Gap advice report-2.pdf

STRATEGIC ADVICE REPORT A report detailing the strategic advice given for the company Gap 30/06/2024 Word count - 5338 (inc in-text citations and titles) BD2IC Lois Faustino, Elyna Lee, Sylvi Liesveld, Pettry Zwart 500897601, 500864342, 500892351, 500891160 TABLE OF CONTEN...

STRATEGIC ADVICE REPORT A report detailing the strategic advice given for the company Gap 30/06/2024 Word count - 5338 (inc in-text citations and titles) BD2IC Lois Faustino, Elyna Lee, Sylvi Liesveld, Pettry Zwart 500897601, 500864342, 500892351, 500891160 TABLE OF CONTENTS 1 Table of contents (P.3) 2 Executive summary (P.4) 3 Introduction (P.6) 4 Future Business Model (P.7) 5 Strategy and design (P.8) 5.1 Strategy (P.8) 5.1.1 The future business model (P.9) 5.1.2 Implementation (P.11) 5.2 Back office - the supply chain (P.12) 5.2.1 Front office - customer-focused aspects (P.13) 5.2.2 Ethics (P.14) 5.2.3 Key performance indicators (P.15) 5.2.4 Financial justification (P.16) 5.3 Bibliography (P.19) 6 Appendix (P.21) 6.1 Business model canvas (P.23) 6.2 Supply wheel (P.24) 6.3 Gap’s KPI’s (P.25) 6.4 TOWS (P.26) 6.5 Customer journey (P.28) 6.6 Buyer persona (P.29) 6.7 Balance score card (P.30) 6.8 Financial calculations (P.31) P.2 Executive summary The research focuses on evaluating Gap's current strategic growth plan and proposing an innovative, sustainable approach to improve financial performance and market presence, particularly in Europe. Research Questions: 1. How can Gap reduce waste and repurpose leftover inventory? 2. What strategies can Gap implement to increase its European presence and physical stores? 3. How can Gap align its sustainability efforts with its business model to improve financial performance? The research employed a comprehensive cost analysis of operating physical stores in Paris, including rent, employee wages, and marketing expenses. SWOT analysis was conducted to identify strengths, weaknesses, opportunities, and threats. Additionally, we explored innovative strategies to address identified weaknesses and leverage opportunities. Findings: - Cost Analysis: Operating an average store in Paris (40m²) incurs a total estimated cost of $36,220 per month. - Rent: $12,600 - Employee Costs: $16,020 - Marketing Costs: $5,220 - Financial Projection: Despite a forecasted break-even point by 2025, Gap is projected to face a loss of 5.3% by 2027. SWOT Analysis: Strengths: strong brand recognition, commitment to sustainability, diverse product range. Weaknesses: lack of European presence, high operational costs, supply chain inefficiencies. Opportunities: expanding physical stores in Europe, leveraging sustainability initiatives, innovative partnerships. Threats: intense competition, economic fluctuations, changing consumer preferences. Conclusion: The current strategy of managing leftover inventory through Gapfactory is financially unsustainable given the high costs of physical stores and projected losses. Therefore, Gap must adopt a more sustainable and innovative approach to achieve long-term growth and market presence. Strategic advice: For 2027, we recommend Gap to partner with FabBrick, a French company that produces bricks from wasted textiles and dead stock. This partnership aims to: - Reduce Waste: repurpose unsold and discarded stock into reusable products. - Enhance European Presence: use these bricks to construct new stores across Europe, addressing the lack of physical stores. - Promote Sustainability: align with Gap’s mission and vision by creating a more circular product cycle, extending the product life cycle, and improving supply chain efficiency. - Increase Social Awareness: Enhance the perception of Gap's sustainability efforts among consumers, boosting marketing and customer engagement. P.3  Executive summary Implementation Plan: 1. Design Process: Gap will collaborate with FabBrick to design stores using bricks made from leftover textiles. 2. Production Process: Ensure timely production and sustainable sourcing of materials. 3. Marketing Strategies: Employ targeted advertising campaigns and social media engagement to promote new stores and sustainability initiatives. 