Giordano at a Glance

• “To be the best and the biggest world brand in the apparel retailing.”

• Giordano’s mission is to provide value for money merchandise

• Giordano is a retailer of casual clothes• It was founded by jimmy Lai in 1980• In 1985 it opened its first outlet in Singapore• After 1987 it repositioned itself as a retailer of

unisex apparel

Management value & styles

• Lai’s management philosophy

• Employee treated as an assets

• Spent heavily on training-average 224 hours training for each employee

• Paid high wages to employees

• Flat organizational structure

Contd…

• Services of Giordano – key strength• Employee evaluation- service star award• Store evaluation- Best service shop• Value for money-selection of suppliers, cost

control etc• Inventory control-Inventory turnover reduced to

28 days in 1999 from 58 days in 1996• Product positioning-simple having limited items• Repositioning-stylish clothes & broadening its

appeal

Contd..

• Advertising & promotion-heavy spend on advertisement & the campaign were creative & appealing

• Asian retail industry-Asian currency crisis

• Giordano’s competitors- Ten,Bossini,Baleno

• Growth strategy- beyond Asia

PEST

Political

• Tax structure.

• Pollution regulation.

EconomicalAsian currency crisis

Exchange rate % change from

7/97 to 1/98

Stock market % change from 7/97 to

1/98

Nominal GDP % change 1997-98

Indonesia -59.4% -32.6% -16.2%

Japan -12.0% -18.2% -4.3%

Malaysia -36.4% -43.8% -6.8%

Singapore -15.6% -36.0% -0.1%

S.Korea -47.5% -21.9% -7.3%

Taiwan -14.6% -19.7% n.a.

Thailand -48.3% -25.6%-1.2%

(1996-97)

U.S. n.a. 2.7% 2.3%

Cont..

• Currency fluctuation • Rising cost of raw

material.• Labour cost

Social

• Taste & preference

• Culture

• Convenience

Technological

• IT systems

• Software's like:

1.Point of sale (pos)

2.Enterprise resource planning (ERP)

3.Web designing

SWOT

Strength

• CEO-Lai

• Employees

• Flat organizational structure

• Lower staff turnover ratio

• Inventory control

• Services

• Advertisement & promotion

Opportunity

• Change taste, preference,

fashion trends

• Impulse buying

• Shopping is an

experience

Cont…

• Population

Source: Ernst & Young Retail Report,2000

Cont…• Untapped market

Threats

• High turnover ratio

• Labour regulations & laws

Q-1 Describe and evaluate Giordano’s product, business, and corporate strategies.

Product strategies: Value for money product. Excellent services. Focused on core items. Customer oriented.

Business Strategies Differentiation. Cost leadership Niche

Cont…..

• Corporate strategies.

Did vertical integration. Asian currency crises. Concentrated on retailing.

Q-2 Describe and evaluate Gioranado’s current positioning strategy. Should Gioranado reposition itself against its competitors in its current and new markets, and should it have different positioning strategies for different markets?

• Current positioning.• Target up-market may create confusion.• Measures• Difficult to make different strategies for different

market.• Costly to acquire existing brand or setup new brand.• So go with old strategies.

Q-3 What are Gioranado’s key success factors (KSF) and sources of competitive advantage? Are its competitive advantages suitable, and how would they develop in the future?

Porter’s Five Forces in Retail Industry

Source:Adapted from Porter’s(1985) Value Chain model, competitive advantage: creating and sustaining superior performance, New york, Free Press,London

Porter’s Value Chain Analysis

Source:Adapted from Porter’s(1985) Value Chain model, competitive advantage: creating and sustaining superior performance, New york, Free Press,London

Giordano’s Key Success Factors(KSF)Giordano’s Key Success Factors

Sustainability in Existing Country Markets

Likely/Potential Future Developments of KSF

Design

Fast and Market Driven New Product DevelopmentSystematically collects ideas from customers, front line and experienced designersFast turnaround from market impulse, design, manufacturing to distribution to the shops.

Somewhat Sustainable

Relies on effective organizational communications and other intangible sources of advantage, which are difficult for competitors to copy and implement effectively.

Competitors could increasingly use technology to assist in their design process

On Giordano’s part, effort must continually be made to obtain and utilize feedback from target customers.

Attracting and retaining good staff in design is important.

Operation, Logistics and IT

Excellent Management of systems and integration of activities, e.g. stocks obsolescence costs are minimized due to:Daily sales report (facilitated through IT & system)Limited stock in shops that are daily restockedRapid market driven manufacturing

Somewhat sustainable

Giordano’s efficiency in logistics and operations may be copied or even exceeded with an acquisition of superior systems. However, there are not many competitors who would be able to copy the implementation and integration of the systems on the scale that Giordano has done.

