Giordano's Secret of Delivering Great Customer Service and Other Lessons for Clothing Retailers - Case Study Example

?Answer Giordano is one of the leading apparel retailers for men, women and children in Asia Pacific region and Middle East that has now successfully expanded across globe. It was founded by Jimmy Lai in 1981 in Hong Kong as a single retail outlet for exclusive men’s casuals. Lai had visualized it as the best and the biggest world brand in the apparel retailing. Its mission was therefore clearly defined as to make people feel good and look great (Wirtz, 2007). Thus, people became its key focus area around which centred its products and services. In 1985, Giordano opened its first retail shop in Singapore. It was the beginning for expansion for Giordano. In 1987, the competitive market forced Lai to redefine its corporate strategy and introduce unisex casuals that were attractive and affordable for men, women and children. It was highly innovative and firm used unit sales of value-for-money merchandize as against profit margin to maximize its revenue. The strategy was a huge success helped it to maintain its competitive advantage within the market. Giordano’s expansion also resulted in differentiating its product line into well defined categories and specialized outlets that catered to more trendy casuals and semi formals for men, women and children through its brands like Giordano, Giordano Ladies, Giordano Junior and Blue Star Exchange. Giordano’s corporate strategy is aligned with its corporate vision. It relies on exceptional customer service, quality, knowledge, innovation and simplicity. It judiciously applies FSA (feasibility, sustainability and acceptability) tools on its strategic options to optimize its productive outcome. It meets the needs of the customers by implementing the desired changes within its operations and production. Its sales team is highly skilled and equipped with socio-psychological tools to deliver exemplary service to its customers. Performance is evaluated not only by the firm’s supervisor and auditors but also by the customers. It believed in limited variety within its core items so it can maintain quality. Knowledge management was critical aspect of its operational success. Giordano continuously strives to learn from its past errors and uses technology extensively to improve and improvise its processes vis-a-vis inventory management, supply chain, analyzing changing trend in customers’ preferences etc. With low inventory and effective supply chain, it is able to provide customers with the latest trend fashion wear. At the same time, using centralized distribution system, low store inventory also enables it to exploit store space innovatively that attracts customers. The real time production, based on current sales greatly facilitates in meeting the changing demands of the customers. Moreover, the short cycle of its products save expenses of dead inventory or slow moving inventory, thus making its operations cost effective. Answer 2 According to Kotler and Keller (2012), position is critical element of market that helps create an image that is preferred by customer. The major aim is to ensure that the consumer identifies with the brand when product or service is required. As such, repositioning becomes highly desirable strategy for firms that deal in consumer goods and constantly need to meet the challenges of changing customers’ requirements. Repositioning strategy provides the businesses with great leverage to introduce new products or add value to existing processes or products to meet fast changing dynamics of the markets. In 1987, it had to reposition its strategy of exclusive men’s casuals with unisex clothing to target women’s segment also. With the changing external environment, firms need to adapt new strategies to compete and maintain their niche market position (Kotler et al., 2010). While Giordano’s core competency has always been its customer service, its value-for-money was hugely successful strategic option. In the highly competitive environment of global business, especially when Giordano needs to expand beyond its traditional market of Asia Pacific and Middle East to venture yonder to Australia, mainland China, South East Asia, America and Europe, it needs to rethink its positioning strategy. Expanding across geographical boundaries, various factors like changing cultural dynamics, country specific rules and regulations, environmental concerns etc. become important issues that need to be addressed for optimal performance (Drucker, 1999). Indeed, the socio-cultural paradigms have emerged as important linkages that forge personal bonds with that target segment and therefore considerably influence the positioning strategy of the firm for the desired products. The apparel industry is driven by changing fashion and therefore Giordano needs to be constantly vigilant of the changing trend. The firm has differentiated product offering for segmented market. The current positioning strategy is effective in attracting its targeted customers, vis-a-vis men, women and children’s casuals which are trendy, affordable and quality driven. But when it expands to new market like America and Europe, it needs to update its fashion line with that of the new markets. It may also necessitate further segmented diversification vis-a-vis niche market demanding exclusive and customized products, culture based products like wedding gowns etc. Answer 3 Giordano enjoys several key success factors that significantly provide it with competitive advantage in the apparel industry. Porter’s five force analysis clearly defines firm’s priority and describes the factors that give it distinct leverage in the market (Porter, 1998). The main key success factors can be described as below: 1. Excellent customer service It is one of the key factors of Giordano which has helped it to maintain an envious position in the market. It has won several awards for the national and international agencies for its innovative customer service. Through highly trained staff, it delivers exemplary service to the customers and earns their trust and loyalty. It is supported by managerial leadership initiative that provides constant learning environment for its workforce to enhance their skills and understanding of customer behavior. 2. Operational efficiency It uses technology to improve and improvise its operations across its firms. The effective supply chain, centralized distribution centre and low inventory in store outlets are designed to make the various operations like store management, sales etc. more efficient. The daily sales are linked to the distribution centre that helps forecasts next days’ sales and replenishes the stock at the outlets with the new ones that meet the changing demands of the customers. This highly sophisticated system not only cost effective as it delineates the storage of out of fashion clothes. At the same time, the low cycle of apparels effectively reduces the threat of substitution. 