4. Distribution and Retail Operations: Operate an extensive network of retail stores globally, focusing on European expansion. Key Partners and Resources: - FabBrick: Transform textile waste into building materials. - International Suppliers: Ensure the timely production and delivery of high-quality apparel. - Distribution and Logistics Partners: Optimize the global supply chain. Value Proposition: Gap’s unique selling proposition includes a diverse product range and a strong commitment to sustainability. The proposed strategy of repurposing leftover inventory into building materials for new stores will: - Differentiate Gap from Competitors: Showcase Gap's innovative approach to sustainability. - Strengthen Customer Relationships: Engage with environmentally-conscious consumers and build long-term loyalty. - Increase Profitability: Improve supply chain management and reduce operational costs. By adopting this innovative strategy, Gap will not only eliminate projected financial losses but also reinforce its reputation for sustainability, positioning the company favorably in the competitive retail market. P.4 Introduction Gap is a large clothing retailer recognised for its diverse portfolio of brands, including Gap, Banana Republic, Old Navy, Athleta, and Intermix. Founded by Doris and Don Fisher in 1969, Gap has become one of North America's largest specialty clothing retailers, with a global presence boasting over 3,700 stores worldwide and a workforce exceeding 140,000 employees as of 2015 (Annual Report, 2015). Gap was designed to build the foundation of modern wardrobes through every stage of life with apparel and accessories for adult men and women under the Gap name, in addition to GapKids, babyGap, GapMaternity, GapBody, and GapFit collections. With a global footprint from North America to Europe, Asia, and beyond, Gap has widespread brand recognition and consumer loyalty. Over the past decades, Gap has evolved, adapting to changing consumer tastes and market dynamics while maintaining its core values of inclusivity and authenticity. Since its establishment, the company has undergone extensive transformation to become a market leader. However, over the last decade, Gap has seen declining performance. In response, CEO Art Peck outlined strategies to address these issues, including focusing on core products, expanding into online marketplaces like Amazon, and growing the global market of Gap (Gap Inc. Report, 2016). Despite these challenges, Gap showed resilience and adaptability. Their financial performance is reflected in their brand values, which are driven by substantial brand equity and effective merchandising strategies. Gap continues to be committed to improving operational efficiency and enhancing shareholder value through determining goals and focusing on its corporate strategy. P.5 Introduction (Improved) Gap is a major clothing retailer known for its diverse portfolio of brands such as Gap, Banana Republic, Old Navy, Athleta, and Intermix, was founded by Doris and Don Fisher in 1969. Today, it stands as one of North America’s largest specialty clothing retailers with a global presence, boasting over 3,700 stores and a workforce of more than 140,000 employees worldwide (Annual Report, 2015). The company aims to be a foundational part of modern wardrobes, offering apparel and accessories for every stage of life, from GapKids and babyGap to GapMaternity and GapFit collections. Despite Gaps extensive global footprint and strong brand recognition, Gap has faced declining performance over the last decade such as inventory management, volatility in the apparel industry and competition. To address these challenges, CEO Art Peck has implemented strategies focusing on core products, expanding into online marketplaces like Amazon, and growing the global market (Gap Inc. Report, 2016). Nevertheless, the company continues to demonstrate resilience and adaptability, driven by substantial brand equity and effective merchandising strategies. This strategy advice report aims to provide comprehensive insights adjusted to Gap’s specific needs and objectives. The primary goal is to guide Gap in refining its strategic direction, enhancing operational efficiency, and capitalizing on market opportunities. By focusing on the triple bottom line components—people, planet, and profit—this report will look into Gap’s weaknesses, particularly in back-office supply chain management and physical presence within Europe. Currently, Gap suffers from excessive inventory and low inventory turnover due to weak supply chain management and unsuccessful trend forecasting, issues highlighted by the existence of Gap Factory, which negatively impacts the company’s sustainable image. Despite these challenges, Gap has integrated sustainable measures into its business model, emphasizing minimal environmental harm and positive social impact. The company supports multiple initiatives aimed at strengthening communities and operates with a commitment to fair practices and environmental protection. This report will use these strengths and explore opportunities for collaboration