Other competitors would be likely to try to emulate Giordano.

Needs to continually look for new ways to improve and build its advantage inside and outside its industry.

E.g. benchmarking against retailers like The Gap and Liz Claiborne, which are well known for their integration IT systems and deficient operations

Branding and MarketingGiordano’s Brand:

Positioning: helps instant transfer of key values Giordano offers (Value for money, good quality casual wear, excellent service)Excellent brand recognition due to high advertising budget

Somewhat sustainable

Brand Equity helps to build customer loyaltyHowever, Giordano faces threat of strong competitors with similar positioning and also from brand dilution (e.g.”Cheap image”) as the market in general shifts upward along with increasing incomes.

Biggest threat comes from reputable players like The Gap

Giordano should continue to invest in strengthening its brand equity through heavy advertising and excellent customer service

It could acquire another brand to serve higher end segment

Customer Service:

Fantastic customer service:Service orientation is pervasive in many of its activities.Recruitment, selection and training of staff.Empowerment and motivation of staff

Somewhat Sustainable

A service culture is one source of advantage that competitors would find difficult to copyHowever, Giordano needs to ensure that this culture can be maintained as it expands rapidly in existing and new markets

Other competitors have not yet attempted to follow Giordano’s service strategy.

Location:

Good, high traffic shopping and convenience locations

Difficult to sustain

Giordano’s sites are an important source of advantage, but other competitors could also do the same

Competitors and new entrants will successfully compete for good locations

Contd…

Tightly Controlled MenuA Recognize Brand

Q-4 Could Giordano transfer its key success factors to new markets as it expanded both in Asia and rest of the world?

Transferability of Giordano’s Key Success Factors to New Country markets

Giordano’s Key Success Factors

Transferability to new Country Markets

Action required to allow a successful Transfer of KSF

Design

Fast and Market Driven New Product developmentFast turnaround from market impulse, design, manufacturing to distribution to the shops.

Likely

Flat structureGood communicationUse of ITListening to customers and observing trends

Increasing knowledge base of customer preferences, local and international fashion trends, etc.Constant upgrading of IT systems to improve organizations coordination and communications in real time and across geographical boundariesGood design staff is needed for each distinct market.

Operations, Logistics and IT

Excellent Management of systems and integration of activities

Likely

Inventory management and logistics distribution increases in complexity.

However, Giordano’s capability in managing IT system can be utilised

Upgrading and adapting systems to the specific market context e.g. using web based systems for real time information management and coordination

High volume is needed to obtain sufficient scale economies to justify high initial investment

Branding And MarketingConsistent positioning and customized marketing mixHigh advertising and promotional budget

Asia Beyond Asia

Likely DifficultUnderdeveloped satured markets markets offer and established large potential players

Aggressive advertising and brand promotion is necessary to achieve high volume, which then bring economies of scale in advertising and its other activities

Customer ServiceFantastic customer service:Service orientation is pervasive in many of its activities.Recruitment, selection and training of staff.Empowerment and motivation of staff

Likely The service

philosophy, HR policies and performance evaluation consistently emphasizes the importance of providing excellent customer services.

Giordano should seek to understand the expectations of local customers and adapt its performance standards, etc. accordingly

Giordano should adapt its HR programs to the skills and attitudes of staff in its new markets.

LocationsGood, high traffic shopping and convenience locations:

Likely Giordano has the

necessary resources and the contribution – per – square foot needed to acquire good retail sites.

Giordano should continue to seek good locations and take advantage of opportunities to expand in order to achieve high volume and become more accessible to customers

Q-5 How do you think Giordano had/would have to adapt its marketing and operations strategies and tactics when entering and penetrating your country?

Consistency in service and merchandise quality. Two dimensions of marketing and operations need to

be addressed separately. Concentrate on the similarities between countries. Careful to consider national and cultural differences

in some aspects of its marketing mix.

Q-6 what general lessons can be learnt from Giordano for major clothing retailers in your country?

Giordano managed to deliver a high level of service. “Even the most sophisticated training program won’t

guarantee the best customer service” “When you pay peanuts, you get monkeys.” To augment their products for e.g.”no question asked and

no time limit’ exchange policy

Common elements of firms that operated in Cycle of Success

Careful staff selection Realistic Preview of Job and Organization Focus on Nature and quality of job experience Employee Empowerment Employee’s awareness of their roles in customer

satisfaction and Economic success Scorekeeping and Feedback Integration of employees into a winning team Concentration on Quality at the service core

Source : Schlesinger, Leonard A. and James L.L. Heskett (1991),”Breaking the Cycle of Failure in Service ,” Sloan Management Review, Spring , pp.17-28