Gap Inc., (gap for cloth and accessories) began experiencing a significant sales decline, sales were off by almost 50 % from their peak in early 2000s. Changing tastes, a slow economy, and intensive competition from other fashion apparel leaders have all contributed to Gap's decline. Another factor has been Gap's insistence on maintaining its existing channel strategy of selling only through traditional department stores and specialty stores.

1. Do you think Gap should change its channel strategy in the face of sales decline and in light of what competitors are doing?

2. If so, what channel strategy changes should the company make and how would such a move affect Gap's product differentiation and product positioning strategies.