with other environmentally focused companies, ultimately aiming to enhance Gap's strategic position and align with its mission and vision for sustainability and community well-being. P.6 FUTURE BUSINESS MODEL P.7 Strategy (Improved) Gap currently has a separate website, Gap Factory dedicated to leftover inventory that was not sold or overproduced in too high of a quantity. This leftover stock is either unsold or discarded. Our strategy aims to reduce this waste and instead repurpose the clothing in to re-useable products that will then be displayed in new European stores. These products will be bricks, created and produced by French company FabBrick. This company creates bricks out of wasted textile and dead-stock. As one of Gap’s main weaknesses is their lack of European presence and physical stores (see Appendix 5), the bricks that will be produced will then be used as visual merchandising in new stores around Europe, thus increasing Gap’s presence. The stores will be opened in Paris, Stockholm, Copenhagen, London, Berlin, Antwerp, Madrid, Milan, Prague and Amsterdam. The cities were chosen based on their high population and fashionable scene. This strategy will not only uplift the perception of Gap to there future consumers but also makes their product cycle more circular, therefore remaining aligned with their mission and vision. Another weakness of theirs is there supply chain, this strategy aims to fix this by making the overall product life cycle longer. The strategy is a innovative project that sets Gap apart from their competitors. This strategy will also improve the social awareness of Gap’s current customers as well as consumers who have less knowledge on Gap’s sustainability programs. This in turn, improving their front office marketing as well as their back office supply management. The leftover textile from garment production will also be used by FabBrick, again in order to minimise waste from Gap. The plan of this strategy is set over 3 years and is as follows: 2025 - Gap collaborate with FabBrick and start the production of the bricks with the discarded textile, this minimising the waste and leftover inventory, this will also begin the announcing of the closure of Gap Factory. 2026 - Bricks are in production and ready for the first stores opening around Europe (10 capital cities) , the first being Paris as FabBrick is based here, the stores will all feature a decorative display of the bricks to make the customers aware of Gap’s sustainable nature. 2027 - All of the 10 stores in Europe are now open and Gap Factory has been ceased, trends are now forecasted with more consideration thus creating higher inventory turnover. Below is an example of a collaboration between FabBrick and a Kilostore in Paris, titled 0 Waste. P.8 The Future Business Model Key activities Key partners Design Process - Gap prides itself on its meticulous FabBrick - FabBRICK collaborates with other businesses design process, ensuring that its apparel and accessories to transform their textile waste. Their goal is to raise align with the latest fashion trends and customer awareness about the value of recycling waste and preferences. A dedicated team of designers explores challenge companies to reduce their waste. To achieve innovative concepts, conducts market research, and this, FabBRICK takes textile waste from these businesses, collaborates with suppliers to bring fresh and appealing turns it into new design products, and sends them back. designs to life. This helps the companies see firsthand the amount of Production Process - With a focus on quality and waste they generate each year. The goal is to make waste efficiency, Gap maintains a comprehensive production reduction more understandable and encourage positive process. The company works closely with changes in how companies handle their waste. With this manufacturing partners to ensure timely production, mission, FabBRICK continues to evolve from its initial sustainable sourcing of materials, and adherence to stages and has a wide collaborative team, the mission and strict quality standards. By leveraging technology and vision align very closely to that of Gap’s. efficient supply chain management, Gap, streamlines In collaborating with Gap for 2027, ensuring all forms of its production operations. waste textile, including leftover stock, waste from Marketing strategies - The company employs a multi- production, unsold clothing etc, are used and repurposed faceted approach, including targeted advertising in to bricks that better the landscaping in regards to the campaigns, social media engagement, collaborations retail