Giordano: Positioning for International Expansion

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CASE 4 Giordano: Positioning for International Expansion

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 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, in 1987 Giordano changed its positioning strategy. 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 of the company.

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. 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 frontline workers its customer-service heroes. Charles Fung, executive director and general manager (Taiwan), remarked. Giordano had stringent selection procedures to make sure 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 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.

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.

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.” Management had launched several creative, customer-focused campaigns and promotions to extend its service orientation. One 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 and “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 website.

Value for Money
Consumers are learning a lot better about what value is. So we always ask ourselves how can we sell it cheaper, make it more...
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