Will Online Shopping & International Store Openings Resolve Economic Struggles?

Photo credit on reference below

Article Summary (Blog #3)

            The news article “Gap to Slash Its Store Count” by Dana Mattioli and Kris Hudson is published in Wall Street Journal in October 14, 2011.  

In the article, the writers argue that the Gap’s strategy to focus on improving online shopping and opening stores in Asia will lead to long-term profit. In the past, the Gap is known to expand its apparel chain for the purpose of making revenue (Mattioli and Hudson, 2011). However, Mattioli and Hudson considers these expansion of chain stores the reason for the company’s poor financial performance. The authors agree with the Gap’s two-year business strategy which includes letting their lease expire in North American malls and to focus their attention in improving selling items online and opening new stores abroad (Mattioli and Hudson, 2011). The Gap believes that most consumers prefer online shopping instead of going to malls, hence the writers contend that this new business plan will work for the Gap.

            However, the authors raise concerns that although Gap’s new business plan will help the company create revenue, closing down store chains in North America will negatively affect the overall economy. They point out that mall landlords will lose rental profit as the Gap (along with sister companies such as Banana Republic and Old Navy) occupy the largest retail spaces in most shopping centres in North America (Mattioli and Hudson, 2011).

Gap may have failed in North America, however their business dealings internationally saved the company from losing revenue. The Gap sales grew by 16% since it opened its stores in China. However, there was 5% drop in sales after about a year of store opening (Mattioli and Hudson, 2011). The authors contend that there are other underlying problems that Gap needs to face including the challenge of selling “basic” apparel, instead of fashionable ones which may be appealing to consumers. The authors are trying to argue that closing down stores in North America is a good idea because it is not making money, however the Gap needs to develop better styles in order to “level up” in the clothing business (Mattioli and Hudson, 2011). In conclusion, Gap needs to explore more innovative ways to improve its business in order to remain competitive.             

                                                          Courtesy of Youtube


Bloggers Reflection:

            In order to succeed as a company, the Gap’s main challenge is to improve its fashion-sense and creativity to attract more customers to purchase their products. We agree that online shopping is a convenient way for customers to find items they want to purchase, hence explaining the growth of online shoppers.  However, we do not recommend Gap to close its stores in North America for the purpose of improving online sales. Indeed, closing down stores is not the only answer to improve profitability as can will impact the overall economy in North America due to possible loss of employment and loss of lease income.

Also, there are disadvantages to online shopping such as the wait time imposed on the customer due to shipping and custom regulations.  Shipping prices for delivery and return of merchandise can be expensive, which may discourage shoppers to purchase online. In addition, it can be challenging for clients who would like to try the item before purchasing, as it is hard to tell if a piece of clothing fits or looks good just by looking at the item’s image on the website. Most importantly, customers cannot see the product, hence they cannot check the quality of the item. As a result, there might be more returns than actual sales.
Furthermore, looking at the Youtube video clip, it shows that there is also an underlying concern of safety and security, wherein customers might be hesitant to shop online because they do not feel safe in providing their credit card numbers and personal information online due to possibility of identity theft. Also, there are customers who may not be as "tech-savvy" such as the mother on the video who is not used to online shopping. 

            Indeed, there are other solutions that Gap can embark on without closing down its stores. We would like to see Gap moving away from simply selling basic and “plain” apparel, as they have to compete with lower priced big retailers such as Walmart. Improving the creative department of the Gap might be the answer to increase revenue. Indeed, our recommendation to the Gap is Fashion and Comfort should not be sacrificed for lower priced goods. The answer to remaining on top of the clothing business is not simply having low priced items. Rather, it might be a good idea to implement customer survey to identify which areas the Gap needs improvement on such as fashion trends, customer service, and advertising.  Customers’ demands should guide the Gap’s management team to create developments in their weakest areas. Lastly, we recommend that the Gap needs to hire innovative designers who can assist them in reinventing its brand to a fashion-forward and quality brand.

 Feedback Questions:

      
             1. )As a consumer, what do you look for when shopping for clothing?

             2.)  Are there ways for the Gap’s business to flourish without closing down stores and negatively          impacting the economy?

             3.) What are the advantages and disadvantages of customer surveys?

Reference List:

Mattioli, Dana and Hudson, Kris . “Gap to Slash Its Store Count”. Wall Street Journal. October 14, 2011, from <http://online.wsj.com/news/articles/SB10001424052970204002304576628953628772370>

 Randall, Hannah . "Lippy in London". Photo Retrieved April 28, 2013 .  <http://www.lippyinlondon.co.uk/2013_04_01_archive.html> . 

