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Introducing

Introducing. The Shops at Target. Gap at The Shops at Target, 1. Introduction. Target launched The Shops at Target in May 2012 with a limited online and in-store footprint to offer value-priced, high-end niche products for the discerning shopper.

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Introducing

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  1. Introducing The Shops at Target Gap at The Shops at Target, 1

  2. Introduction Target launched The Shops at Target in May 2012 with a limited online and in-store footprint to offer value-priced, high-end niche products for the discerning shopper. The Shops at Target offer quality products from eclectic décor to limited run boutique designers such as Missoni, Todd Odin, and Tory Burch, an upcoming 2012 holiday season partnership with Neiman Marcus, and a planned partnership with tech giant Apple. Gap at The Shops at Target, 2

  3. Positioning Target is the largest discount retailer in the U.S., and with The Shops at Target, is positioned to partner with a mainstream iconic apparel brand to continue its ability to build a unique, sustainable and profitable bricks and clicks shopping experience for its growing customer profile that quickly adapts to affordable high-end specialty merchandise. Gap at The Shops at Target, 3

  4. The Gap Fit • Why Gap? • $3.84 billion annual sales revenue year ending 2012 • $509 million in online sales revenue third quarter 2012 • Largest U.S. retailer with bricks and clicks footprint • Iconic brand in 90 countries with direct-to-consumer global distribution infrastructure Gap at The Shops at Target, 4

  5. Comparable Customers Demographic Comparison – the Target guest mirrors the demographic and psychographic lifestyle attributes of the core Gap buyer. • Gap Inc. is an upscale retailer that provides modern, accessible, and sophisticated iconic quality clothing and accessories at affordable prices in a trend-setting store environment. • Sophisticated cohort 25 – 40 years of age • Middle to upper class income • Urban and suburban appeal to high school and college students, college graduates, and young working, married couples • Energetic, active, work and career oriented, male and female shoppers • Target is an upscale discounter that provides high-quality, on-trend merchandise at attractive prices in clean, spacious and guest-friendly stores, and on Target.com. • Median age of 40 • Median household income of $64k • Approximately 43% have children at home • About 57% have completed college • 93% of their shoppers are women Key Comparability Attributes: upscale, quality, trend, price Gap at The Shops at Target, 5

  6. Advantage Target • Why Gap? Gap at The Shops at Target can increase brand recognition and mass media appeal while decreasing Target’s supply chain burden to increase sales, revenues, and ultimately, profit margin. • Increase: • Global brand recognition • Mass media appeal in-market and online • Expanded location and demographic market opportunities • Foot traffic and spend among specific cohorts • Profits with affluent brand merchandise sales • Decrease: • Manufacturing and inventory burden • Reliance upon private or diminished label apparel • Supply chain burden Gap at The Shops at Target, 6

  7. New Season, Now Showing Online Integration Gap at The Shops at Target, 7

  8. Product Launch • Fall 2013 • Gap Kids Carve-Out (2T – 16) • Online and Free-Standing Displays in Urban, Rural and Suburban, Non-Mall Super Target Locations • Jeans, Logo Sweats, Tops and Tees, Socks and Accessories Gap at The Shops at Target, 8

  9. Product Immersion Timeline Capitalizing on high-spend seasons, Gap Kids Fall 2013 will benefit from back-to-school advertising campaigns and anticipated retail spends while mainstream Gap slated for the blockbuster Holiday 2013 season will help bolster Black Friday, Cyber Monday and the expanding end-of-year shopping season. Brand sustainability and customer demand will support the Spring 2014 Baby Gap launch timed with Easter, Spring and Summer expectations. Baby Gap Spring 2014 Gap Holiday 2013 Gap Kids Fall 2013

  10. Recommended Trial Rollout • Two test markets meet population traffic counts and urban and suburban footprint. • Minneapolis and Southwest suburbs, including Chanhassen and Chaska • Orange County, California, suburbs, including Laguna, Mission Viejo, and Anaheim • In-Store Rollout timed with Valentine’s Dayco-op advertising effort Gap at The Shops at Target, 10

  11. Pricing Strategy Brand to Retailer: B2B wholesale transaction based on the scale of audience, including discounted price, and volume of units required to meet or exceed profitably.Retailer to Consumer: B2C retail transaction where the retailer sells product to the customer at retail price. The retailer sources product from hundreds of brands to dial in their product mix for selling product to their customers.Market Rate: Market analysis clearly defines the competitive landscape within the geographic market determining the corresponding balance of style, price, and quality that enables the brand to most effectively capitalizes on the opportunity. Product Price: Reflective value proposition relative to in-store and area competition. The overall product landscape establishes the data points that a customer will evaluate the product relative to what the customer sees as comparable goods. Gap at The Shops at Target, 11

  12. Pricing Strategy Pricing for Gap Kids at The Shops at Target will offer comparable in-store Gap, Inc. prices as well as consumer discounts including brand coupons and Target Red 5% discounted savings. Year 1 Profit Margin = 52% Net Income = $47,075 per month per store after taxes Break-even = no less than $15,500 in total monthly sales Annual Profits = $380,000 by year three Year 1 Projected Sales = $285,000 Year 3 Projected Sales = $525,000 Month-to-month profitability will be achieved within the first year. Gap at The Shops at Target, 12

  13. https://www.smartsheet.com/b/home 13

  14. Thank You Now at The Shops at Target • Brands you love at prices you adore.

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