industry. The collaboration would also be an on- with influencers, and strategic partnerships to reach its going offer-driven partnership that continues beyond diverse customer base. By continuously adapting its 2027. marketing strategies, the company stays relevant in the International suppliers - Gap collaborates closely with its highly competitive fashion retail industry. suppliers to ensure the timely production and delivery of Distribution and Retail Operations. - The company high-quality apparel and accessories. By forging strong operates an extensive network of retail stores globally, supplier partnerships, the company can maintain a providing a personalized in-store experience. reliable and efficient supply chain. Distribution and Logistics - Gap works closely with distribution and logistics partners to manage its global supply chain effectively. Through these strategic Key resources partnerships, the company optimizes its distribution Physical resources - Currently, Gap have a lack of network, ensuring that its products reach customers European presence, for the future the focus should shift efficiently and on-time. from their international website to operating a vast Third party retailers - By collaborating with well- network of physical resources, including stores and established retail players, such as Amazon, the company distribution centres, within Europe. can expand its store footprint and gain access to new Intellectual Resources - Gap has built a strong customer segments. These partnerships allow Gap to reputation and recognized identity in the retail showcase its products in a wider range of locations and industry. This brand recognition and brand equity cater to the diverse preferences of its customers. represent valuable intellectual resources for the company. Technological Resources - In today’s digital age, technological resources are crucial for a successful retail Value proposition company. Gap utilises advanced technologies to Their USP is their diverse product range that caters to enhance customer experience and optimise its a number of different customer segments. This is what operations, such as collaborating with FabBrick and sets Gap apart from other brands. implementing their operations. Another area Gap thrives in is their sustainability Financial resources - Gap possesses substantial financial outlook. They prioritise the protection of the planet resources that allow for investments in various areas, and thus aligning with their mission and vision whilst including expansion, technological advancements, and also adding value to their products by doing so, marketing initiatives. With a strong balance sheet, the company has the financial capabilities to support its strategic objectives and strengthen its market position. Customer segments By targeting various customer segments, the company aims to meet the diverse needs and preferences of its consumer base. From trendy fashion enthusiasts to families seeking affordable and stylish clothing options, Gap caters to a wide range of individuals. P.9 The Future Business Model Channels Customer relationships Direct sales through online or physical sales, this is based In order to establish long-term relationships, Gap on where they get their revenue. adopts a customer-centric approach. The company Other channels that Gap use to increase customer places great emphasis on listening to customer feedback awareness include third-party retailers, marketing schemes and taking it into account when making decisions. This and corporate social responsibility programs. approach ensures that customers feel valued and heard, fostering a sense of loyalty towards the brand. The company involves itself with corporate social Gap actively engages with its customers through various responsibility, such as the PACE program, which channels, both online and offline, to create personalized empowers women in the communities where the company shopping experiences. By leveraging data analytics and manufactures its products. It has trained over 700,000 customer insights, the company tailors its offerings to women across 17 countries. suit individual preferences and provides recommendations that align with customers’ style and As Gap is part of Gap Inc, the brand already has a taste. This personalized approach enhances customer network of different channels to operate with. satisfaction and helps build lasting brand loyalty. Giving back to society and promoting shared values is For 2027, other channels will start to emerge such as the another way Gap strengthens its customer relationships. concept store’s and newer programs and