Giordano: Making A Value-For-Money, High-Volume, High-Quality Service Strategy Work.

  Giordano

 

Background of  Giordano International Limited  

“The improved communication from Share Point and Outlook allows us to make better product allocations between markets, which has helped Giordano raise the average selling price on our items and increase gross profit.” Cody Chan, Regional Merchandising Lead, Giordano.

Giordano, International Limited is a retailer of men’s, women’s and children’s quality apparel, accessories and supplying products to third parties, founded at 1981 by Jimmy Lai in Kowloon, Hong Kong. Giordano has become a pioneer of customer service in the Asia-Pacific region and, as of January 2008, currently employs more that 11,400 people and operates 1800 stores worldwide in 40 countries.The company is Asia-Pacific’s most successful retailer and sells its name under the brands of “Giordano”, “Giordano Concepts”, “Giordano Junior” and “Giordano Ladies”. Giordano has been publicly listed since 1991 and since then trades on the Hong Kong stock exchange under the ticker symbol.Giordano’s success is measured by the company’s relentless focus on its five corporate business values of quality, knowledge, innovation, simplicity and service. The company has its own apparel manufacturing division where many of its own clothing styles are produced. Giordano is also renowned for its basic and practical men’s, women’s, and children’s T-shirts and trousers, especially denims. In comparison, Giordano is very similar to the American based popular retailer The Gap.

Giordano’s Vision is “To be the best and the biggest world brand in apparel retailing.” When the Mission is “To make people “feel good” & “look great“.[1]

Analysis

Firstly, how, if at all, should Giordano reposition itself against its competitors in its existing and new market? Would it be necessary to follow different positioning strategies for different market (e.g. Hong Kong versus South East Asia)?

Answer: According to Osama Taha- “A positioning strategy results in the image you want to draw in the mind of your customers, the picture you want him/her to visualize of what you offer, in relation to the market situation, and any competition you may have”.[2]

Giordano’s current positioning strategy is based on providing “value-for-money merchandise of discounted casual unisex apparel”.

Giordano repositioned its brand to focus on value-added products and broadening it appeal by improving on visual merchandising and apparel. The company also emphasized on the merchandise that is relatively mid-priced which means “inexpensive yet contemporary and trendy”, and offers quality, value and excellent customer services. Now the fact is whether or not Giordano should reposition itself against its competitors in its current and new markets. Repositioning is not necessary for the entire company because Giordano’s relatively mid-priced positioning worked well: “the inexpensive yet trendy” clothing appealed to Asia’s frugal customers, especially during the Asian economic crisis. However, with the Asian economy booming, customers now have more disposable income and spending power. Thus, Giordano could find it worthwhile to alter their brand image into a more high-value, high-quality and therefore higher price market.

hk_qrc_giordano_ladies_shop
     This could mean primarily repositioning Giordano as a higher priced and higher value brand.  Giordano must continue to be creative in their promotions. Perhaps they should spend more on traditional advertising, as they spend less on advertising and promotion than close competitors.  A spokesperson, McCann- Erickson, in his one comment about Giordano was that it was a “good brand but not a great one. Compared to other international brands, it doesn’t shape opinion”. A competitor of Giordano is Esprit. They are seen as more upmarket than Giordano, whilst being stylish and trendy. However, Esprit promoted a “lifestyle” image, even though it is positioned similarly to Giordano.  So, Giordano could re-launch its image, to be more stylish and thus promoting a lifestyle and not just a brand.   It is not necessary for Giordano to follow same positioning strategies for different market but it will depend on the market condition of a particular whether to follow standardized or customized strategy. The company can go after with standardized positioning strategies “value-for-money merchandise” for different market within the same region like South East Asian countries. But before implementing this standardized positioning strategy Giordano needs to understand the single market on the basis of consumer’s tastes and preferences about the product and promotional activities. On the other hand, the other successful strategies of Giordano in proving excellent customer services, information system and logistics and human resource policies and practices should be implemented tactically for different markets. It means customized strategies should be developed for different countries even within Asia because there are some variations between countries in terms of their economic, cultural and social factors.   

→  Giordano completely understood its core competencies and the pillars of its success, but it had to carefully explore how they were likely to develop over coming years. Which of its competitive advantages would be sustained and which ones were likely to be eroded?

Answer: The competitive advantages those worked as key success factors for Giordano to achieve a distinct position in the competitive markets are:

Computerization – The POS terminals that are used to record and transmit flows of stocks to a mainframe computer which then aids in controlling stock flow of inventory.

