Environmental Scan: Gap Inc. vs. Urban Outfitters
This paper conducts an environmental scan of two major American retailers — Gap Inc. and Urban Outfitters — examining the internal and external forces shaping their business performance. It traces both companies' decline from their 1990s peak and analyzes how external competitive threats from fast-fashion rivals such as H&M and Forever 21 have reshaped consumer expectations. The paper explores how each company relies on sister brands — Old Navy for Gap and Anthropologie and Free People for Urban Outfitters — to sustain profitability, and contrasts their strategic responses. It concludes by highlighting key differences in consumer loyalty and internal innovation between the two retailers.
- What Is an Environmental Scan?: Definition of environmental scanning as a business tool
- Gap Inc.: External Threats and Internal Struggles: Gap's decline, fast-fashion rivals, and Old Navy's role
- Urban Outfitters: Brand Resilience and Strategic Recovery: Urban Outfitters' struggles and sister-brand strength
- Comparing Internal and External Environments: Key differences in loyalty and strategy between both retailers
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- The paper grounds an abstract business concept — environmental scanning — in two concrete, well-known retail case studies, making the analysis immediately accessible and relevant.
- It uses direct quotations from industry sources to support analytical claims rather than simply asserting them, lending credibility to the argument.
- The comparative structure in the final section effectively synthesizes both cases, clarifying what distinguishes each company's strategic position.
Key academic technique demonstrated
The paper demonstrates comparative case analysis: it examines two companies side by side using a shared analytical framework (internal vs. external environment), then draws meaningful distinctions. This technique shows how identical market pressures can produce different outcomes depending on brand portfolio strength and strategic initiative.
Structure breakdown
The paper opens with a brief definition of environmental scanning, then devotes one body paragraph each to Gap Inc. and Urban Outfitters, analyzing both internal and external factors. A final comparative paragraph synthesizes the two cases, identifying where the companies diverge in consumer loyalty and internal strategy. The structure is tight and logically sequenced, moving from concept definition to application to comparison.
What Is an Environmental Scan?
An environmental scan refers to the process of carefully monitoring both the internal and external environments of a particular company to determine whether there are any nascent signs of threats or opportunities that might impact its present or future plans.
Gap Inc.: External Threats and Internal Struggles
If one were to examine Gap, Inc., this is a company that has undergone a great deal of stress and challenge over the last fifteen years. The 1990s were the company's heyday, when it was at the height of its popularity. During that period, Gap achieved strong success across all of its stores, capitalizing on the decade's culture of simple designs and grunge appeal. The following fifteen years brought tremendous challenges, driven by both external and internal threats.
Consider the external threats: massively successful competitors like H&M and Forever 21 were able to offer more current and more daring fashions for a fraction of the price. H&M used the last decade to expand aggressively in the United States, and while that aggressive expansion slowed earnings to a certain extent, the firm continued to outpace Gap, Inc. (Bogenrief, 2013). This external pressure was compounded by internal issues facing the company. "Instead of retrenching, innovating, and economizing operations and designs in order to cut COGS, boost net income, and solidify product offerings in the now internationally-dominated world of fast-fashion retail, GAP has instead decided to take the afore-listed retailers on 'head-on,' by embracing the difficult-to-master art of quick operations and 'modern' designs, all intended to boost inventory turns and keep consumers returning again and again. And, despite the recent few years' positive proof the strategy's working, it's driving the company into a sartorial corner" (Bogenrief, 2013).
In terms of stability, Gap relies most heavily on Old Navy — its most low-priced brand and the one that provides the highest level of stability and international growth (Bogenrief, 2013). This is largely because Old Navy is better positioned to compete with the fast fashion offered by rivals such as Forever 21 and H&M. This dynamic also explains why the higher-priced Banana Republic brand has struggled significantly with profitability. Consumer trends have been gravitating toward lower-priced apparel, and Gap has been wise to push Old Navy forward — but this remains a short-term strategy. There is little clarity regarding how Gap and Banana Republic will survive in the long term.
Urban Outfitters: Brand Resilience and Strategic Recovery
Another retailer that experienced tremendous growth and popularity in the 1990s but continues to struggle today is Urban Outfitters. Like Gap, Urban Outfitters was one of the defining stores of the 1990s. Now the brand also struggles, though not as acutely as Gap Inc. The namesake brand of the company has suffered in terms of profitability, while its sister brands, Anthropologie and Free People, continue to thrive. "While the retailer recorded strong sales growth for its Anthropologie and Free People brands, its namesake business stumbled due to missed fashion calls and severe winters in the U.S. However, Urban Outfitters' Q4 earnings per share of $0.59 was better than the consensus estimate of $0.56" (Trefis, 2014).
Experts predict that Urban Outfitters will recover from these harder times more readily than Gap, Inc., because consumer loyalty to Anthropologie and Free People remains strong. These are two brands that are not competitively priced in the fast-fashion segment; their core consumer bases have demonstrated a sustained willingness to follow the brand. Analysts suggest that these external environmental factors are precisely what will help Urban Outfitters push forward into recovery.
Internally, the most relevant factors involve Urban Outfitters' aggressive efforts to elevate its creative functions so that it can more effectively restructure procedures and reconnect with its core customers (Trefis, 2014). For instance, "Urban Outfitters introduced a new concept named 'Without Walls,' which aims to attract young customers with active lifestyle products, placed in an enthralling environment. The concept was recently launched in five stores, where it received tremendous customer response" (Trefis, 2014). The retailer plans to capitalize on this success in subsequent stores as a means of reconnecting with its core consumer base.
References
Bogenrief, M. (2013, March 9). Why Gap is in more trouble than you think. Retrieved from http://www.businessinsider.com/why-gap-inc-is-in-more-trouble-than-we-think-2013-3
Trefis, T. (2014, March 12). Anthropologie & Free People propel Urban Outfitters despite a slump in namesake brand. Retrieved from http://www.forbes.com/sites/greatspeculations/2014/03/12/anthropologie-free-people-propel-urban-outfitters-despite-a-slump-in-namesake-brand/
Always verify citation format against your institution’s current style guide requirements.