Giordano is operating within an industry characterised by high and increasing competition, intense rivalry between firms, threat of new entry, moderate customer loyalty and increasing power of suppliers. Giordano's competitors are all adopting aggressive expansion strategies in Giordano's Asian markets and are offering products in direct competition, as well as products at higher Willingness-To-Pay (WTP) prices. Giordano has historically positioned itself as a producer of value for money clothing, selling to the middle class of society within Asia. This positioning has been supported by Giordano's core competencies in supply chain management, a pleasurable shopping experience, focus on customer's basic clothing demands, and a conservative financial position (Appendix H and I).
Giordano's recent attempt to move into the higher WTP category with its Giordano Concept' line and move into the USA is bold, and will theoretically capture more customer surplus, further differentiating the Giordano offering. However, there is a possibility that this move could cause significant negative financial and brand consequences if it fails. Failure of this strategic shift is likely to occur if Giordano does not quickly move to support the revised strategy. In addition, Giordano must be prepared to protect itself against a failure by continued emphasis on expansion of its existing brand. This report recommends that Giordano:
Make large investments in design, marketing and culture change management to support the new Giordano Concept' line.
Adopt a "wait and see" approach to Giordano Concepts for the next 2 years, before evaluating the effectiveness of this line and its impact on the core Giordano brand. Rationalise its stores in existing markets, holding the stores which reach a profitability requirement, but eliminating those that fail.
Review company rent and distribution costs. Seek Joint Ventures (JVs) or part ownership to reduce costs.