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Emerald Emerging Markets Case Studies Giordano: positioning for international expansion Jochen Wirtz,
Article information: To cite this document: Jochen Wirtz, (2011) "Giordano: positioning for international expansion", Emerald Emerging Markets Case Studies, Vol. 1 Issue: 1, pp.1-13, https://doi.org/10.1108/20450621111110500 Permanent link to this document: https://doi.org/10.1108/20450621111110500
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Giordano: positioning for international expansion
Jochen Wirtz
As it looks to the future, a successful Asian retailer of casual apparel must decide whether to
maintain its existing positioning strategy. Management wonders what factors will be critical to
success and whether the firm’s competitive strengths in merchandise selection and service are
readily transferable to new international markets.
To make people ‘‘feel good’’ and ‘‘look great’’ (Giordano’s Corporate Mission).
In mid 2009, Giordano, a Hong Kong-based retailer of casual clothes targeted at men,
women, and children through its five company brands, Giordano, Giordano Concepts,
Giordano Ladies, Giordano Junior, and BlueStar Exchange (BSE). It was operating over
1,800 retail stores and counters in some 30 markets worldwide. Its main markets were
Mainland China, Hong Kong, Japan, Korea, Singapore, and Taiwan. Other countries in which
it had a presence were Australia, Indonesia, Malaysia, Middle East, and North America. In
September 2008, there were 1,757 Giordano and Giordano Junior stores, 46 Giordano
Ladies stores, 29 Giordano Concept stores, and 111 BSE stores. Sales had grown to
HK$4,950 million (US$561 million) by 2007 (Exhibit 1). Giordano stores were located in retail
shopping districts with good foot traffic. Views of a typical storefront and store interior are
shown in Exhibit 2. In most geographic markets serviced by Giordano, the retail clothing
business was deemed to be extremely competitive.
The board and top management team were eager to maintain Giordano’s success in existing
markets and to enter new markets, especially in mainland China. Several issues were under
discussion. First, in what ways, if at all, should Giordano change its current positioning in the
marketplace? Second, would the factors that had contributed to Giordano’s success in the
past remain equally critical over the coming years or were new key success factors (KSF)
emerging? Finally, as Giordano sought to enter new markets around the world, were its
competitive strengths readily transferable to other markets?
Company background
Giordano was founded in Hong Kong by Jimmy Lai in 1980. In 1981, it opened its first retail store
in Hong Kong and also began to expand its market by distributing Giordano merchandise in
Taiwan through a joint venture. In 1985, it opened its first retail outlet in Singapore.
Responding to slow sales, Giordano changed its positioning strategy in 1987. Until 1987, it
had sold exclusively men’s casual apparel. When Lai and his colleagues realized that an
increasing number of female customers were attracted to their stores, he repositioned the
chain as a retailer of value-for-money merchandise, selling discounted casual unisex
apparel, with the goal of maximizing unit sales instead of margins. This shift in strategy was
successful, leading to a substantial increase in turnover. In 1994, Peter Lau Kwok Kuen
succeeded Lai and became Chairman.
DOI 10.1108/20450621111110500 VOL. 1 NO. 1 2011, pp. 1-13, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
Jochen Wirtz is an
Associate Professor of
Marketing at NUS Business
School, National University
of Singapore, Singapore.
This case is based on published information and quotes from a wide array of sources. The generous help and feedback provided by Alison Law, former Assistant to Chairman, Giordano International Ltd, to earlier versions of this case are gratefully acknowledged. The author thanks Zhaohui Chen for his excellent research assistance.
Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality.
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PAGE 2jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 1 2011
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Management values and human resource policies
A willingness to try new and unconventional ways of doing business and to learn from past
errors was part of Lai’s management philosophy and soon became an integral part of
Giordano’s culture. Lai saw the occasional failure as a current limitation that indirectly
pointed management to the right decision in the future. To demonstrate his commitment to
this philosophy, Lai took the lead by being a role model for his employees, adding:
[. . .] Like in a meeting, I say, look, I have made this mistake. I’m sorry for that. I hope everybody
learns from this. If I can make mistakes, who [. . .] do you think you are that you can’t make mistakes?
He also believed strongly that empowerment would minimize mistakes – that if everyone
was allowed to contribute and participate, mistakes could be minimized.
