch up with the development of industry 4.0 In our perspective, the adoption of technology will foster the prediction of customers’ behavior and the expected fashion trends, thus allowing Peck and his managers to record improved product innovation to suit clients’ preferences Technology has also revolutionized the way businesses operate in the modern market, as denoted by the adoption of online platforms to boost sales and gauge consumers’ purchasing trends and market patterns Hence, by broadening its e-commerce engagements through online retail companies such as Amazon, Gap will not only increase sales but also mine data for its market analytics purposes Such an innovative approach is crucial to the success of Gap in the current clothing industry

However, the fact is that no matter how developed technology is, it cannot completely replace the role of people in economic activities In our viewpoint, Peck was not correct in firing his creative directors and replacing them with big data drives the creative process, because the creative directors most likely add uniqueness to the product, and they are considered trendsetters who are responsible to create fashion Many creative thinkers believe that big data will help the company in creating more powerful and accurate forecasts The creative directors are additionally accountable to serve as guardians of the company's image as well as for the ideas and inspiration regarding products Not only this, but the creative directors also tend to establish the design's direction for each product line, creating a small number of inspiration pieces and overseeing and accepting the product's designs, thus the personal vision of the creative directors reinforces and establishes the tone, feel, look as well as the spirit of the brand as a whole Furthermore, the creative directors are the artistic visionaries and they establish the feel, look & tone of the brand Particularly, the creative directors tend to create a few aspiration pieces and then the merchants and the lower-level designers figure out how to create multiple designs from these pieces, thus the creative directors give the vision of what the brand should be.

RECOMMENDATIONS

Recommendations

On the basis of the analysis of Gap Inc.’s objectives and issues, we have summarized and presented these proposals to change the company’s operation method, returning its position, and helping it move forward on a respectable path

With the aim of making difference, Gap has to increase the application of technology, utilizing big data is one of the most important ways, it can help to predict consumer tastes and behaviors in real-time and warn about changes anytime they happen Therefore, senior managers of Gap Inc will have enough information to orientate new lines of products that are suitable for each customer segment and satisfy customer demand

Following the technological innovation, developing the Creative Director's role, and establishing a collaborative, decentralized, data-driven model are

14 also necessary Depending Creative Directors’ eyes couldn’t always make the right decisions, if they’re off the mark, approve a wrong line of products, sales collapse and so does Gap’s stock price Instead of that, the company should establish a collaborative, decentralized model with the management of the Creative Director so it can generate a better vision by mining big data using Analytics Tools (Google Analytics, Google Trends), social media, the company’s own sales, and customer databases

After that, Gap Inc should expand online distribution on e-commerce trading platforms, establish sustainable relationships between physical and digital channels; increase digital marketing & e-commerce such as cutting down inefficient physical stores, focusing on developing main stores, and improving the application and UX on the website (E-commerce) “Gap’s next CEO will need to find a better way to connect with younger shoppers through product, marketing, and digital ”

Repositioning the brand of the company is always a top priority, Gap has to create different and quality product lines to meet the needs of customers

Another important step in implementing the company's digital transformation is the application of AI Based on data from AI Vision, Gap could gain user experience and their purchasing ability by:

At physical stores: arranging products in the right places (using AI Vision to find out best-seller products and suitable places to put them on to gain purchase rate)

On E-commerce platforms: promoting UX on app and landing page, website of the company (using big data to analyze traffic on these platforms in order to specify the right decisions about arrangements, layouts, and UIs of them).

Our recommendation solves the issues

Through the analysis process, there are two main issues that Gap Inc is facing: Declining sales and the appearance of potential opponents These are clear ways that the following recommendations could solve them:

About declining sales, the issue’s main reason is the lack of information about customer tastes and preferences Additionally, the method of depending on just only the Creative Director’s eyes is ineffective Because of that, Gap Inc can’t determine the accurate needs and tastes of consumers, which leads to unsuitable product lines being created To solve this problem, increasing the application of technology is one of the best ways, utilizing big data can help the company analyze consumer behaviors in real-time and then give warnings Based on that information, the management will re-establish product lines more suitable for each customer segment and create products that satisfy customer needs

The appearance of potential competitors is also a great threat to the company With the high changeability and low price of fast fashion, a series of these model brands sprang up, such as H&M and Zara These brands can easily gain a considerable share of the apparel market by offering fast-fashion items at low prices competing against Gap Inc Therefore, Gap should promote digital transformation With AI, the company could build stores and brands on E-commerce platforms quickly, making the user experience higher Not only that, AI Vision technology could help arrange the right products in the right places to increase the purchase rate of customers This method can also be used in physical stores with the same consequence After all, Gap’s brand name will be enhanced, and the user experience when making a transaction at Gap’s stores will be improved Since then, Gap Inc.'s position and competitiveness have also been restored and developed more and more sustainably.

