Executive Summary

Giordano was founded in Hong Kong in 1980 by Jimmy Lai. Giordano consolidated its
position as a leading casual apparel retailer in Asia by offering customers value for
money, excellent customer service, understand customer’s needs. Besides this, key
success factors like stringent selection procedures and staff’s training, operating
efficiencies, success inventory control to close integration of purchasing and selling
functions and short product development cycle, helping company survived the Asian
economic downturn and SARS crisis. The emphasis on service and the value for money
concept had proven to be successful and made Giordano’s brand really stand out.

How Giordano could sustain its past success was perhaps the most critical question
confronting its management. These questions were how Giordano brand should be
positioned against the competition in both new and existing market, how was the
sustainability of Giordano’s key success factors and how was Giordano’s growth strategy
in Asia as well as across continents.

As the result, Giordano should have same positioning strategies in both new and existing
market to avoid customer’s confusion. Sustainability of Giordano’s key success factors
depends on ability of top management to continue invest in human resources as human
resources are most valuable assets in an organization and ability of top management to
make Giordano a customer – service orientated organization. The main idea of
Giordano’s growth strategy should be to learn and develop rather than merely transfer or
apply known or proven strategies.
Statement of the problem

Although Giordano had been extremely successful, the problems facing top management
was how it could maintain this success in the years ahead. First thing was how the
Giordano brand should be positioned against the competition in both new and existing
market and if repositioning required in existing markets, would it be necessary to follow
different positioning strategies for different markets (e.g. Hong Kong versus Southeast
Asia)? Second thing was the sustainability of Giordano’s key success factors. Which of
its key success factors or in other word, competitive advantages was likely to be
sustainable and which ones were likely to be eroded? Third thing was would Giordano’s
competitive strengths be readily transferable to other markets? Would strategic
adaptations to IT strategy and marketing mix be required, or would tactical moves
suffice?

Top management should decide whether to use same positioning strategies for all markets
or different positioning strategies for different market depends on market environment.
Sustainability of key success factors depends on the top management ability to create
element such as organizational culture which is more difficult for competitor to copy. In
order for Giordano’s competitive strengths to be transferable to other markets, Giordano
must be carefully considering national and cultural differences in other markets.

Analysis of the causes of the problem

Giordano’s current positioning strategies are providing quality of products with value of
money, high level of service provided to customers and sales staff is dedicated, ever-
smiling, well-mannered and helpful. These positioning strategies had proved to be
successfully in current market situation because delivery of quality service, differentiated
with other brand, functionally value-added products and improvement on visual
merchandising and apparel.

However, top management decided to reposition Giordano brand by upgrade its image
and capture the up scale market segment. This repositioning became inconsistent with the
brand image that Giordano tried hard to build over the years. This decision will cause
problem with its current core target market segment. For example, failure of “Gio
Ladies” is because of repositioning strategy failed to differentiate its new clothing line
from its mainstream product line, and even tried to sell both through the same outlets.
Giordano fought out it was losing customers who favored its value for money positioning
due to this repositioning strategies. This is because Giordano already establish it branding
in value for money position which Giordano cannot easily change its positioning.
Furthermore, this will create so called “brand dilution” effect and caused Giordano keep
on losing its loyalty customers.

By applying different positioning strategies in different market may caused problem to

Giordano also. For example, as Giordano’s Hong Kong outlets are shifting from value of
money position to high end position but in other market, Giordano still means for value
of money concept. This situation wills confuse customers in other market what Giordano
stand for and inconsistency of brand image makes Giordano difficult to implement
effective service strategies. Especially now a day due to globalization, customers are
more mobile and moving around more frequently. In addition, different of positioning
strategies will cause dilution of brand power in other market as well.