Another factor that contributed to the firm’s success was its dedicated, ever-smiling sales
staff of over 11,000. Giordano considered front-line workers to be its customer-service
heroes. Charles Fung, executive director and general manager (Taiwan), remarked:
Even the most sophisticated training program won’t guarantee the best customer service. People
are the key. They make exceptional service possible. Training is merely a skeleton of a customer
service program. It’s the people who deliver that give it form and meaning.
Giordano had stringent selection procedures to make sure that the candidates selected
matched the desired employee profile. Selection continued into its training workshops,
which tested the service orientation and character of a new employee.
Giordano’s philosophy of quality service could be observed not only in Hong Kong but also
in its overseas outlets. The company had been honored by numerous service awards over
the years (Exhibit 3). Fung described its obsession with providing excellent customer
service in the following terms:
The only way to keep abreast with stiff competition in the retail market is to know the customers’
needs and serve them well. Customers pay our pay checks; they are our bosses [. . .] Giordano
Exhibit 2 Typical Giordano storefronts
Source: Take from SM7, Exhibit 2, p. 512
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considers service to be a very important element [in trying to draw customers] [. . .] service is in
the blood of every member of our staff.
Giordano believed and invested heavily in employee training and has been recognized for
its commitment to training and developing its staff by such awards as the Hong Kong
Management Association Certificate of Merit for Excellence in Training and the People
Developer Award from Singapore, among others. Fung explained:
Training is important. However, what is more important is the transfer of learning to the store.
When there is a transfer of learning, each dollar invested in training yields a high return. We try to
encourage this [transfer of learning] by cultivating a culture and by providing positive
reinforcement, rewarding those who practice what they learned.
Giordano offered what Fung claimed was ‘‘an attractive package in an industry where employee
turnover is high.’’ Giordano motivated its people through a base salary that probably was below
market average, but added attractive performance-related bonuses. These initiatives and
Giordano’s emphasis on training had resulted in a lower staff turnover rate.
Giordano was only too aware that managing its human resources (HR) became a major
challenge when it decided to expand into global markets. To replicate its high-service-quality
positioning, Giordano knew it needed to consider the HR issues involved in setting up retail
outlets in unfamiliar territory. For example, the recruitment, selection and training of local
employees required modifications to its formula for success in its current markets owing to
differences in the culture, education and technology of the new countries. Labor regulations
also affected HR policies such as compensation and welfare benefits.
Focusing Giordano’s organizational structure on simplicity and speed
Giordano maintained a flat organizational structure. The company’s decentralized
management style empowered line managers, and at the same time encouraged fast and
close communication and coordination. For example, top management and staff had desks
located next to each other, separated only by shoulder panels. This closeness allowed easy
communication, efficient project management and speedy decision making, which were all
seen as critical ingredients to success amid fast-changing consumer tastes and fashion
trends. This kept Giordano’s product development cycle short. The firm made similar
demands on its suppliers.
In addition, the company kept its operations lean to focus on what it considered its
competitive advantage: service. One of their main strategic objectives was to disengage
from manufacturing to focus on retailing. This was implemented by reducing its interest in
their joint ventures with key manufacturers. This allowed the group to channel its resources
from the Garment Trading and Manufacturing Division to the more profitable Retail and
Distribution Division[1].
Service
Giordano’s commitment to service began with its major Customer Service Campaign in
1989. In that campaign, yellow badges bearing the words ‘‘Giordano Means Service’’ was
worn by every Giordano employee, and its service philosophy had three tenets: ‘‘We
welcome unlimited try-ons; we exchange – no questions asked; and we serve with a smile.’’
As a result, the firm started receiving its numerous service-related awards over the years. It
had also been ranked number one for eight consecutive years by the Far Eastern Economic
Review for being innovative in responding to customers’ needs. Furthermore, proving its
expansion success in the Middle East, in 2006, Giordano received double awards for
exceptional service and customer centricity from the Government of Dubai.
Management had launched several creative, customer-focused campaigns and promotions
to extend its service orientation. For instance, in Singapore, Giordano asked its customers
what they thought would be the fairest price to charge for a pair of jeans and charged each
customer the price that they were willing to pay. This one-month campaign was immensely
successful, with some 3,000 pairs of jeans sold everyday during the promotion. In another
VOL. 1 NO. 1 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 5
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service-related campaign, over 10,000 free T-shirts were given to customers for giving
feedback and criticizing Giordano’s services.