Market analysis

The threat of New Entrants is moderate

The apparel industry is attractive for entrepreneurs because it has short product life cycles, tremendous product variety, volatile and unpredictable demand, and long and inflexible supply processes The global apparel manufacturing industry is expected to grow more than ever in times to come Therefore, this field has many rivals such as Gap, Macy’s, and Zara with long years of seniority, large scale, stabilized

16 stand, strong brand, and their loyal customers Moreover, access to distribution channels represents one of the most significant barriers for new market entrants, since it is difficult to find vacant places in attractive locations to open new stores The need for large capital requirements to set up the business and expected retaliation from the current market players are additional challenges to be faced by potential new market entrants If they have no right direction in operation, they will be drowned in the market But new entrants in Apparel Stores could bring innovation, and new ways of doing things and put pressure on The Gap Inc through lower pricing strategy, reducing costs, and providing new value propositions to the customers The apparel industry is always changing and developing according to new trends, so if Gap Inc still keeps traditional methods, it will lead to losing its position in the market As a consequence, the company has to manage all these challenges and build effective barriers to safeguard its competitive edge

Bargaining Power of Suppliers is low

Because Gap Inc buys its raw material from numerous suppliers, the power of suppliers is not a threat to it Consequently, the suppliers are unable to charge high prices for fear of losing contracts to competitors who may offer the same goods and services at a cheaper price But suppliers in dominant positions can decrease the margins Gap Inc can earn in the market Powerful suppliers in services sector use their negotiating power to extract higher prices from the firms in the Apparel Stores field The overall impact of higher supplier bargaining power is that it lowers the overall profitability of The Gap Inc

Bargaining Power of Buyers is high

Customers have significant negotiating power in the fashion sector The cheap switching costs from one store to another are one of the causes Customers often decide to shop at a rival store when they are displeased with the design or cost of the clothing at one particular retailer In order to keep customers, a store must provide them with the best products available in terms of quality, price, and trend Buyers can be a picky bunch They want to spend as little money as they can while purchasing the best products Long-term profitability for The Gap Inc was impacted by this Gap Inc.'s consumer base is smaller and more influential, hence the higher the bargaining power of the customers and their ability to seek increasing discounts and offers

Threats of Substitute Products or Services are weak

In the fashion industry, alternative methods of acquiring designer clothes to shopping at clothing stores are very limited because clothing is a basic need and cannot be substituted Because of this, there is less competition from similar products Making your own clothes and wearing clothes that have been handed down are the most popular alternatives Both of those solutions are unattractive due to the time commitment and variations in personal preferences for the option of donning second-hand clothing However, there may be emerging fashion trends and fresh apparel designs that the brand is not yet producing We can conclude that the threat of substitutes is a weak factor to change the competitive landscape of the company in this situation because of the dynamic nature of the industry and our assumption that any such trend could be easily copied by the company Designs that are regionally inspired and created on a much smaller scale are examples of clothing that can compete with popular styles, although their danger to The Gap Inc.'s status is still very low

Rivalry among the Existing Competitors is fierce

The introduction of new trends in fashion makes the industry extremely dynamic Since the customers have many options to purchase clothing, switching costs are low, which allows them to experiment with different brands and look for the best deals and experiences, the rivalry among the existing players in the apparel industry is intense and will drive down prices and decrease the overall profitability of the industry, this competition does take a toll on the overall long term profitability of the organization A hefty portion of customers’ willingness to pay comes from the label they are purchasing and how well they can resonate their

18 lifestyle with what the brand stands for

Providing this premium experience is not easy for local brands, which are therefore not direct competitors of GAP

However, different semi- premium to premium brands offers similar experiences, pushing the company to continuously augment its offerings and experiment with newer things According to

"Brand Consideration among Non-Millennial Consumers", the Old Navy's brand consideration is (+45%), while Gap was above average at (+29%), and Banana (+18%) As for "Brand Consideration among Millennial Consumers", Old Navy had among the highest brand consideration (+53%), Gap (+35%), and Banana the lowest (+22%) It can be clearly seen that in the three brands, only Old Navy is a "worthy competitor", while the remaining two brands have a much lower level of popularity than competitors of the same economic scale It is therefore important that Gap Inc has to adapt to new trends so as to attract consumers and create brand loyalty

Figure 4: Brand Consideration among Non- Millennial Consumers

Figure 5: Brand Consideration among Millennial

Gap Inc is a company with long seniority and success in growing its brand But during the last tenure of Millard “Mickey” Drexler, Gap Inc had begun to enter a period of declining revenue The factors that create Gap's competitive advantage can be mentioned as its strong brand portfolio, global presence, franchising system, and financial strength The next important thing is to solve problems that the company is facing Due to a lack of information about customer tastes and behaviors, Gap Inc had made the wrong decision in creating new lines of products being unable to meet customer needs, hence dropping revenue Therefore, Gap Inc has to do digital transformation

