Question: Using the table below, can you please suggest implications for Gap Inc in terms of marketing or advertising expenditures going forward as needed to implement
Using the table below, can you please suggest implications for Gap Inc in terms of marketing or advertising expenditures going forward as needed to implement strategies.
| Gap Inc. | Ross Stores, Inc. | TJX Companies, Inc. |
| We use a variety of marketing and advertising mediums to drive brand health, customer acquisition, and engagement. We leverage our growing customer database and respond to shopping behaviors and needs with personalized content across email, site, and digital media to drive relevance and urgency. Our diversified media mix spans traditional to digital to social media. We focus on productivity of demand generation investments to drive increased effectiveness. Costs associated with the production of advertising, such as writing, copy, printing, and other costs, are expensed as incurred. Costs associated with communicating advertising that has been produced, such as television and magazine costs, are expensed when the advertising event takes place. Advertising expense was $1,115 million, $816 million, and $687 million in fiscal 2021, 2020, and 2019, respectively, and is recorded within operating expenses on the Consolidated Statements of Operations. | Advertising for Ross Dress for Less relies on a mix of television and digital channels to communicate the Ross value propositionsavings off the same brands carried at leading department or specialty stores every day. This strategy reflects our belief that a mix of channels is necessary to reach our customer. Within digital channels, we continue to grow social, digital video, and audio, to communicate our brand position. Advertising for dd's DISCOUNTS is primarily focused on radio, both broadcast and digital, social media, and new store grand openings. Customer traffic and demand for our merchandise is influenced by our advertising and marketing activities, the name recognition and reputation of our brands, and the location of our stores. Although we use marketing and advertising programs to attract customers to our stores, particularly through television and digital channels, our competitors may spend more or use different approaches, which could provide them with a competitive advantage. Our advertising and other promotional programs may not be effective or may be perceived negatively, or could require increased expenditures, any of which could adversely affect sales or increase costs. Advertising costs are expensed in the period incurred and are included in Selling, general and administrative expenses. Advertising costs for fiscal 2021, 2020, and 2019 were $65.1 million, $42.5 million, and $74.0 million, respectively. | TJX expenses advertising costs as incurred. Advertising expense was $506 million for fiscal 2022, $296 million for fiscal 2021 and $452 million for fiscal 2020. The increase in selling, general and administrative expenses for fiscal 2022 was primarily driven by higher store payroll costs to support a higher sales volume. In addition to these costs, incentive compensation costs and other variable store costs, such as advertising spend and credit processing fees, were higher in fiscal 2022 as compared to fiscal 2021. We operate with a low cost structure compared to many traditional retailers. We focus aggressively on expenses throughout our business. Our advertising is generally focused on promoting our retail banners rather than individual products, including at times promoting multiple banners together, which contributes to our advertising budget (as a percentage of sales) remaining low compared to many traditional retailers. We design our stores to provide a pleasant, convenient shopping environment without spending heavily on store fixtures. Additionally, our distribution network is designed to run cost effectively. |
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