môn học chuyển đổi số và trí tuệ nhân tạo gap inc

CHUYEN DOI SO VA TRi TUE NHAN TAO

Giang vién: Nguyén Thé Dai Nghia

Mã lớp hoc phần: 215MI5202

Ca học: Sáng thứ 3 Nhóm sinh viên thực hiện:

TABLE OF CONTENTS

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B Key issues e6 4

NI List of issues hé ốe

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A OBJECTIVE

1 Summarize the objective of your proposal - Use predictive analysis to sell existing products - Use predictive analysis to sell new products - Predicting consumer interests

- Looking forward to the future

2 Replace the position of creative director for each of the firm's fashion brands with a more collective creative ecosystem

Peck was betting that market intelligence fueled by Big Data could outperform a creative director at predicting the future fashion tastes of consumers Could data-mining replace the artistic vision of a creative director? Was this the night approach to fashion development for all three of Gap’s brands? Selling Gap’s products on Amazon could open up a whole new data stream to Peck and his managers, providing insight into the shopping habits of existing customers when they weren’t shopping on the company’s own digital platforms or in their stores, and providing access to new customers not currently attracted by the company’s distribution efforts Should he allow Amazon to sell his brands?

3 Address consumers' shift to omnichannel shopping, focusing on dissolving the wall between the physical and digital channels

3 Deliver a better customer experience.

B KEY ISSUES TO TACKLE I List of issues

1 Slow growth in core markets

Gap Inc competed in the $3 trillion global apparel industry, which accounted for 2% of the world’s gross domestic product (GDP) The U.S and Canadian markets accounted for over $340 billion and were expected to grow annually by 2% through 2025 These two markets accounted for 84% of Gap’s sales

Millennials were spending less on apparel Speaking to investors at a retail conference, Peck claimed that “there are no compelling [fashion] trends driving the business” and lamented that there had been a change in consumers’ buying habits such that there was a lack of need to replenish their closets

4 Rise of Fast Fashion

New competitors, such as H&M and Zara, compressed supply chains, delivering low- priced looks knocked off from luxury fashion runways within weeks of their unveilings With an average product cycle time of 10 months, Gap lagged competitors such as Zara which could deliver products to stores within four weeks due to their consumer- responsive and decentralized buying process, which allowed individual stores to order small batches of product, wait to see how consumers responded to it, and then airlift additional products to backfill the store’s inventory within days The speed and pace of the fashion cycle was dizzying, with new styles appearing in stores on a weekly basis ina constantly renewing fashion cycle.

5 Heavy and frequent discounting

Clothing was increasingly commoditized as consumers viewed the lower-quality fast fashion offerings as disposable, yielding a need for low prices and heavy discounting Retail analysts were concerned about an overabundance of price promotion at Gap, where 40% discounts were common

6 Gap’s size and ubiquity were transforming from asset to liability

Consumers looking to forge a unique identity were moving away from Gap’s classic offerings

II Some Solutions:

1 Replace creative directors with Big Data obtained from Google Analytics, Google Trends, social media, the company's own sales and customer databases to inform the

next season's assortment

2 Develop an augmented reality app

- Use data-driven decision making: personalize shopping experiences based on browsing and purchase history

- Develop email programs to provide relevant, personalized messages to consumers 3 Messaging based on consumer's searching, or deliver another landing page based on

browsing history or IP address

4, Understand why consumers were not buying as much from Gap's physical stores = develop Gap's digital and mobile e-commerce platforms to drive customer

engagement.

3 Option 3: Product 3.0 Advantages:

- Using Big Data as the original source of innovation for fashion trends, combine the’ clear brand vision with a common model!

- Based on google analytics can be defined soon

- Significantly improved the ability to meet the supply chain and inventory

management Weakness:

4 Option 4: Change the distribution model Advantages:

- Access to digital customers

- Amazon can provide a customer access gap even if they don' t shop on the company’ s platform

- The distribution of products through two alternatives is to use amazon as a transport channel or use amazon as a distributor

Weakness:

- Can't guarantee the situation around the customer

- The choice between giving up control to use the amazon giant

D RECOMMENDATIONS I Our recommendations

1 Our recommendation solution

Replace creative directors with Big Data obtained from Google Analytics, Google Trends, social media, the company's own sales and customer databases to inform the next

season's assortment

2 Our recommendation solves the issues

Gap' s leadership needs to appreciate that customer' s fashion requirements are built in social ways by collective behavior and taste in tastes and interests As a result, designers do not consider the impact of social effects on consumers’ tastes that have weakened the goal of changing gap products in conformity with the changing market demand

Another notable issue involves the need for the company' s essential need for large data implementation to promote product mnovation Market - based market research strategies have previously backfired Accordingly, the company can apply new analytical methods to assess customer behavior on the garment market The use of large data to assess the trend in garment and customer change is important because it affects the success of gap in its operations Therefore, we believe that peck’ s decision to eliminate the creative director while using large data analysis to promote the development of the creative costume to match the customer’ s interests in different segments is appropriate

players material among the

Saturated products Products are market Identical products The manufacturer really identical

High rivalry Zero switching cost is wholly Readily Zero switching among the depended upon availability of cost of the

competitors Many substitutes the supplier for the substitute buyer

Strong brand image, "9W material ahi

Strong brand ?'TONS Fan oo hich is plastic 20 switching High identity high quality, skin cost of the advertisement

fnendly, No substitute buyer and environmentally promotional friendly Zero switching activities

- Enjoy a good reputation by advertising through mass media

- Gap Inc management of the brand year: gap, banana republic, old navy, athleta and intermix, and used to be the U.S style of simplicity All these brands are common in different demographic segments it's the way the retail fashion brand is headed for multi - diversity customer segments

- Enough knowledge and experience to adapt to new fashion trends

- Providing quality products for many different customers, closely observed gaps in market trends are changing and customers’ demand The retail company provides products that match the trend of the needs It gives the company a unique competitive advantage compared to other brands

- Have strong financial figures - Along - term multi - brand portfolio 2 Weakness

- Putting the burden on these brands over the season to another is an individual being inspired.