partnerships, this The company is committed to sustainability efforts, include FabBrick and there newly formed stores. focusing on ethical sourcing, reducing waste, and supporting initiatives that benefit local communities. By aligning with customers who prioritize sustainability and social responsibility, Gap strengthens the bond and creates a sense of shared values. Cost structure The apparel market is generally price-sensitive, and many consumers prioritise price while purchasing clothes. Revenue streams Gap products, although priced higher, are still Online sales affordable for their quality. However, Banana Republic Physical sales is a luxury brand, and the products have premium Third-party retail sales prices. The same goes for the Athleta brand. Collaborations Gap’s business strategy included improving cost Gap is dedicated to improving its financial control, operational efficiency, inventory management, performance and driving online sales growth. The and financial planning in order to overcome these company recognises the importance of adapting to the challenges. evolving retail landscape and leveraging digital Also, the intense competition in terms of prices and platforms to reach its customers. With the increasing promotional activities in the retail sector created trend of online shopping, Gap is investing in its e- pressure on its profitability. commerce operations to enhance the online shopping experience and capture a larger share of the digital market, however for 2027, the shift is now changing back in to physical stores as Europe becomes more of a central hub for distribution. (CirroEcommerce, 2024) This shift has occurred due to the post-affects of covid. (Nuorder, 2024) P.10 IMPLEMENTATION P.11 BACK OFFICE -THE SUPPLY CHAIN 1. Gap operates with differentiation strategy, their competitive strategy focuses on cost leadership pricing. They manage their supplies internationally, with strategic sourcing to maximise their business relationships with non-merchandise vendors (Gap Inc., 2024) Gap has a team of strategists dedicated to evaluating their current supply chain every so often. 2. By 2030, Gap Inc. aims to: Empower 5 million people touched by the apparel industry to improve and sustain their access to clean water and sanitation Reduce water use and replenish water to nature, equivalent to the water used in manufacturing Gap Inc. apparel and in our owned and operated facilities The company also announced it has set a goal to reach 100 percent renewable energy across its global owned and operated facilities by 2030. Other than these goals, Gap continuously work on sustainability, equality and enriching communities. 3. In conclusion, Gap’s success in the retail industry is tied to its USP: one store for the complete family.This commitment is supported by a diverse product range that caters to men, women, children, and babies, emphasising classic and timeless designs. By aligning its USP with a competitive strategy focused on offering a comprehensive selection of family fashion, Gap distinguishes itself from competitors and attracts a broad customer base. 4. Design, sourcing, product development, suppliers, transport, quality control, ordering/(online systems, website), reception, branding, management, ordering services. return services. 5. As the Gap has a big network of suppliers ranging from asia to the u.s. it’s not possible to list all of the suppliers. see appendix 3 for an example of some suppliers. (GAP INC. FACTORY, 2016) 6. Gap uses a hybrid management organisational structure, integrating certain elements of divisional and hierarchical organisational structures.Gap's organizational structure reflects a balanced approach, incorporating divisional and hierarchical elements to encourage teamwork, empowerment, and communication. This approach allows the company to effectively manage its diverse brand portfolio while promoting a culture of innovation and transparency. By aligning its organizational structure with its strategic pillars of differentiation, sustainability, and inclusivity, Gap is well-positioned to find the complexities of the retail industry and drive long-term success. (Management Approach | GAP Inc., n.d.) 5. See list below 6.Hybrid structure Differentiation 1. Differentiation strategy strategy 2. See appendix 4 4. Supply chain cost 3. USP and competitive strategy P.12 FRONT OFFICE-CUSTOMER FOCUSED ASPECTS Recent research from Statista shows that while Gen X and Baby Boomers are familiar with Gap, Millennials are the most frequent shoppers of the brand. Gap has little to no representation of Generation Z, making it advisable to