Old Navy Gap Inc., Parent

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?

Seek Joint Promotion

While cross over products are not always a good strategy for waning businesses, it can definitely help if some mutual benefits can be achieved. Instead of inviting and keeping cross over products as KMART did with Martha Stewart, it's better to seek joint promotion or what is known as inter-firm collaboration. For example if Old Navy has some cashmere products to display, find a top-notch firm that sells matching scarves and this would bring in more customers. In such ventures, customers of the other brand are also attracted to the store and they might end up purchasing some of Old Navy's own products.