Wagner, Paul & Nargi, Randy. Subaru Online Commercial. April 24, 2012. Video Retrieved from <https://www.youtube.com/watch?v=zgsueFv3njs>.

Reusing Cotton

Tuesday, September 30, 2014

Summary

 In the following news article called “Denim drive expands to insulate Habitat for Humanity homes” by Wendy Koch was published on March 3^rd, 2010 onwww.content.usatoday.com. In this article, Koch praises The Gap’s efforts to recycle jeans, wherein customers can donate any type of denim that are either out of style or no longer fit them (Koch, 2010).

The campaign’s main purpose is to encourage customers to become environmentally-friendly and to provide clothing to underprivileged groups. Koch argues that this campaign is successful as several customers have participated in this denim drive. This charitable program started in 2006 and has already received approximately 270,000 jeans, which is a total of cotton fiber insulation of 540 houses (Koch, 2010). The reason why this drive is effective is because The Gap store came up with an incentive program by giving 30% off to customers who donated jeans (Koch, 2010).

            To explain how denim-recycling can be help our environment is that most of the jeans that have been donated are used in the so-called “Habitat for Humanity” homes. The process of using jeans as insulation starts off by removing any accessories (zippers, gemstones etc.) Then, the denim is treated with borate solution to make it fire resistant. The material is given to Bonded Logic who then makes the insulation. In addition, jean clothing are also donated to impoverished people.

To conclude, the success of the Denim Drive program implemented by Gap shows that it is beneficial for companies to engage in charitable events as it creates a positive relationship with the community and its customers.

                                          (Photo credit on references below)

Opinion

            The idea of Gap getting their consumers to donate their old jeans is a great idea. Not many organizations care about the community and saving our earth. While shopping at the Gap, we have personally been asked by staff to donate jeans. We are impressed to see that the Gap encouragesemployee participation in socially responsible activities. We argue that this leads to employee morale, identification with an organization, and motivation and job satisfaction. 

            Going back to our first blog on the Gap being linked to sweatshop factories, this article serves to show us that it is more beneficial for companies to be ethical. By showing customers that it doesn’t cost much to help our mother earth and those who are in need, the denim drive fosters customer’s identification with the company. We encourage companies such as Gap to invest time and effort in community involvement as this benefits the company’s reputation, which can lead to a long-term profitability potential.

            In a scholarly business article we found, studies show that 42% of North American consumers surveyed stated that they will not purchase products from companies who are engaged in socially irresponsible behavior (Chong, 2009, page 112). In short, investing on socially responsible initiatives is mainly due to its tangible financial benefits, because it is not only “the right thing to do” but also “the smart thing to do” (Chong, 2009, page 108). Also, the author quoted other sources to show that there tends to be a bad publicity on firms due to unethical corporate behavior, which ultimately resulted to lowering of stock prices (Chong, 2009, page112). Therefore, in order to save the company from the probable risk due to negative publicity, it is wise for companies to use social events to build a good relationship with both its workers and consumers, leading to better economic advantage.

Click on the Youtube link below to see how GAP caught consumers' attention to donate their jeans! 

                               https://www.youtube.com/watch?v=Zoxkvmayddk

Feedback Questions

1.    In choosing a store to do your shopping, are you more likely to purchase from a company who is involved in ethical business practices? Is lower-priced goods more important than business ethics, explain.

2.    Authors Koch and Chong argues that there is a correlation between profit and charitable business initiatives. Does this mean that companies are only being ethical because it is more profitable for them to do so? Is there something wrong with this goal morally speaking?

References:
Chong, Mark. (2009). “Employee Participation in CSR and Corporate Identity: Insights from a Disaster-Response Program in the Asia-Pacific.” Business Source Premier. Corporate Reputation Review. Vol. 12 Issue 2.

Koch, W. (2010, March 9). Denim drive expands to insulate Habitat for Humanity homes. USA Today. Retrieved September 15, 2014, from http://content.usatoday.com/communities/greenhouse/post/2010/03/donate-old-jeans-to-insulate-habitat-for-humanity-homes/1#.VBeLTC5dVc9

The Gap. "Pants-formation" Oct 3, 2010. Retreived from <https://www.youtube.com/watch?v=Zoxkvmayddk>.