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 Stock market %
Nominal GDP
% change from change from 7/97 to
% change 1997-98
7/97 to 1/98 1/98
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.
-1.2%
Thailand -48.3% -25.6%
(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:
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 Sustainability in Likely/Potential Future
Factors Existing Country Developments of KSF
Markets
Design Somewhat Sustainable  Competitors could
increasingly use
Fast and Market Driven Relies on effective 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.
distribution to the shops.  Attracting and
retaining good staff
in design is
important.
Operation, Logistics Somewhat sustainable  Other competitors
and IT would be likely to
Giordano’s efficiency try to emulate
Excellent Management of in logistics and Giordano.
systems and integration operations may be  Needs to
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
Branding and Somewhat sustainable  Biggest threat comes
Marketing from reputable players
Giordano’s Brand: Brand Equity helps like The Gap
to build customer  Giordano should
Positioning: helps loyalty continue to invest in
instant transfer of key However, Giordano strengthening its brand
values Giordano offers faces threat of strong equity through heavy
(Value for money, good competitors with advertising and
quality casual wear, similar positioning and excellent customer
excellent service) also from brand service
Excellent brand dilution (e.g.”Cheap  It could acquire
recognition due to high image”) as the market another brand to serve
advertising budget in general shifts higher end segment
upward along with
increasing incomes.
Customer Service: Somewhat Sustainable  Other
competitors have
Fantastic customer A service culture is one not yet attempted
service: source of advantage that to follow
Service orientation is competitors would find Giordano’s
pervasive in many of its difficult to copy service strategy.
activities. However, Giordano needs
Recruitment, selection to ensure that this culture can
and training of staff. be maintained as it expands
Empowerment and rapidly in existing and new
motivation of staff markets

Location: Difficult to sustain  Competitors and

new entrants will
Good, high traffic Giordano’s sites are an successfully
shopping and important source of compete for good
convenience locations advantage, but other locations
competitors could also do the
same
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 Transferability to new Action required to allow a
Success Factors Country Markets successful Transfer of KSF
Design 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.
Operations,  Likely  Upgrading and
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
systems and  However, Giordano’s time information
integration of capability in management and
activities managing IT system can coordination
be utilised  High volume is
needed to obtain
sufficient scale
economies to justify
high initial
investment
Branding And Asia Beyond Asia Aggressive
Marketing advertising and
Consistent Likely Difficult brand promotion is
positioning and Underdeveloped satured markets necessary to
customized markets offer and established achieve high
marketing mix large potential players volume, which
High advertising then bring
and promotional economies of scale
budget in advertising and
its other activities
Customer Service  Giordano should seek
Fantastic customer Likely to understand the
service:  The 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.
Locations  Likely  Giordano should
Good, high traffic  Giordano has the 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