To ensure customer service excellence, performance evaluations were conducted
frequently at the store level, as well as for individual employees. Internal competitions
were designed to motivate employees and store teams to do their best in serving customers.
Every month, Giordano awarded the ‘‘Service Star’’ to individual employees, based on
nominations provided by shoppers. In addition, every Giordano store was evaluated every
month by mystery shoppers. Based on the combined results of these evaluations, the ‘‘Best
Service Shop’’ award was given to the top store. Customer feedback cards were available at
all stores, and were collected and posted at the office for further action. Increasingly
customers were providing feedback via the firm’s corporate web site.
In late 2006, Giordano opened Giordano University, located at Dongguan in China. At its
initial stage, the University trained staff located in Hong Kong and Mainland China with plans
to offer training to its other markets and even franchisees and authorized dealers. Giordano’s
efforts on staff training and development reaped results as was shown by the many service
awards it clinched.
Value for money
Lai explained the rationale for Giordano’s value-for-money policy:
Consumers are learning a lot better about what value is. So we always ask ourselves how can we
sell it cheaper, make it more convenient for the consumer to buy and deliver faster today than [we
did] yesterday. That is all value, because convenience is value for the consumer. Time is value for
the customer.
Giordano was able to sell value-for-money merchandise consistently through careful
selection of suppliers, strict cost control and by resisting the temptation to increase retail
prices unnecessarily. For instance, to provide greater shopping convenience to customers,
Giordano started to open kiosks in subway and train stations in 2003 aimed at providing their
customers with a ‘‘grab and go’’ service.
Inventory control
In order to maximize use of store space for sales opportunities, a central distribution center
replaced the function of a back storeroom in its outlets. Information technology (IT) was used to
facilitate inventory management and demand forecasting. When an item was sold, the barcode
information – identifying size, color, style, and price – was recorded by the point-of-sale cash
register and transmitted to the company’s main computer. At the end of each day, the
information was compiled at the store level and sent to the sales department and the distribution
center. The compiled sales information became the store’s order for the following day. Orders
were filled during the night and were ready for delivery by early morning, ensuring that before a
Giordano store opened for business, new inventory was already on the shelves.
Another advantage of its IT system was that information was disseminated to production
facilities in real time. Such information allowed customers’ purchase patterns to be
understood, and this provided valuable input to its manufacturing operations, resulting in
less problems and costs related to slow-moving inventory. The use of IT also afforded more
efficient inventory holding. Giordano’s inventory turnover on sales was reduced from 58 days
in 1996 to merely 28 days in 2008. Its excellent inventory management reduced costs and
allowed reasonable margins, while still allowing Giordano to reinforce its value-for-money
philosophy. All in all, despite the relatively lower margins as compared to its peers, Giordano
was still able to post healthy profits. Such efficiency became a crucial factor when periodic
price wars were encountered.
Product positioning
Fung recognized the importance of limiting the firm’s expansion and focusing on one
specific area. Simplicity and focus were reflected in the way Giordano merchandised
PAGE 6jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 1 2011
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its goods. Its stores featured no more than 100 variants of 17 core items, whereas competing
retailers might feature 200-300 items. He believed that merchandising a wide range of
products made it difficult to react quickly to market changes.
Giordano’s willingness to experiment with new ideas and its perseverance despite past
failures could also be seen in its introduction of new product lines. It ventured into mid-priced
women’s fashion with the label ‘‘Gio Ladies’’ – featuring a line of smart blouses, dress pants,
and skirts – targeted at executive women. Reflecting retailer practices for such clothing,
Giordano enjoyed higher margins on upscale women’s clothing – typically 50-60 percent of
selling price as compared to 40 percent for casual wear.
Here, however, Giordano ran into some difficulties as it found itself competing with more than
a dozen seasoned players in the retail clothing business, including Esprit. Initially, the firm
failed to differentiate its new Giordano Ladies line from its mainstream product line, and even
sold both through the same outlets. In 1999, however, Giordano took advantage of the boom
that followed the Asian currency crisis in many parts of Asia, to aggressively re-launch its
‘‘Giordano Ladies’’ line, which subsequently met with great success.
As of September 2008, the reinforced ‘‘Giordano Ladies’’ focused on a select segment – the
‘‘office ladies, dressier’’ market, with 46 ‘‘Giordano Ladies’’ shops in Hong Kong, Taiwan,
Singapore, Malaysia, Indonesia, and China, offering personalized and exceptional service
as one of its core offerings. Among other things, the employees were trained to memorize
names of regular customers and recall their past purchases.