build their Gen Z customer base through strategic marketing. Targeting Gen Z is beneficial because of their growing economic power, influence on family spending, digital presence, social media activity, and trendsetting roles (Caroline Bee, 2023). This generation values authenticity, social and environmental responsibility, and diversity, expecting brands to reflect these values. Gen Z's omnichannel shopping habits blend online and offline experiences. Engaging Gen Z with authentic, value-driven marketing can help Gap build long-term loyalty and stay relevant. Gap is advised to use concept stores to connect with Gen Z. These stores can offer memorable experiences, cater to their fear of missing out, and feature creative designs that attract social media attention. Concept stores provide tangible, interactive brand engagement and allow Gap to gather direct feedback, understand preferences, and tailor offerings according to their customers. The temporary nature of these stores creates urgency and exclusivity, driving excitement and buzz. By using social media and digital marketing to promote these concept store experiences, Gap can create a word-of-mouth marketing and attract more customers. The advice strategy for Gap, is to partner with FabBRICK, a company specializing in sustainable building materials. Gap would use this company to create sustainable concept stores for Generation Z. FabBRICK's sustainable and eco-friendly products align with the values and preferences of this demographic. Gen Z is known for their emphasis on sustainability and environmental consciousness, making FabBRICK's products appealing to this consumer group. Using concept stores, Gap can create retail spaces that showcase FabBRICK's sustainable materials in a tangible and interactive way, allowing Gen Z to engage with the brand and its eco-friendly offerings. P.13 Ethics Gap has a strong sense of diversity, they believe and work on equality of gender and race. They also implement sustainable initiatives such as their P.A.C.E and RISE program. They help address the systemic social and environmental challenges of the apparel industry through collaboration with their suppliers to build their capabilities, incorporating industry-wide efforts to elevate best practices and improve efficiency, and connecting with local and international NGOs and industrial partners to innovate programs that benefit workers and their communities. They also take a holistic approach to working with factories and their partners, aiming to catalyse improvements in workers’ grievance mechanisms, gender equity in leadership, safety and well-being, and more. In all their capability-building programs, they place a special emphasis on women’s empowerment. The two levels of focus are profit and planet. The proposal for the future business model involves re-using leftover inventory and partnering with Fabrique, a company that creates bricks out of old discarded fabric. In this business model, Gap factory products would become revived in to bricks that would then be used to build new Gap stores across Europe. Gap factory could then be dissolved and the focus would then shift to making the company circular. This should increase the profit as well as protect the planet from any more damage created by un-bought and unwanted clothes. This proposal sets Gap apart from competitors, other companies have created projects on a smaller scale, but Gap would have an entire store newly situated in a significant city such as Paris. Gap will also then be perceived as sustainable by consumers who don’t yet know this. Targeting more European countries and customers. Positive publicity and showcases Gap’s mission and vision, encompassing the triple bottom line. As the leftover stock decreases, the investment will terminate therefore this will only be short term until Gap have controlled their stock. This would increase the shareholder value and therefore improve Gap’s position in the market. With a stronger focus on Europe, the ideology that Gap is an American brand may be lost, however better translated to the European market. Profit will not only be saved from better management of the supply chain, the termination of Gap factory will also mean that the investment could retain more attention as all products that are not sold or wasted can then repurpose for their own use. P.14 Key performance indicators Justification: This KPI is important for Gap Inc as it measures the company's ability to create more income, which 1. INCREASE REVENUE: COMPARE TO is important for their growth and sustainability. It also PAST YEARS (+5%) PER YEAR reflects the