Tuesday, August 28, 2007

Can New CEO Glen Murphy Revamp Gap Inc. ?

The once iconic American brand has since faded in the eyes of consumers in recent years, a driving force in Gap Inc.'s two year profit slump. Gap Inc has its share of issues, but the most significant seems to be simply its inability to capture its target customer and their consistent failure to produce an inspiring product offering. This trend is likely linked with Gap Inc's high turnover of executive employees who essentially are in charge of a brand's direction. It is possible that Gap has relied too heavily on its established brand name, leading the company to become overconfident with expansion and new growth market potential while subsequently loosing sight of their core product, message, and brand identity.

To combat Gap Inc.'s downturn is newly appointed CEO Glen Murphy. With a reputation in brand turn-arounds, Murphy has the difficult task of re-vamping the Gap brand and cultivating a creative atmosphere for his design and merchandising teams. Internally, Gap Inc has been noted as being a "revolving-door of talent" primarily in the merchandising department and design team.

The executive high turnover, which Murphy pledges to stop, has sent mixed messages to investors, another factor contributing to Gap Inc.'s lagging stock price and sales growth. Although Gap's low price-to-earnings ratio can be a sign of a mature or established company, it can also signify low-growth and missed sales projections.

However, it looks as though Murphy is doing all the right things as new CEO, proclaiming an "unleash" of creativity that will span throughout all of Gap Inc's divisions including Old Navy and Banana Republic. With no previous experience in the apparel/fashion industry Murphy is poised to learn about the apparel process and direct the company back to it's core values. His plans include improving the store experience, cutting costs by closing down their newest operation, Fourth and Towne, and decreasing company office space and HR costs. Perhaps Gap Inc. and Murphy will narrow their customer focus to avoid getting lost in such a broad market. Flashy advertising and the newest celebrity face will only be a quick fix for Gap; first they must redefine their customers
and reconnect with their wants and expectations. This can be accomplished by putting together a winning combination of designers, merchandisers, analysts, supply chain managers, etc. and also allowing this team to grow and mature with the brand by giving them an incentive to be creative. Murphy has a long journey ahead, but I feel confident Gap's timeless appeal and accessible customer base will be helpful in their growth attempts as they strive be "back on top."

-Jane Brownfield

1 comment:

Professor Sanghvi said...

i hope GAP gets back its mojo! i think many consumers miss it.