During the late 1990s, Giordano had begun to reposition its brand, by emphasizing
differentiated, functionally value-added products clothes and broadening its appeal by
improving on visual merchandising and apparel. In 1999, the firm launched BSE, a new line
of casual clothing for the price conscious customer. A typical storefront and store layout are
shown in Exhibit 2. Giordano’s relatively mid-priced positioning worked well – inexpensive,
yet contemporary-looking outfits appealed to Asia’s frugal customers, especially during a
period of economic slowdown. However, over time, this positioning became inconsistent
with the brand image that Giordano had tried hard to build over the years. As one senior
executive remarked, ‘‘The feeling went from ‘this is nice and good value’ to ‘this is cheap.’’’
As such, Giordano started to focus on establishing clear brand images and creating distinct
identities between its brands. In September 2006, Giordano announced that it will be
re-branding BSE. As explained by Peter Lau:
The apparel retail market is getting increasingly competitive, regardless of whether you are
talking about the high end or the mass market. In order to succeed, you must achieve meaningful
differentiation from your competitors or else you risk becoming lost in the crowd. We believe it is
time to give BSE a makeover to sharpen its image, and decided to go outside the company to get
a fresh perspective[2].
The newly revamped brand, now known as BSX (Exhibit 4), was unveiled at the launch of its
first flagship store in Hong Kong in April 2007. The shift saw BSX evolve from price to ‘‘fun
sell’’, targeting the key youth demographic[3]. Expansion plans to bring BSX to other
countries were made, following careful review and tweaking after its Hong Kong debut.
Additionally, having earned success in its value-for-money lines, Giordano now wanted to
penetrate the ‘‘upper-premium’’ segment. This was done via the introduction of Giordano
Concepts and its existing Giordano Ladies range. The lines focused on quality lifestyle and
targeted the fashion-conscious consumer in the affluent market segment. In contrast to its
unisex Giordano stores that carried a majority of items for women, Concept stores carry 60
percent of items catering to males.
To create alignment between the new up-market positioning and brand image, Giordano
Concepts and Giordano Ladies stores were distinctly different from its mainstream stores.
This included a revamp in store interiors and staff image to exude exclusivity, induce
curiosity and more importantly appeal to an affluent target group. For instance, to enhance
its ‘‘white’’ – themed summer collection of 2006, flagship Concept stores in Hong Kong and
Taiwan were dressed in abstract wall patterns and modern images.
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Giordano gradually remarketed its core brand in ways that sought to create the image of
a trendier label. To continue connecting with customers, Giordano launched several
promotions. Among its successes was the ‘‘World without strangers’’ slogan. First launched
in South Asia as a means to raise funds for the Tsunami victims in Phuket, it gained quick
favor with its other markets and in 2005 was launched across the region. The slogan extends
to a range of T-shirts and rubber wristbands that promote international friendship. The
products came in a variety of colors and brought across the message through words like:
‘‘Strength, Explore, Listen, Believe, Imagine, and Accept’’[4]. Ishwar Chugani, Executive
Director for Giordano Middle East, explained:
The words are designed to be personal watchwords, such as ‘‘have strength in your convictions’’,
or ‘‘explore the world around you’’, almost reminders to live outside the box and experience the
variety of life [. . .] The shirts are a sign of solidarity for fellow humans, spreading a message of
peace, acceptance and open-mindedness, which is something we can all use from time to
time[5].
In light of international crises and at times fragile cross-border friendships, ‘‘World without
Strangers’’ served as a mediator and avenue for which customers could express themselves.
The company has been able to act as a mouthpiece for society, championing various themes
from environmentalism to community work and even the economy. An example would be
the ‘‘Cheer U Up’’ collection, produced in collaboration with Mr Jim Chim Sui-man aimed to lift
the spirits of the people in the financial turmoil during the 2009 world economic crisis. Thus, the
firm’s skills in executing innovative and effective promotional strategies helped the retailer to
gain public favor and approval.