Gap Inc operates around the world so it also has a lot of global partners, some typical collaborators are EmbraceRace, Empower@Work, and NAACP…

The key partners of suppliers for input materials, retailers, the franchising system, and famous Models help Gap Inc to increase its name on the market and have a smooth international supply chain Based on the following collaborators’ advantages, Gap Inc makes a variety of distribution strategies such as:

 Gap Inc.'s distribution strategy at the store

 Gap Inc.'s distribution strategy through many indirect channels

 Gap Inc.'s distribution strategy through authorized units

 Gap Inc.'s distribution strategy through a high-level authorized unit

 Distribution strategy of Gap Inc through website and telecommunications company

Gap Inc is an apparel company with a target of customers in every segment From kids to oldman, male to female, the company could offer a product line that is suitable for that segment Regarding region, Gap pays special attention to Europe and Asia

In addition, there is another segment of customers - Retailers They’re important people who help Gap speed up its sales cycle and push on the growth

Gap's main competitors include Zara, H&M, and Forever21 These brands could really greatly enhance sales volume and also turnover ratio Gap Inc is actually trying to resurrect itself, however, the consequences are unclear, and the company has been rapidly declining The company has begun a transformation program to create a more streamlined and effective business model It is necessary for the brand to rebuild its brand identity because of its challenging situation

Although Gap Inc is a global company with many years of operation, like many other businesses, it is also affected by macro factors from national policies and business strategies For example, in December

2015, FED rate increased from 0-0,25% to 0,25%-0,5%, Gap has to account for the rising in debts Also in that year, “Sanctions War” between Russia and Europe broke out, and both Russia and the EU's economy were badly affected, thus a lot of businesses including Gap fell into a state of terrible declining sales

Gap’s main strength is its Global appeal Over the years Gap Inc has invested in building a strong brand portfolio The SWOT analysis of The Gap Inc just underlines this fact This brand portfolio can be extremely useful if the organization wants to expand into new product categories Some individuals will want to identify with another culture’s values if they perceive them as superior to theirs Gap Inc is globally recognized as an icon of American style and pop culture Therefore, individuals who would want to be identified with the American style will naturally go for Gap merchandise

Another major strength is the company’s global presence Its stores are located in several countries across the world, which include: the U.S, U.K, Japan, France, Canada, and Ireland among others Other than the company-owned stores, it also has franchise stores in some countries such as Turkey, United Arab Emirates, among others It has successfully integrated a number of technology companies in the past few years to streamline its operations and build a reliable supply chain Highly successful at Go Market strategies for its products to

Financial analysis

Fixed costs are expenses that do not change based on sales That is, they are expenses that the business has committed to that are not tied to the volume of production Fixed costs have little or no change Typically fixed business expenses include facilities, infrastructure, wages, insurance, equipment rental, car rental, utility payments, phone service, Variable costs change over a certain period of time and are directly related to the business These are based on the business results and the volume of services the business generates Some examples of variable costs include direct labor, commissions, taxes, operating expenses, investments, etc

It is estimated that if the revenue is 100%, about 65-70% will be used to cover the cost Of which, about 30-40% are variable costs This difference is due to the fact that businesses are very dynamic and easy to adapt to the impacts of the market to develop strongly

Based on actual data of Gap Inc achieved revenue of $2.5 billion in

2017 and the goal of the team's proposal, forcing revenue to achieve more than that Annual revenue growth of 10%, of which 2.5% offset the decline since 2015, the rest is to promote technology investment in business operations According to the group's plan, by May 2018, Gap Inc will start using Big Data in operations that require a lot of costs, so from May 2018, Gap's revenue must be 15% per month and this 5% will be used to invest in development Decentralized and data-driven business model system development

Figure 7: Revenue Prediction of Gap Inc

IMPLEMENTATION

Timeline

Timeline, which is designed based on the long process of Gap Inc Since 2017, marked the strong growth of Gap Inc., with online sales exceeding $2.5 billion So, the target of our team is the recovery, development, and expansion of Gap Inc in a year

Table 1: The timeline of our recommendation

1/2017 Developing the creative director’s role and starting to make a collaborative, decentralized, data-driven model 5/2017 Utilizing big data to predict consumer tastes

1/2018 Compensation for losses, profits, technology, and e- commerce investment

In early 2017, Gap Inc needed to recover its revenue and organizational structure after a period of decline Starting to build a collaborative, decentralized, data-driven model According to the assessment team, 5 months is a reasonable time for Gap Inc to recover, stabilize, and grow By May 2017, Gap Inc will apply Big Data to the process of analyzing consumer tastes based on supporting tools such as Google Analytics, Google Trends to give customers the best experience and accelerate business growth By the beginning of 2018, according to the set target, the enterprise will have outstanding growth and create great resources to make technology investments and e-commerce for businesses.

