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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.

Economical
 Asian currency crisis
Exchange rate % change from 7/97 to 1/98 Stock market % change from 7/97 to 1/98 -32.6% -18.2% -43.8% -36.0% -21.9% -19.7% -25.6% 2.7% Nominal GDP % change 1997-98 -16.2% -4.3% -6.8% -0.1% -7.3% n.a. -1.2% (1996-97) 2.3%

Indonesia Japan Malaysia Singapore S.Korea Taiwan Thailand U.S.

-59.4% -12.0% -36.4% -15.6% -47.5% -14.6% -48.3% n.a.

Cont..
• Currency fluctuation • Rising cost of raw material. • Labour cost

Social
• Taste & preference • Culture • Convenience

Technological
• IT systems • Software's like: 3.Point of sale (pos) 4.Enterprise resource planning (ERP) 5.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

Cont…
• Untapped market

Source: Ernst & Young Retail Report,2000

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

 Competitors could increasingly use Relies on effective Fast and Market Driven technology to assist New Product Development organizational in their design Systematically collects communications and process ideas from customers, front other intangible sources  On Giordano’s part, line and experienced of advantage, which are effort must designers difficult for competitors continually be made Fast turnaround from to copy and implement to obtain and utilize market impulse, design, effectively. feedback from target manufacturing to customers.  Attracting and distribution to the shops. retaining good staff in design is important. Design Somewhat Sustainable

Sustainability in Existing Country Markets

Likely/Potential Future Developments of KSF

 Other competitors would be likely to Giordano’s efficiency try to emulate Excellent Management of in logistics and Giordano.  Needs to systems and integration operations may be of activities, e.g. stocks copied or even exceeded continually look for obsolescence costs are with an acquisition of new ways to minimized due to: superior systems. improve and build Daily sales report However, there are not its advantage inside (facilitated through IT & many competitors who and outside its system) would be able to copy industry. Limited stock in shops the implementation and  E.g. benchmarking that are daily restocked integration of the against retailers like Rapid market driven systems on the scale that The Gap and Liz manufacturing Giordano has done. Claiborne, which are well known for their integration IT systems and deficient operations Operation, Logistics and IT Somewhat sustainable

Somewhat sustainable  Biggest threat comes from reputable players Brand Equity helps like The Gap  Giordano should to build customer loyalty continue to invest in Positioning: helps However, Giordano strengthening its brand instant transfer of key equity through heavy values Giordano offers faces threat of strong advertising and (Value for money, good competitors with similar positioning and excellent customer quality casual wear, also from brand service excellent service)  It could acquire dilution (e.g.”Cheap Excellent brand another brand to serve recognition due to high image”) as the market in general shifts higher end segment advertising budget upward along with increasing incomes.

Branding and Marketing Giordano’s Brand:

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 Location: Good, high traffic shopping and convenience locations

Somewhat Sustainable A service culture is one source of advantage that competitors would find difficult to copy However, Giordano needs to ensure that this culture can be maintained as it expands rapidly in existing and new markets Difficult to sustain Giordano’s sites are an important source of advantage, but other competitors could also do the same

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

 Competitors and new entrants will successfully compete for good locations

Contd…
Tightly Controlled Menu A 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 Design Transferability to new Action required to allow a Country Markets successful Transfer of KSF Likely Increasing knowledge base Fast and Market Flat structure of customer preferences, local Driven New Product Good and international fashion development communication trends, etc. Fast turnaround Use of IT Constant upgrading of IT from market impulse, Listening to systems to improve design, customers and organizations coordination and manufacturing to observing trends communications in real time distribution to the and across geographical shops. boundaries Good design staff is needed for each distinct market.

 Likely  Upgrading and Operations, Logistics and IT adapting systems to  Inventory management the specific market Excellent and logistics distribution context e.g. using web Management of increases in complexity. based systems for real  However, Giordano’s systems and time information integration of capability in management and activities managing IT system can coordination  High volume is be utilised needed to obtain sufficient scale economies to justify high initial investment

Branding And Marketing Consistent positioning and customized marketing mix High advertising and promotional budget

Asia
Likely Underdeveloped markets offer large potential

advertising and brand promotion is Difficult satured markets necessary to and established achieve high volume, which players then bring economies of scale in advertising and its other activities

Beyond Asia Aggressive

 Giordano should seek Customer Service Likely Fantastic customer to understand the  The service service: expectations of local Service orientation philosophy, HR customers and adapt its is pervasive in many policies and performance standards, of its activities. performance etc. accordingly Recruitment, evaluation consistently  Giordano should adapt selection and training emphasizes the its HR programs to the of staff. importance of skills and attitudes of Empowerment and providing excellent staff in its new markets. motivation of staff customer services.  Likely  Giordano should Locations  Giordano has the Good, high traffic continue to seek good shopping and necessary resources and locations and take convenience the contribution – per – advantage of locations: square foot needed to opportunities to expand acquire good retail sites. 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