3. Innovation, simplicity and effective communication With nearly flat hierarchy of structure, the leadership encourages regular communication across its workforce. It is highly creative in its design and constantly seeks customers’ feedback to improve and improvise its products and services. Speed and simplicity have provided it with the ability to introduce new products at short notice and thereby gain leverage against its competitors. 4. Effective marketing strategy Flexible approach in its marketing has considerable contributed to its market success. The strong market position and brand equity are landmarks that are primarily achieved due to its consistently commendable customer service that delivers value for money, both in terms of products and services. It uses market mix and is culturally sensitive in its promotion of its products. All key success factors of Giordano are not sustainable broadly because competitors and external environment of business varies when it expands its business across wider geographical boundary. Hence, positioning strategy needs to be redefined to incorporate the differences and integrate the factors that impact its relations with the customers. Its modules of customer relationship building are hugely pertinent elements of its competitive advantage which can be maintained through cross cultural understanding. Value for money strategy is also sustainable because people in general Answer 4 Yes, Giordano can transfer its key success factors to new markets as it expands both in Asia and in other parts of the world. In global business scenario, especially retail market, understanding of cross cultural values is crucial for integrating processes for developing and achieving shared goals (McGoldrick, 2002). The need to expand business interests across globe is mainly due to inter dependency of nations for their socio-economic development. Sirgy et al. (2004: 253) says that globalization a process that facilitates flow of goods, services, capital, technology, and people (workers) across national borders. This highlights the need to not only understand cross cultural understanding but also to evaluate the feasibility and sustainability of resources that could be exploited to gain acceptance in different countries. Hence, Giordano must make efforts to identify, evaluate and analyze the preferences of people and their cultural dynamics to wider understand the compulsions of the business. This would help Giordano to incorporate those values within its customer relationship management and provide new market with the same excellent service. Moreover, it would also help it to understand its competitors in the market and help innovate to maintain its competitive advantage. In a new market, it would also require heavy investment in its promotion and building up of brand equity so that it could create effective market position. Benchmarking against its competitors like Gap and Espirit would help it be creative in its style and delivery. While technology would not serve to be the mainstay of its operational efficiency, it could nevertheless be used to optimize its logistics, supply chain and help maintain short cycle of products. Indeed, it should continue to exploit technology to constantly keep in touch with the demands of the customers and meet them in short notice. Thus, Giordano can employ various mechanisms to transfer its key success factors as it expands in other countries. Answer 5 In my country, Giordano would have stiff competition from brands like Gap, Zara, Espirit and other international brands. Thus, its marketing, operational strategies and tactics would need to be highly innovative. It also has pluralistic society that would require culturally sensitive approach in its marketing and customer service. It therefore must strive to understand the socio-cultural dynamics of new markets and incorporate them within its operations for improved outcome. Before entering new market, it should also conduct feasibility study for its products and identify and analyze the changing preferences of the new market. It would give valuable insight into the new market which can be exploited by it by producing goods which can satisfy the needs of the target segment. Giordano must continue to maintain its excellent customer service through training and development of its workforce. In depth knowledge about the culture and behaviour of diverse population of the target would help deliver committed service and promote relationship building based on trust and mutual respect. The firm would also need to develop linkages with local agencies so it can help local economy by employee local people. This would increase its credibility amongst the various stakeholders and customers of the new market. In my country, would also be hugely beneficial for Giordano to decentralize its operations to increase its responsiveness to environmental factors. This could prove to be the vital element of competitive advantage as it would be able to respond promptly to local challenges and deliver highly efficient and timely service to its customers. Answer 6 There are many lessons that can be learnt by major clothing retailers from Giordano. The most important one is the mechanism of delivering excellent customer service. The training of the staff not only equips them with critical psycho-sociological tools of understanding human behaviour but it also constantly uses customers’ feedback to improve its competencies. It also has low employee turnover rate because it looks on the workforce as human capital whose potential needs to be exploited. Thus, it creates a highly motivating environment through regular incentives and recognition of employees’ work. The monthly award of ‘Service Star’ is given to individual, chosen mainly by customers’ feedback and inputs from sudden inspections of supervisors. Giordano’s service philosophy is also highly recommendable. ‘We welcome unlimited try-ons; we exchange – no question asked; and we serve with smile’ encapsulates its mantra of success. It is also very innovative in its operations and actively seeks customers’ participation. In one of its campaigns, it distributed around 10,000 t-shirts free to individuals who had criticized Giordano’s services! These are important areas which can be used by other apparel retailers. Reference Drucker,P. Management Challenges for the 21th Century. NY: Harper, 1999. Kotler, P., and Keller, K. L. Marketing Management. 14th ed. Upper Saddle River, New Jersey: Pearson Education, 2012. Kotler, P., Brown, L., Adam, S. and Armstrong, G. Marketing. 8th ed. Australia: Pearson Education, 2010. Porter, Michael E. Competitive Strategy: Techniques for Analyzing Industries and Competitors. NY: Free Press, 1998 McGoldrick, P. Retail Marketing. London. McGraw Hill, 2002 Sirgy, M. J., D.J. Lee, C. Miller and J. E. Littlefield. (2004). ‘The impact of globalization on a country’s quality of life: toward an integrated model’. Social Indicators Research, 68, (2004):.251-298. Wirtz, Jochen. Giordano: Positioning for International Expansion. 2007. May 26, 2012. < http://www.scribd.com/doc/50639437/Giordano-Case > Read More