Resources estimation

There are three following resources: budget, technology, and collaborators

For budget: Quality is an important element that attracts consumer interest the most Gap Inc needs to use our budget to improve the quality of our products in the best way Gap also deploys some marketing strategies to bring our products closer to consumers Besides, Gap frequently organizes special programs for consumers in order to give them good shopping-online experiences In this way, we can impress customers and make them loyal customers in the near future For technology: The adoption of technology in Gap’s market research is crucial for augmenting its sales in the highly competitive apparel industry Most clients had already integrated technology into their shopping behaviors In this perspective, the adoption of technology will foster the prediction of customers’ behavior and the expected fashion trends Technology has also revolutionized the way businesses operate in the modern market, as denoted by the adoption of online platforms to boost sales and gauge consumers’ purchasing trends and market patterns Hence, by broadening its e-commerce engagements through online retail companies such as Amazon, Gap Inc will not only increase sales but also mine data for its market analytics purposes Businesses with advanced technology will bring a lot of dramatic benefits so this is the reason we think investing in technology is vital

For collaborators: Gap Inc can’t develop when operating independently without cooperation with other companies Especially, promoting e-commerce along with using big data to analyze consumer trends requires Gap Inc to link to markets that receive constant interaction from consumers such as Amazon, Alibaba, Due to this, Gap tightens cooperation with Amazon, which is known as a world- class company in online retail, as well as other collaborators Thanks to connections, Gap’s products can be easily accessible to consumers and sales can significantly increase

Contingencies

Table 2 Contingencies maybe happen with our recommendation :

The business does not have enough funds to invest in technology

Call for support from partners

Discord with suppliers, and partners

Resolve conflicts by negotiating, come together to make decisions that bring benefits for both sides

(natural disasters, epidemics, ) lead to changes the structure in of consumer goods

In case the product’s quality is damaged, quickly replace that product with a new one to avoid a bad consumer experience

Consumers give negative feedback about the product

Review product quality whether the feedback is right or wrong, apologize to consumers and give a suitable compensation

The company does not make a profit in the early stages of strategy implementation

Evaluate the process to figure out the reason and then provide the right solution In case the reason infers from going in the wrong direction, immediately adapt to avoid failure in the long run.

Risk mitigation

Market competition: Facing a high level of market competition, Gap Inc needs to make use of available brand value and consumer trust The consumer is the key that decides partly the company's success so Gap Inc not only reinforces but also constantly enhances its position in the market by quickly capturing trends, and establishing eye-catching and high-quality lines of products with impressive prices

Decentralized model without unity: Organizing company structure is very crucial that decides whether the development process is successful or not Gap Inc needs to review the organizational structure and rectification timely if discovering mistakes To create company unity, Gap Inc needs to divide into different departments that take over specific roles Departments determine the goals they need to achieve as well as unite with the general goals to help the company develop stably

Diversifying consumer goods: With the development of the economy, the demand of consumers also increases For each consumer segment, there is a block of demands so if Gap Inc wants to gain success, it needs to meet all the demands in every segment To do this, Gap Inc classifies segments in the market and then determines exactly their demands in order to offer suitable products In this way, consumers are easier to choose and afford our products, which helps us raise our sales

Partner's departure: To avoid a partner's departure, in a period of cooperation, Gap Inc needs to maintain constant agreement together in all aspects to avoid unworthy conflicts that affect company business Besides, Gap Inc also finds potential partners to broaden cooperative networks and then bring products close to consumers.

CONCLUSION

The failure of Gap to adapt to the changing patterns in the clothing market has undermined its competitiveness, as denoted by the dropping value of sales in the recent past Creative directors in the company have failed to take into account the dynamic aspects of the contemporary market, thereby failing to develop brands that suit consumers’ evolving fashion tastes Facing a decline

30 in sales since 2015 and under pressure from market competition, Gap Inc proposed objective settings, that recognize the key issues to tackle with the main issue: declining sales following two years since 2015 From the options above we can see that options are satisfied with the set of criteria However, despite the growing popularity of Big Data driving the creative process in the market; in my viewpoint, Peck was not correct in firing his creative directors and replacing them with big data driving the creative process In our view, combining utilizing Big Data to analyze consumer tastes, developing the Creative Director's role, and establishing a collaborative, decentralized, data- driven model will revive the declining sales of clothing products offered by Gap Inc.

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