Giordano’s competitors
To beat the intense competition prevalent in Asia – especially in Hong Kong – founder
Jimmy Lai believed that Giordano had to develop a distinctive competitive advantage. So he
benchmarked Giordano against best-practice organizations in four key areas:
Exhibit 4 Giordano’s 1st BSX Store in Hong Kong
Source: www.giordano.com.hk/web/HK/investors/news/BSX200704.html
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1. computerization (from The Limited);
2. a tightly controlled menu (from McDonald’s);
3. frugality (from Wal-Mart); and
4. value pricing (as implemented at the British retail chain Marks & Spencer).
The emphasis on service and the value-for-money concept had proven to be successful.
Giordano’s main competitors in the value-for-money segment had been Hang Ten, Bossini,
and Baleno, and at the higher end, Esprit. Exhibit 5 shows the relative positioning of
Giordano and its competitors: The Gap, Bossini, Hang Ten, Baleno, and Esprit.
Hang Ten and Bossini were generally positioned as low-price retailers offering reasonable
quality and service. The clothes emphasized versatility and simplicity. But while Hang Ten
and Baleno were more popular among teenagers and young adults, Bossini had a more
general appeal. Their distribution strategies were somewhat similar, but they focused on
different markets. For instance, while Hang Ten was mainly strong in Taiwan, Baleno
increasingly penetrated Mainland China and Taiwan. On the other hand, Bossini was very
strong in Hong Kong and relatively strong in China. The company planned to make its
business in China into the group’s largest turnover and profit contributor. The geographic
areas in which Giordano, The Gap, Espirit, Bossini, Baleno, and Hang Ten operate are shown
in Exhibit 6.
Esprit was an international fashion lifestyle brand. Esprit promoted a ‘‘lifestyle’’ image and its
products were strategically positioned as good quality and value for money – a position that
Giordano was occupying. By 2008, Esprit had a distribution network of over 12,000 stores
and outlets in more than 40 countries in Europe, Asia, America, Middle East, and Australia.
The main markets were in Europe, which accounted for approximately 86.7 percent sales.
The Esprit brand products were principally sold via directly managed retail outlets,
wholesale customers (including department stores, specialty stores, and franchisees), and
by licensees for products manufactured under license, principally through the licensees’
own distribution networks.
Although each of these firms had slightly different positioning strategies, they competed in a
number of areas. For example, all firms heavily emphasized advertising and sales promotion –
selling fashionable clothes at attractive prices. Almost all stores were also located primarily in
good ground-floor areas, drawing high-volume traffic and facilitating shopping, browsing and
impulse buying. However, none had been able to match the great customer value offered by
Giordano.
A threat from US-based The Gap was also looming. The Gap had already entered Japan.
After 2005, when garment quotas were largely abolished, imports into the region had
become more cost effective for this US competitor. Through franchise partners such as
FJ Benjamin Holdings Ltd, Gap expanded its international presence with franchises
Exhibit 5 Market positioning of Giordano and principal competitors
Firms Positioning Target market
Giordano (www.giordano.com.hk) Value for money Mid-priced but trendy fashion Unisex casual wear for all ages (under different brands)
The Gap (www.gap.com) Value for money mid-priced but trendy fashion Unisex casual wear for all ages (under different brands)
Esprit (www.esprit-intl.com) More up-market than Giordano Stylish, trendy Ladies’ casual, but also other specialized lines for children and men
Bossini (www.bossini.com) Value for money (comparable to Giordano) Unisex, casual wear, both young and old Baleno (www.baleno.com.hk) Value for money Trendy, young age casual wear Unisex appeal, young adults Hang Ten (www.hangten.com) Value for money Sporty lifestyle Casual wear and sports wear, teens and young
adults
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in Bahrain, Greece, Indonesia, Korea, Kuwait, Oman, Qatar, Malaysia, Russia, Saudi Arabia,
Philippines, Singapore, Turkey, and the United Arab Emirates.
Financial data for Giordano, Esprit, The Gap and Bossini, are shown in Exhibit 7.
Giordano’s growth strategy
Early in its existence, Giordano’s management had realized that regional expansion was
required to achieve substantial growth and economies of scale. By 2007, Giordano had over
1,800 stores in more than 30 markets. Exhibit 8 shows the growth achieved across a number
of dimensions from 1998 to 2007. Despite a drop in profits in 2006 due to the unforeseen
warm winter as well as the astounding rise in rental expenses in Hong Kong, Giordano
showed relatively consistent growth over the years as profits rebounded in 2007 with a 39.4
percent increase.
