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
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)
2 7%
2 3%
U.S.
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 Enterprise resource planning planning (ERP) 5.Web 5. Web designi designing ng
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 Q-1 Desc Descri ribe be and and eva evalu luat atee Gior Giorda dano no’s ’s prod produc uct, t, 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:
Porter’s Value Chain Analysis
Source:Adapted from Porter’s(1985) Value Chain model, competitive advantage:
Giordano’s Key Success Factors(KSF) Giordano’s Key Success Factors
Design
Sustainability in Existing Country Markets
Somewhat Sustainable
Likely/Potential Future Developments of KSF Competitors could
increasingly use Relies on effective Fast and Market Driven technology to assist New Product Development organizational in their design Systematically Systematically collects communications 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.
Operation, Logistics and IT
Somewhat sustainable
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 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
Branding and Marketing Giordano’s Brand:
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.
Customer Service:
Somewhat Sustainable A service culture is one
Fantastic customer service: Service orientation is pervasive in many of its activities. Recruitment, selection and training of staff. Empowerment Empowerment and motivation of staff
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
Location:
Difficult to sustain
Good, high traffic shopping and convenience locations
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 A
Controlled Menu
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 Action required to allow a Country Markets successful Transfer of KSF
Design
Likely Increasing knowledge base
Fast and Market
Flat structure
Driven New Product development Fast turnaround from market impulse, design, manufacturing to distribution to the shops.
Good
communication Use of IT Listening to customers and observing trends
of customer preferences, local and international fashion trends, etc. Constant upgrading of IT systems to improve organizations coordination and communications communications in real time and across geographical boundaries Good design staff is needed for each distinct market.
Likely Upgrading and Operations, adapting systems to Logistics and IT 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
Beyond Asia Aggressive 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
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
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
