Old Navy's expansion strategy and declining market competitiveness

Old Navy

Gap Inc., parent company of Old navy, has been losing customers and revenues steadily for last few years. The flagship brands Old Navy and Banana Republic have consequently suffered a great deal. The competitors have come up with better ideas and strategies, which have had a significant impact on market share. Old Navy needs to understand where its main flaws and fault lie in order to target them more successfully and effectively. The main problem that we notice is needless expansion of Old Navy stores. Whether Gap Inc. understands this or not, but its consistent expansion only means it is spreading itself very thinly. This can cause a decrease in revenues because of increased overheads. The Old Navy stores have now been opened in Canada too where the company is planning to open many new stores in coming years. However this strategy of expansion works best when profits are very high and revenues are solid. This is not the case with Old Navy and thus expansion only translates into further loses.

Some of the important steps that Old Navy needs to take are as follows:

Stop expanding

Since Old Navy needs to increase revenues, it must start cutting costs. Attracting more customers to the shop by offering them very low prices shows a desperate attempt at winning elusive customers. But it doesn't lead to higher revenues unless low prices were your basic strategy as has been in the case of Wal-Mart. In all other cases, it only spells disaster and reeks of desperation. Instead cutting costs is a better option which obviously cannot be achieved if Old Navy continues to expand.

Find a Niche

Wal-Mart is always low prices and Target is reasonably priced fashion so what is Old Navy? Customers normally have a place for each brand in their minds. Some brands will be stylish, others vintage, still others cheap and some high quality etc. Old Navy needs to find its niche. Why should customers visit their stores and not the rivals? This distinction must be attained and heavily advertised. This must be done with customer's buying behavior in mind. What will lure the customer to Old Navy for its own products?

Observe Market Trends

Do not start developing products, which are not needed in the market or are in huge supply already. If your pair of jeans is nothing different from the pair of jeans offered by rivals, do not keep pushing the same product forward. Instead observe market trends and see which new products are more in demand and what kind of demand can be easily created. This would help in becoming pioneers in new products. The firm would then become synonymous with innovative ideas.

These steps if effectively taken and implemented should bring in more customers and higher revenues.