Clothing and retail accessories are a very competitive industry The gap of the gap has not made a difference compared to other competitors It reduced the market share to a large level

There is a limited share with high - brand conversion

Revenue and declining profits are a major weakness that the company can’ t handle Still use their assets and not profit on assets and equity

Gap is lagging compared to the opponent on the effective usage of online sales Not to grasp the needs of customers

Opportunity

The core capacity of the organization could be a success in similar product The development of the market will reduce the advantage of competitors and facilitate the Gap Inc., to increase competition compared to other competitors New trends in consumers' behavior can open new markets for the gap, inc., which provides a great opportunity for organizations to build new revenue lines and diversify into new product categories

This investment has opened new sales channels for the gap, inc In the next few years, the company can take advantage of this opportunity by understanding its customers more and serving their needs using large data analysis

Expanding mternational markets focused on Asia

Use online retail trends and improve their site to mtroduce products to customers 4 Threatening

Digital brands are increasingly filling gaps in fashion retail areas and forms digital revolutions for rival brands such as gap and other competitors like zara or mango Bitter competition - stable profitability has increased the number of companies in the industry, which has caused pressure to decline not only for profits but for sales

New technologies are developed by competitors or market breakers may be a serious threat to the future and long - term industry

Provide products with high levels of competition Risk associated with global supply and production IV Financial analysis

1 Cost (fixed, variable)

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Fixed: Gap Inc.'s gap in the global garment industry, $ 3 trillion, accounting for gross domestic product (gdp) The U.S and Canada market accounted for more than $ 340 billion

Variable: 2015 and 2016 were disappointing (see evidence of 9, 10, 11, and 12 for the recent financial statement of the Gap Inc reduced in eight quarters before increasing 2% in the fourth quarter of 2016, which sales sales of 2% in the year 2 Revenue prediction

Fiscal 2015 results were impacted by a series of strategic actions to position Gap brand for improved business performance in the future, including rightsizing the Gap brand store fleet primarily in North America, streamlining the brand's headquarter workforce, and developing a clear, on-brand product aesthetic framework to strengthen the Gap brand to compete more successfully on the global stage During fiscal 2015, the Company completed the closure of about 150 Gap global specialty stores related to the strategic actions During fiscal 2015, the Company incurred $132 million of charges in connection with the strategic actions, primarily consisting of impairment of store assets related to underperforming stores, lease termination fees and lease losses, employee related expenses, and impairment of inventory that did not meet brand standards Financial results for fiscal 2016 are as follows:

¢ Net sales for fiscal 2016 decreased 2 percent to $15.5 billion compared with $15.8 billion for fiscal 2015

¢ Comparable sales ("Comp Sales") for fiscal 2016 decreased 2

percent

¢ Gross profit for fiscal 2016 was $5.6 billion compared with $5.7 billion for fiscal 2015 Gross margin for fiscal 2016 was 36.3 percent compared with 36.2 percent for fiscal 2015

¢ Operating margin for fiscal 2016 was 7.7 percent compared with 9.6 percent for fiscal 2015 Operating margin is defined as operating income as a percentage of net sales

¢ Net income for fiscal 2016 was $676 million compared with $920 million for fiscal 2015, and diluted earnings per share was $1.69 for

fiscal 2016 compared with $2.23 for fiscal 2015 Diluted earnings

per share for fiscal 2016 included about a $0.41 impact of restructuring costs incurred during fiscal 2016, a non-cash goodwill

impairment charge of $0.18 related to Intermix, an $0.11 benefit

from the gain from insurance proceeds related to the fire which occurred at the Company's Fishkill distribution center campus, and a

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favorable income tax impact of a legal structure realignment of about $0.15 Diluted earnings per share for fiscal 2015 included a $0.20 impact of costs related to strategic actions incurred during fiscal 2015

¢ During fiscal 2016, we distributed $367 million to shareholders

through dividends

Our business priorities in 2017 include: ¢ offering product that is consistently brand-appropriate and on-trend with high customer acceptance, with a focus on expanding our advantage in the most promising categories; »° delivering meaningful product novation; * creating a unique and differentiated customer experience that builds loyalty, with focus on both the physical and digital expressions of our brands; and « attracting and retaining great talent in our businesses and functions 20 In fiscal 2017, we are focused on investing strategically in the business while also maintaining operating expense discipline One of our primary objectives is to continue transforming our product to market process, with the development of an advantaged operating platform To enable this, we have several product, supply chain, and IT initiatives underway Further, we expect to continue our investment in customer experience, both in stores and online, to drive higher customer engagement and loyalty, resulting in market share gains Finally, we will continue to invest in strengthening brand awareness and customer acquisition Fiscal 2017 will consist of 53 weeks versus 52 weeks in fiscal 2016

So, in order to grow financial resources, management should apply some of the business strategies in certain countries, such as china, where there is a huge population to promote business operations The gap in adaptation to the market model changes it reduces the ability to sell and make revenue decrease, because the creative managers in the company have not accounted for the dynamic aspects of the modern market, which are not developed by the consumer - appropriate brand

E IMPLEMENTATION

I Timeline

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