Giordano have its key success factors like short product development cycle and fast
market-driven new product development, excellence in management’s swift cost-control
strategies, good in marketing and strong brand positioning, excellence service with “no
questions asked exchange” and “unlimited try-on” policy, good location primarily in
good ground-floor areas, drawing high-volume traffic and facilitating shopping,
browsing, and impulse buying. However, Giordano should never satisfy itself in such
rapid changing current market situation. Furthermore, Giordano should look into new
ways of improving and strengthening its competitive advantages. For example, rapid
development in Internet and Intranet technologies, packaged solutions such as MS Office,
point of sale (POS) and enterprise resource planning (ERP) software, and supporting
telecommunications service (e.g. broadband Internet access), Giordano’s competitor
could acquire integrated IT and logistics technology more easily and more cost-
effectively than ever before.

Same for Giordano’s key success factors, its competitor are going to equip with these
competitive advantages in very near future. Once Giordano’s competitor learned it from
Giordano, this wills no longer Giordano’s competitive advantages. As the results, top
management of Giordano should starting thinking how sustain their competitive
advantages and further development of their key success factors.

In order to continue success in new market, Giordano need to transfer its key success
factor to new market. However, there are difficultly to effectively transfer all key success
factors to new market. Geographically, because of different countries, the complexities of
the operations, logistics and IT systems would increase. The effect to achieve efficiency
and lean processes in inventory management and distribution may become more difficult.
For example, the use of Web-base Intranet systems in that particular country, which
facilitate real-time information flow and inventory control across geographical
boundaries may not sufficient due to inefficient information technologies system or
frequent current blackout at that country.

If Giordano expand in market beyond Asia, it faces the situation of saturated markets and
established competitors, some with similar positioning like The Gap in US. It is difficult
for Giordano to differentiate itself in these markets. Giordano needs to reconsider
carefully before enter these market whether it can make profit or break even from such
saturated market or not.

Giordano with excellent of customer services need to consider how to transfer it

recruitment and training skills to new market to the extent that it could maintain service
levels as in Hong Kong. Besides providing training to local staffs and monitoring their
performance, Giordano also need to understanding different countries with different
cultures require different service expectations and needs. On the other hand, countries
like Japan and US, expectations on service are higher and it may be almost impossible for
Giordano to gain competitive advantages form those competitors which also provide high
quality of service in these countries.
Decision criteria and alternative solution

Giordano is looking for maintaining its success in future as leading apparel retailer in
Asia market. In order to overcome this issue, Giordano should stay creative and
innovative all the way like what it did in the past. Several creative and customer-focused
campaigns and promotions like “unlimited try-on”, “worldwide no questions asked
exchange policy”, “Bluestar Exchange (BSE)” series, “Simply Khakis” series and “Yoga
Collection” series made Giordano’s brand really stand out among its competitors. Good
responses of these campaigns and promotions shown that creativity and innovative are
the core success factors of Giordano in apparel retailer markets. As all key success
factors can be copying by competitor soon or later, the creativity and innovative ideas of
marketing strategy cannot be stolen by competitors. By creating organization culture
towards creativity and innovative, Giordano will stay ahead than its competitor in market
and continue to lead the apparel retailer markets.

Giordano emphasis on customer service and the value for money concept had proven to
be successful. Giordano positioned itself not only as apparel retailer, but further to
include customer service as part of it products. Giordano considered front-line workers to
be its customer service heroes. Giordano provide sophisticated training program for its
staffs, especially “attitude training” to make sure that its staff deliver high quality of
service to its customers. Charles Fung, Executive Director and Chief Operations Officer
(Southeast Asia) described its excellent customer services as “service is in the blood of
every member of our staff”.

Besides incorporating service as part of it product, Giordano focuses on the concept of

value for money. Giordano is constantly aiming to improve the value of product. With
customer service orientation philosophy, Giordano always focus on what its products
mean to customers. Customers are always encouraged to exchange its products if the
products fail to meet their requirements. For example, Giordano outlets in Singapore
asked its customers what they thought would be the fairest price to charge for a pair of
jeans and charged each customer the price they were willing to pay.