effectiveness of the company's marketing strategies in attracting more customers and increasing sales. Justification: Gap’s lack of European presence has been caused due to Covid as well as their lack of appeal to Gen Z, 2. INCREASE NUMBER OF STORES IN regaining that presence using concept stores that involve EUROPE (+5 STORES) PER YEAR sustainability will then allow for customer awareness of the brand to increase. Justification: This is important for Gap’s sustainability efforts as this KPI focuses on reducing the environmental 3. DECREASE SUPPLY CHAIN COSTS: impact of Gaps supply chain operations. By lowering costs, DECREASE THE COSTS OF GOODS SOLD the company can also improve its bottom line and invest in more sustainable practices. Justification: Customer loyalty is crucial for Gap long-term success, and this KPI measures the satisfaction and loyalty 4. IMPROVE CUSTOMER LOYALTY: of Gaps customer base. Positive reviews and high ratings COMPARE REVIEWS AND RATINGS show that customers are satisfied with the brand, leading to more purchases and brand advocacy. Justification: Gap’s value proposition is that they make 5. INCREASE CUSTOMER VARIETY: products for everyone, yet there is still a lack of appeal from COMPARE NUMBER OF GAP CUSTOMERS Gen Z. With the new stores being based in fashionable TO PAST YEARS European cities, this KPI focuses on gaining more customers of the Gen Z target group within these citiies. Justification: Employee satisfaction is often linked to product quality, as happy and engaged employees are more 6. IMPROVE THE QUALITY OF PRODUCTS: REVIEW EMPLOYEE likely to produce high-quality products. This KPI SATISFACTION unintentionally reflects the company's commitment to sustainability by ensuring ethical and responsible production practices. Justification: Managing deadstock is important for 7. INCREASE INNOVATIVE WAYS TO sustainability, as it reduces waste and minimizes the MANAGE DEADSTOCK: INCREASE environmental impact of excess inventory. Focusing on INNOVATIVE WAYS TO MANAGE innovative solutions, Gap Inc can show thier commitment to DEADSTOCK sustainable practices and responsible inventory management. Conclusion: The KPIs outlined are esstential for Gaps marketing and sustainability growth efforts. Foucsing on increasing revenue, improving profitability, reducing supply chain costs, and enhancing customer satisfaction and loyalty, Gap will be able to achieve their mission of creating positive impact and sustainability. Prioritizing product quality, innovative deadstock management, and employee satisfaction further aligns with Gap Inc's vision of responsible and inclusive practices. By tracking and achieving these KPIs, Gap can strengthen their position as a leader in sustainable and impactful fashion. P.15 Financial justifications (improved) example calculation for amsterdam Lease/Rent: €72,000 Renovation and Interior Design: €120,000. Permits and Licenses: €6,000. Initial Inventory: €180,000. Equipment and Fixtures: €60,000. Marketing and Advertising: €25,000. Professional Fees: €20,000. Total Costs: ~€483,000 a year a month- 40.250 (appendix 9 page 33) (Charmante Boutique Dans Le Haut-Marais | Storefront, n.d.) (Minimum Wage Revised in France From 01 January 2024 - January 01, 2024, n.d.) (ERI Economic Research Institute, n.d.) 1. paris - 48.000 2. stockholm - 24.450 TOTAL COST FOR RENT FOR A YEAR: 3.400.000 3. copenhagen - 6647 TOTAL COST FOR SALARIES A YEAR: 1.922.400 4. london - 45.200 5. berlin - 27.750 TOTAL INVESTMENT COST FOR A YEAR 5.322.400 6. antwerp - 29.083 ESTEMITATED ROI - 1.064.480 (5.322.400/100X20) 7. madrid - 21.583 8. Milan - 36.666 9. Prague - 9865 10. amsterdam - 40.250 total cost - 289.494 total rent per month P.16 Financial justifications CONCLUSION The financial analysis based on the average wages for employees in France reveals critical insights into Gap Inc's future trajectory. After calculating the growth rate, it became evident that Gap must revise its strategic growth plan. Despite the forecast indicating a break-even point by 2025, the projections show an estimated loss of 5.3% in 2027. Key Findings: Cost Analysis: Detailed examination of costs, including rent, employee wages, and marketing. total cost - 289.494 total cost per month total investment cost for a year 5.322.400 Given these financial constraints, Gap's current strategy of handling leftover inventory through Gapfactory needs re-evaluation. The significant costs associated with physical stores and the projected financial loss underline the necessity for a more sustainable and innovative approach. INVENTORY TURNOVER cogs: 9.114.000.000/ average inventory average