A tightly controlled menu – It mainly focus on a few items whose demand and desirability can be closely monitored.                   

Frugality – curbed spending on advertising and tight inventory control

Value pricing – value for money apparel The other sources of competitive advantage for Giordano’s are: 

  1. A dedicated workforce in all outlets that provides quality service: In order to maintain this Giordano follows stringent selection procedures to ensure only desired employees are chosen, conduct workshops on “attitude training”, follows rotational on the job training method and performance related pay systems on the basis of periodic performance evaluations.
  2. Simplicity and speed of operations: Giordano maintained a flat organizational structure and this facilitated easy communication between people within the organization, helped to make speedy decision and to manage the project efficiently.
  3. A recognized brand: Giordano has received awards such as: The American Service Excellence Award, ISO 9002 Award and People Developer Award which helped Giordano to establish their brand as a familiar one in over 30 countries.  All these competitive advantages and sources should be maintained by Giordano in order to keep its current competitive position and there are some other competitive advantages that should be developed by Giordano in future. The future competitive advantages can be gained through investment into the development of employees and continued development of a learning organization which may not be gained by the other competitors.

A third issue to be considered was Giordano’s growth strategy in Asia as well as across continent. Would Giordano’s competitive strengths be transferable to other markets? Would strategic adaptation to IT strategy and marketing mix be required or would tactical moves suffice?  

Answer:  Giordano Company’s main competitive strengths which can be transferred to other market are: the experience of the employees, inventory controlled system, HRM practices but the policies should be different for each country and can use the established distribution, marketing and inbound channels members in order to market their product out side the home country.  IT strategy which is currently used by Giordano, it should not adopt the same strategy for other countries where they are planning to expand their business. Because the IT infrastructure for each country in Asia and other continents may not be the same and the current IT strategy of Giordano may not be supported by that particular country’s technological structure. Giordano needs more efficient, cost effective, and secure internal communication platform which will link its many sites in Hong Kong and other host countries. As the cross border business of Giordano is increasing, the company needed a comprehensive communications tool that would help Giordano employees conduct multisite management meetings, share documents and collaborate for fast business decisions and quality customer service. In such scenario Giordano can go for partnership with the IT company (Like Microsoft), through which they can install such a server and software through which they can equipped their staff with real time teamwork and presence capabilities that dramatically increased productivity. At the same time they can decrease its multi-national direct dialling and travel cost, as well as IT management costs. The marketing mix strategies that are followed by the Giordano for the existing market should not be the same for new markets where the company is willing to enter. The marketing mix strategies mainly deal with arrangements of the 4 Ps’. So the strategies regarding product price, price, place and promotion should not be the same for all target countries as the market differs in terms of their economic, cultural, social and political environment. But the successful strategies which are currently used for other market can be used by Giordano as guidelines and can develop tactical strategies for different market according to the market situation and customers’ requirement.        

Recommendation 

From the above analysis we have some recommendation for Giordano International Limited. These are: 

          C   It is essential to start promotions to increase brand awareness when starting businesses in new market.

          C   The location and site selection for establishing Giordano’s outlet in different country will be critical. The company should carefully select the site to position their stores which will be convenient for the customers.

         C   Customer is the key and main factor for differentiation is customer care. The company needs to follow customized customer service strategy for each market segment.

         C   Giordano needs to find out possibility of outsourcing to maintain low costs

        C   Extensive market research is needed to investigate designs and fabrics required by the target customers

Conclusion

Giordano has perfectly focused in the value-for-money concept and everything they do is managed at a world-class standard. The management conducted their business in such an excellent and professional manner which helped this brand to reach from Asia to the Middle East and India, Australia, Eastern Europe, and now in North America.

 References   

Kotler, P., & Kelvin, K. (2006).Marketing Management .New Delhi: Prentice-Hall  Publications.

Taha, O. (2000). How to Design Your Positioning Strategy. Retrieved February 23, 2008, from http://www. dime-co.com/marketing/positioning.htm

Giordano International Limited (Hong Kong). (n.d.). Retrieved February 25, 2008, from http://www.giordano.com.hk/web/HK/index.html

Our Company. (n.d.). Retrieved February 25, 2008, from http://www.giordano.com.hk/web/HK/ourCompany.html 

 


 

[1] Our Company in  Giordano International Limited’s home site

[2]How to Design Your Positioning Strategy” by Osama Taha

The above analysis of the case study was contributed by Farhana Tahmida Newaz