Introduction
Donald and Doris Fisher founded Gap Inc. in 1969 in the apparel industry. Currently, their organization has a workforce of 135,000employees located in its 3659 facilities around the world. The huge capital outlay that Gap Inc. made resulted in sales of 15.5 billion by 2000 (Israeli & Jill, 2018). The company has five brands in its portfolio, which are Old Navy, Gap, Banana Republic, Intermix, and Athleta, identifiable by their distinct American style. However, the company is facing serious problems as its sales started to decline in 2000. In October 2014, Art Peck was appointed the Chief Executive Officer (CEO) of Gap Inc and was struggling to turn around the company’s fortune following years of decline in sales (Israeli & Jill, 2018). Previously, he was serving as the President of Growth, Innovation, and Digital, where he developed a digital strategy that employed an analytical approach to influence designs.
Analysis of Gap Inc.
Every season Gap Inc. produced numerous unique products in different colors and sizes. The company’s website offered the entire collection stored at its brick-and-mortar establishment translating to 10,000 square feet on an average shopping floor (Israeli & Jill, 2018). However, its physical stores were still constrained in terms of space and instead offered a carefully selected subcategory of a product line. Its mixture of every product selection comprised two types of products, items that were all-season style, and the fashion-forward items that were in sync with a specific season. The product lines were influenced by the creative directors, but their impact was heavily felt in the segment where design and innovation were desired.
However, as the company’s President of Growth, Innovation, and Digital, Peck invested extensively in the digital systems to address the shifting marketing dynamic to online channels. Peck had observed that the current crop of customers’ behavior was universal and that was an important awakening reality (Israeli & Jill, 2018). Most of the Gap Inc customers started their shopping using their phones and finished it in the stores. Therefore, Peck started modernizing and digitalizing the company’s entire inventory and introduced retail services that enabled customers to reserve, find in-store, and ship their desired items from the store. The process was important because it eased the process of browsing, purchasing, and shipping their items across all channels.
Peck at the helm pushed data-driven decision-making and urged his team to employ big data to understand customers’ behaviors and deliver a better customer experience. As Gap Inc. embraced digital systems, Peck, on the other hand, was pushing his managers to refine the new features since it listened to customers through the “voice of the customers” initiatives that enabled tracking and responding to customers’ feedback (Israeli & Jill, 2018). Data-driven decision-making necessitated the customers to be trackable, but Peck complained that in-store customers were anonymous compared to online ones who are identifiable.
Art Peck was appointed the CEO of Gap Inc. in October 2014 and he faced various challenges that reduced the growth of the company. The company was experiencing low growth in its key markets. However, Gap Inc. was competing in a $3 trillion apparel industry globally and accounted for 2% of the world GDP (Israeli & Jill, 2018). In the Canadian and US markets, the key markets for Gap amounted to over $340 billion and the industry was expected to grow by 2% annually all through to 2025 (Israeli & Jill, 2018). The millennials were spending more on apparel, which kept the industry growing. Nevertheless, Peck complained that Gap Inc had no notable fashion trend influencing sale despite the dynamic changes in consumer buying habits.
Additionally, Peck observed a rise in the fast fashion market segment with companies such as H&M and Zara entering the apparel industry and gaining traction in the market. The new entrants compressed the supply chains and supplied low-priced knock-offs from the fashion runaways’ weeks after they were unveiled. Hence, with a 10-month average product cycle time, Gap was lagging behind its core competitors in product delivery (Israeli & Jill, 2018). For example, Zara could deliver products within four weeks because of their consumer-responsive and decentralized purchasing process that allowed stores to order a small number of products while waiting to evaluate customer responsiveness to the new products. Therefore, the quick change in the fashion cycle eluded Gap Inc. because every week the millennials were changing their dressing styles (Israeli & Jill, 2018). Moreover, Peck faced the challenge of heavy and frequent discounting as consumers perceived the products to be of low-quality fashion which was disposable. Analysts were concerned about the overabundance of the price promotion by Gap where a 40% discount was a common feature.
The objective of this case study on big data analysis was to prove the importance of data in the designing, manufacturing, and selling of products. Companies that have ignored data have found the harsh reality after they are outsmarted by new entrants. Gap Inc. had relied on the creative directors to push their fashion designs, a strategy that was failing miserably (Israeli & Jill, 2018). Digital data streams permitted companies to monitor their consumers’ purchase patterns and collect valuable data on their online behavior. The mining of the big data resulted in actionable insights that influenced decision-making by the management. Therefore, the case study succeeded in highlighting the importance of big data in decision-making. For example, companies such as Amazon and Netflix used predictive analytics to collect data that enabled them to recommend personalized products to their users (Israeli & Jill 2018). The success of these efforts is based on the aggregate data from other users, purchase history, and customers expressed preferences.
The big data analysis at Gap Inc. was successful because it helped feed the design team with information about the market right from the start. As such, the company was able to determine what the market wanted at a particular time, and design and deliver it at the right time. After the products have been placed in the stores, it was possible to know which items to restock and the ones to abandon (Israeli & Jill, 2018). In this regard, trends started being noticed across the entire portfolio but were perceived and interpreted in each brand’s spectrum. Managers were able to share the trend information across their divisions, which further pushed the agenda of Grap Inc.
Conclusion
In conclusion, Gap Inc. hired Art Peck to turn around its dwindling sales. However, Peck faced a huge task because the company was lagging behind new entrants in the apparel industry such as H&M and Zara. Therefore, he introduced big data mining and analysis to track consumer spending behavior online. Traditionally, the company was relying on the creative directors’ input. However, their input was not enough to turn around the declining sales of Gap Inc. because of the lengthy product cycle. Peck introduced the use of data analytics to speed up the process and ensure that products hit the market at the right time. Additionally, data analytics helped Peck track consumer behaviors online and respond to their feedback in real-time. Hence, the purpose of this article to emphasize the importance of data mining and analysis was achieved.
Reference
Israeli, A & Jill. (2018). Predicting consumer tastes with big data at Gap. HBS No. 517-115. Harvard Business School Publishing.