Exhibit 6 Geographic presence of Giordano and its principal competitors
Country Giordano The Gap Esprit Bossini Baleno Hang Ten
Asia Hong Kong/Macau X – X X X X Singapore X X X X X X South Korea X X X X – X Taiwan X – X X X X China X X X X X X Malaysia X X X X X X Indonesia X X X X X – Philippines X – X X – X Thailand X – X X X – Japan X X – – – X Middle East X X X X X X World USA and Canada X X X X – X Europe – X X X – – Australia X – X – – – Total 1,585 3,117 9,751 827 1,160 NA
Notes: ‘‘X’’ indicates presence in the country/region; ‘‘ – ’’ indicates no presence Sources: Giordano International Limited, available at: www.giordano.com.hk/web/HK/ourCompany. html (accessed March 9, 2009); Annual Report 2007, Gap, available at: http://media.corporate-ir.net/m edia_files/IROL/11/111302/AR07.pdf (accessed March 9,2009); Esprit, available at: www.esprit.com/ index.php?command¼Display&navi_id¼104; (accessed March 9, 2009); Bossini International Holdings Limited, available at: www.bossini.com/bossini/html/eng/common/global.jsp (accessed March 9, 2009); Baleno, available at: www.baleno.com.hk/EN/stores_list_map.asp (accessed March 9, 2009); Hang Ten, www.hangten.com.hk/countryLink.do (accessed March 9, 2009)
Exhibit 7 Competitive financial data for Giordano, The Gap, Esprit and Bossini
Giordano The Gap Esprit Bossini
Turnover (US$ million) 639 15,736 4,403 298 Profit after tax and minority interests (US$ million) 39.2 833 832 8.2 Return on total assets (percentage) 7.0 10.6 33.1 6.97 Return on average equity (percentage) 10.8 19.5 46.0 9.71 Return on sales (percentage) 8.0 5.3 20.7 Number of employees 11,000
12,100 154,000 10,541 4,300
Sales per employee (US$ ‘000) 52.81 102.18 457.43 69.02
Notes: The Gap reports its earnings in US$; all reported figures have been converted into US$ at the following exchange rate (as of March 2009): US$1 ¼ HK$7.75 Sources: Annual Report, 2007, Giordano International; Annual Report, 2007; The Gap, 2007; Annual Report, Esprit International; Financial Report, 2007/2008, Bossini International Holdings Limited; Annual Report, 2007/2008
PAGE 10jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 1 2011
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Driven in part by its desire for growth and in part by the need to reduce its dependence on
Asia in the wake of the 1998 economic meltdown, Giordano set its sights on markets outside
Asia. Australia was an early target and the number of retail outlets increased from four in
1999 to 56 in 2008. Although the Asian financial crisis had caused Giordano to rethink its
regional strategy, it was still determined to enter and further penetrate new Asian markets.
This determination led to successful expansion in Mainland China (Exhibit 9), where the
number of retail outlets grew from 253 in 1999 to 881 by 2008. Giordano’s management
foresaw both challenges and opportunities arising from the People’s Republic of China’s
accession to the World Trade Organization.
Giordano opened more stores in Indonesia, bringing its total in that country to 100 stores. In
Malaysia, Giordano planned to refurnish its outlets and intensify its local promotional
campaigns to consolidate its leadership position in the Malaysian market. To improve store
Exhibit 8 Operational Highlights for Giordano’s Retail and Distribution Division
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
Number of retail outlets Directly managed by the group 1,000 962 914 811 550 473 456 367 317 308 Franchised 895 805 780 774 813 783 703 553 423 370
Total number of retail outlets 1,895 1,767 1,694 1,585 1,363 1,256 1,159 920 740 678 Retail floor area directly managed by the Group (in ‘000 sq. ft.) 995 957 918 846 650 599 597 465 301 358 Sales per square foot (HK$) 4,975 4,568 4,807 4,300 4,200 4,500 5,100 7,400 8,400 6,800 Number of employees 12,100 11,000 11,000 9,000 7,900 8,000 8,287 7,166 6,237 6,319 Comparable store sales Increase/(decrease) (percentage) 2 23 21 7 (9) (2) (4) 4 21 (13) Number of sales associates N.A N.A. N.A. N.A. 3,200 2,900 2,603 2,417 2,026 1,681
Sources: Annual Report 2007; Giordano International; N.A. ¼ not available
Exhibit 9 Giordano’s Flagship Store in Shanghai
Source: Take from SM7, Exhibit 9, p. 519
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profitability, Giordano had already converted some of its franchised Malaysian stores into
company-owned stores.