Giordano positioning strategy is a focused differentiation strategy. Giordano recognized

the importance of limiting the organization’s expansion and focusing on one specific
area. Simplicity and focus were reflected in the way Giordano merchandised its goods.
The primary source of differentiation comes from Giordano’s commitment to quality, in
terms of the products it sells and the service it provides to customers. This can be seen
from its dedication to train and motivate its front-line workers as well as introduce its “no
questions asked exchange” policy. Giordano understand that the only way to keep abreast
with stiff competition in the retail market is to know what its customer needs and serve
them well. Giordano was able to find its position in apparel retailer market to cater to the
needs of its budget-conscious customers who want affordable trendy casual apparel with
reasonable quality.

Recommended solution, implementation and justification

In order not to dilute brand image, Giordano should avoid repositioning in existing
market and different positioning in other markets. By adopting success experience from
LV, CK, Gucci, Guess, etc., Giordano would do better by keeping a consistent
positioning, keep its management focused on its core business strength which is value for
money and quality merchandise, and send a clear and strong message to all its staffs and
customers. In a long run, Giordano can gradually and slowly moved its positioning
upwards to meet the rising spending power in existing market, parallel with its global
brand acceptance and economic of scale in building their brand in global market.

For capturing new market or different market segment, Giordano can acquire another
existing brand or launch a new product line, like Bluestar Exchange (BSE) to cater for
new group of customers with its own positioning. However, this strategy is extremely
risky due to the costs involved in building new brand with new positioning. It will be
safer to acquire another existing brand with different market positioning and already have
its basic customer base. If not, it is better to keep a consistent positioning with Giordano
brand even it means to compete with other established brands on head to head basics.

Charles Fung, Executive Director and Chief Operations Officer (Southeast Asia) of
Giordano 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.” So although technologies can be owned by competitor,
the important point to keep Giordano’s competitive advantages is to continually invest in
human resources.

In the long run, sustainability of key success factors of Giordano highly depend on
creativity and innovative of the organization. As mentioned before, some competitive
advantages can be Giordano key success factors now, but it may not be in future. For
example, information was disseminated to production facilities in real time by IT system
but if Giordano’s competitor installed the similar system as Giordano did, it will no
longer Giordano’s competitive advantages and cannot become the key success factor of
Giordano. As the results, creativity and innovative play an important role in continue to
gain competitive advantages as “people are the key” to create value to organization or so
called “organization culture” which is difficult to adopt by its competitors in market.
Although Giordano might lose some of competitive advantages in future, investment in
human resources will help Giordano to create new competitive advantages to contribute
in the key success factors of Giordano and stay ahead in future market. Besides this,
Giordano should keep on commit to its excellent customer service orientation philosophy
and well monitoring with SWAP analysis of market competition.

Giordano well established infrastructure like flat structure, good communication between
departments, advantages and application of IT and customer service orientated
philosophy play a major role in transferring these key success factors to new or existing
markets.

Due to geographically problem, Giordano needs to adjust and minor modify its system to
suit local application. In order to transfer key success factors to new or other markets, IT
facilities should be upgraded to cater for additional and more complicated information
flow in from all outlets for real market analysis purpose.

One of the key success factors of Giordano is clear market positioning and strong
branding power. Unfortunately, if Giordano enter the new markets like Japan and
America, it faced saturated markets and established competitors with similar positioning.
Giordano will lose its competitive advantages or in other words, Giordano will fail to
transfer its key success factors to new markets. Same situation happen for key success
factor like excellent customer service orientation. Service expectation is higher for Japan
and America markets, so it is impossible for Giordano to transfer its key success factors
to markets like this. As the results, Giordano should consider not to enter markets like
Japan and America to avoid unprofitable expanding. However, it may be more practical
for Giordano to concentrate on the similar markets in few countries, which will allow
Giordano to transfer its key success factors more easily and build brand awareness more
rapidly.