inventory= 2.389.000 (appendix 9 page 30) 9.114.000.000/2.389.000= 3814 inventory turnover = 3814x (GaP Inventory 2010-2024 | GPS, n.d.) CONCLUSION The analysis of Gap Inc.'s inventory turnover ratio, calculated by dividing the cost of goods sold (OGS) of $9,114,000,000 by the average inventory of $2,389,000, indicates a turnover of approximately 3.814 times. This inventory turnover ratio suggests that Gap is selling and replenishing its inventory a little less than four times a year. A lower inventory turnover ratio may indicate issues such as overstocking, obsolescence, or weak sales. This relatively low turnover rate suggests that Gap may be holding onto inventory longer than optimal, which can lead to increased storage costs and potential markdowns due to unsold stock becoming obsolete. To address these concerns, Gap should review its inventory management practices to ensure they are closely aligned with actual sales demand. By optimizing inventory levels, Gap can reduce excess stock, minimize obsolescence, and improve overall cash flow and profitability. This approach will help the company maintain a healthier inventory turnover ratio, contributing to greater operational efficiency and financial stability. P.17 Financial justifications RESEARCH FUTURE REVENUE AND COSTS MAKING IT FINANCIAL FEASABLE Investing in Gap’s strategy to repurpose leftover textiles into bricks for building new stores across Europe proves financially feasible when considering future revenue and costs. This investment won't only be part of generating publicity; it will initiate growth and acknowledge a bigger issue that the fashion industry faces: leftover stock. By turning waste into sustainable building materials, Gap addresses overstocking and obsolescence, reducing waste management costs and enhancing the company's environmental reputation. Future revenues are projected to rise as the new stores attract environmentally-conscious consumers and expand Gap’s market presence in Europe. Despite initial setup costs, including construction, employee wages, rent, and marketing, the long-term operational efficiencies and increased market share make this investment financially viable. This investment will not only open up the European market, but it will also help Gap to grow and flourish by taking responsibility for their dead stock and regenerating it. The most suitable form of investment for this initiative would be a mix of equity financing to raise capital without immediate debt obligations, and strategic partnerships with sustainability-focused investors who align with Gap’s mission and vision. This combined investment approach ensures sufficient funding while leveraging expertise in sustainable practices. Investing in a concept concept can be an enticing opportunity for companies like Gap to explore new markets, engage with customers in innovative ways, and potentially drive revenue growth. However, to make such an investment financially feasible, it's crucial to conduct thorough research into both the potential revenue and costs associated with the venture. CONCLUSION: In conclusion, investing in Gap's strategy to repurpose leftover textiles into bricks for building new stores not only presents a financially feasible opportunity but also addresses critical issues within the fashion industry, such as dead stock and environmental sustainability. By transforming waste into sustainable building materials, Gap not only mitigates overstocking and obsolescence but also enhances its environmental reputation and operational efficiencies. This investment goes beyond mere profit-making; it signifies Gap's commitment to responsible business practices and signifies a shift towards a more sustainable future. By eliminating dead stock and repurposing resources, Gap creates room for growth and innovation while contributing to a healthier environment. Therefore, this investment is not just about opening up new markets or generating revenue; it's about making a positive impact and leading by example in the fashion industry. 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Retrieved from https://www.cirroecommerce.com/fashion-e-commerce-logistics-trends-challenges/ P.20 APPENDIX P.21 APPENDIX 1 P.22 APPENDIX 2 - BUSINESS MODEL CANVAS P.23  APPENDIX 3 - SUPPLY WHEEL 5. See list below 6.Hybrid structure 1. Differentiation strategy 2. See appendix 4 4. Supply chain cost 3. USP and competitive strategy P.24 APPENDIX 4 - GAP’S KPI’S P.25 P.26 APPENDIX 5 - TOWS P.27 APPENDIX 6 - CUSTOMER JOURNEY P.28 APPENDIX 7 - BUYER PERSONA P.29 APPENDIX 8 - BALANCE SCORE CARD P.30 APPENDIX 9 - FINANCIAL JUSTIFICATION P.31