Having gained a foothold in the far eastern region, Giordano began expansion into India in
2006, North American and the Middle East in 2007. In June 2007, Giordano unveiled its first
franchised store in Cairo, Egypt. Since the launch of its first store in Chennai, Giordano
increased its presence in India to nine stores in five cities[6].
The senior management team knew that Giordano’s future success in such markets would
depend on a detailed understanding of consumer tastes and preferences for fabrics, colors
and advertising. In the past, the firm had relied on maintaining a consistent strategy
across different countries, including such elements as positioning, service levels,
information systems, logistics, and HR policies. However, implementation of such tactical
elements as promotional campaigns was usually left mostly to local managers. A country’s
overall performance in terms of sales, contribution, service levels and customer feedback
was monitored by regional headquarters (for instance, Singapore for Southeast Asia)
and the head office in Hong Kong. Weekly performance reports were distributed to all
managers.
As the organization expanded beyond Asia, it was becoming clear that different strategies
had to be developed for different regions or countries. For instance, to enhance profitability
in Mainland China, the company recognized that better sourcing was needed to enhance
price competitiveness. Turning around the Taiwan operation required refocusing on basic
designs, streamlining product portfolio, and implementing their micromarketing strategy
more aggressively. In Europe, Giordano was investigating a variety of market entry
opportunities.
Decisions facing the senior management team
Although Giordano had been extremely successful, it faced a number of challenges. A key
issue was how the Giordano brand should be positioned against the competition in both new
and existing markets. Was a repositioning required in existing markets and would it be
necessary to follow different positioning strategies for different markets (e.g. Hong Kong
versus Southeast Asia)?
A second issue was the sustainability of Giordano’s KSF. Giordano had to carefully explore
how its core competencies and the pillars of its success were likely to develop over the
coming years. Which of its competitive advantages were likely to be sustainable and which
ones were likely to be eroded?
A third issue was Giordano’s growth strategy in Asia as well as across continents. Would
Giordano’s competitive strengths be readily transferable to other markets? Would strategic
adaptations to its strategy and marketing mix be required, or would tactical moves suffice?
Study questions
1. Describe and evaluate Giordano’s product, business and corporate strategies.
2. Describe and evaluate Giordano’s current positioning strategy. Should Giordano
reposition itself against its competitors in its current and new markets, and should it
have different positioning strategies for different geographic markets?
3. What are Giordano’s KSF and sources of competitive advantage? Are its competitive
advantages sustainable, and how would they develop in the future?
4. Could Giordano transfer its KSF to new markets as it expanded both in Asia and the other
parts of the world?
5. How do you think Giordano had/would have to adapt its marketing and operations
strategies and tactics when entering and penetrating your country?
6. What general lessons can be learnt from Giordano for other major clothing retailers in your
country?
PAGE 12jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 1 2011
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Notes
1. Management Discussion and Analysis, p. 30, Interim Financial Report 2008, Giordano International,
30. Giordano to dispose of their interest in garment manufacturing subsidiary, available at: www.
giordano.com.hk/web/HK/investors/news/2008-06-30_Placita%20Disposal_E.pdf (accessed
March 9, 2009).
2. Giordano Re-brand Bluestar Exchange Article, available at: www.giordano.com.hk/web/HK/
investors/news/Bluestar%20Rebranding.html (accessed January 2008).
3. Bluestar shifts from price to ‘‘fun’’ sell, James Murphy, Asia’s Media and Marketing Newspaper,
March 11, 2008, p. 11.
4. Al-Bawaba News_Giordano world without strangers spreading goodwill_11 October 2005
(accessed via Factiva on December 2007).
5. Al-Bawaba News_Giordano world without strangers spreading goodwill_11 October 2005
(accessed via Factiva on December 2007).
6. Giordano opens three new stores in India, November 20, www.giordano.com.hk/web/HK/investors/
IR2008/2008-11-20%20Pune%20 þ %20Mumbai.pdf, (accessed March 9, 2009).
Keywords:
Retailing,
Customer service
management,
Marketing strategy
Corresponding author
Jochen Wirtz can be contacted at: [email protected]
VOL. 1 NO. 1 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 13
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This article has been cited by:
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