In mid-2009, Giordano, which targeted men, women, and children through its five

company brands—Giordano, Giordano Concepts, Giordano Ladies, Giordano Junior,

and Blue Star Exchange—operated more than 1,800 retail stores and counters in
some 30 markets worldwide.

In September 2008, there were 1,757 Giordano and Giordano Junior stores, 46
Giordano Ladies stores, 29 Giordano Concept stores, and 111 Blue Star Exchange
stores. Sales had grown to HK$4,950 million (US$561 million) by 2007.
+ from 2004 started to increase
+ The board and top management team were eager to maintain Giordano’s
success, especially in mainland China. Several issues:
First, how should Giordano adjust its marketplace positioning? Second, will the
factors behind Giordano’s past success remain critical, or are new key success
factors emerging? Finally, as Giordano enters new global markets, are its
competitive strengths easily transferable?
1. Company background: page 1

- Giordano was founded in Hong Kong by Jimmy Lai in 1980. In 1981, it opened its first
retail store in Hong Kong
- In 1985, it opened its first retail outlet in Singapore.
- Responding to slow sales, Giordano changed its positioning strategy in 1987, from
solely men’s casual wear to a unisex approach. When Lai and his colleagues noted an
increasing number of female customers, he repositioned the chain to focus on
value-for-money merchandise. The strategy emphasized selling discounted casual
unisex apparel, aiming to maximize unit sales rather than profit margins. This change
aimed to maximize unit sales rather than margins and successfully boosted turnover.

2. Management Values and Human Resource Policies

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 believed and invested heavily in employee training, and has been recognized
for its commitment to training and developing its staff by awards such as the Hong Kong
Management Association Certificate of Merit for Excellence in Training and the People
Developer Award from Singapore, among others.
 => 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. (tỷ lệ luân chuyển nhân viên thấp)

=> 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( tái
tạo) its highservice quality positioning, Giordano knew it needed to consider the
HR issues involved in setting up retail outlets in unfamiliar territory( việc thiết lập
các cửa hàng bán lẻ ở những khu vực xa lạ). 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.

3. Focusing Giordano’s Organizational Structure on Simplicity and Speed (page 5)

The company’s decentralized management style empowered line managers and, at the
same time, encouraged fast and close communication and coordination.
- 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 fastchanging consumer tastes and fashion trends
- The firm made similar demands on its suppliers.
- competitive advantage: service.
=> One of their main strategic objectives was to disengage from
manufacturing( ngừng sản xuất) 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 &
Manufacturing Division to the more profitable Retail & Distribution Division.
4. 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.”
=> 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.
- Giordano’s management had launched several creative- activities:
 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 => some 3,000 pairs of jeans sold every day during the promotion. In another
service-related campaign, over 10,000 free T-shirts were given to customers for
giving feedback and critiquing Giordano’s services.

- To ensure customer service excellence, Giordano conducted regular performance

evaluations at both the store and individual employee levels
+ Each month, a “Service Star” award was given to an employee based on shopper
nominations, and stores were evaluated by mystery shoppers. The top store received the
“Best Service Shop” award
+ Customer feedback cards were available in all stores and collected for review, while
feedback also increasingly came through the corporate website.

5. 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 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.
=> in 2003, to provide greater shopping convenience to customers, Giordano started to open
kiosks in subway and train stations aimed at providing their customers with a “grab and go”
service.
6. Inventory Control
In order to maximize the 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(chuyển) to the company’s main computer. At the end of each day, the
information was compiled(tổng hợp) at the store level, and sent to the sales department
and 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 new inventory was already on the shelves before a Giordano store
opened for business.

Information was disseminated( phổ biến) to production facilities in real time. Such
information allowed customers’ purchase patterns to be studied, and this provided
 valuable input to its manufacturing operations, resulting in fewer problems and costs
related to slow-moving inventory. The use of IT also allowed 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 than those of its peers( mặc dù tỷ
suất lợi nhuận tương đối thấp hơn so với lợi nhuận của nó ngang hàng). Giordano
was still able to post healthy profits. Such efficiency became a crucial factor when
periodic price wars occurred.
7. 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 its
goods=> This focus was evident in Giordano's merchandising, which offered no
more than 100 variants of 17 core items, unlike competitors with 200 to 300 items.
He believed that a wide product range hindered quick responses to market
changes.
Giordano was also willing to experiment with new ideas => It ventured into mid-
priced women’s fashion by introducing new product lines, such as the “Giordano
Ladies” label. This featured 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% to 60% of
selling price compared to 40% for casual wear.
- Some difficulties: Giordano faced challenges competing with over a dozen
established retailers, including Esprit. Initially, it struggled to differentiate its Giordano
Ladies line from its mainstream products, selling both in the same outlets. However, in
1999, the company capitalized on the post-Asian currency crisis boom to aggressively
relaunch the Giordano Ladies line, which achieved significant success.
- As of September 2008, the reinforced “Giordano Ladies” focused on a select
segment — the “office ladies, but 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, and broadening its appeal by
improving on visual merchandising and apparel. In 1999, the firm launched Blue Star
Exchange (BSE), a new line of casual clothing for the price-conscious
customer( khách hàng quan tâm đến giá cả).
 => Giordano's mid-priced positioning( định vị giá tương đối trung bình) initially
resonated with Asia's budget-conscious consumers, especially during economic
slowdowns. However, over time, this positioning became inconsistent with the
brand image that Giordano had tried hard to build over the years. One senior
executive remarked, “The feeling went from ‘this is nice and good value’ to ‘this is
cheap.’” To address this, Giordano began focusing on establishing clear brand
identities. In September 2006, the company announced plans to rebrand Bluestar
Exchange=> BSX
- Giordano now wanted to penetrate the “upper premium” segment (phân khúc cao
cấp). 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, Giordano Concept stores carry 60% of
items catering to males.
- To align its new up-market positioning with its brand image, Giordano Concepts
and Giordano Ladies stores were designed to be distinct from mainstream stores.
This involved revamping store interiors and staff appearances to convey exclusivity
and attract an affluent target audience. For example, to promote its white-themed
summer collection in 2006, flagship Concept stores in Hong Kong and Taiwan featured
abstract wall patterns and modern imagery.
- 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 2004 Indian Ocean tsunami victims in
Phuket, it gained popularity with its other markets and was launched across the region in
2005. The slogan extended to a range of T-shirts and rubber wristbands that
promoted 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
- In light of international crises and fragile cross-border friendships (Trong bối cảnh
khủng hoảng quốc tế và vấn đề xuyên biên giới mong manh tình bạn), “World
Without Strangers” served as a mediator and avenue through which customers could
express themselves. The company has been able to act as a mouthpiece( cơ quan
ngôn luận) 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. This collection aimed to
lift the spirits of the people in the financial turmoil during the 2009 global economic crisis.
The firm’s skills in executing innovative and effective promotional strategies helped the
retailer to gain public favor and approval.
7. Giordano’s Competitors
 Giordano had to develop a distinctive competitive advantage. He benchmarked the
company against best-practice organizations in four key areas:
1) computerization (from The Limited),
(2) a tightly controlled menu (from McDonald’s),
(3) frugality (from Wal-Mart)
(4) value pricing (from Marks & Spencer).
This focus on service and value-for-money has proven successful.
=> Giordano's main competitors in the value-for-money segment included Hang Ten,
Bossini, and Baleno, while Esprit targeted the higher end of the market.
- Hang Ten and Bossini were positioned as low-price retailers offering reasonable
quality and service, with an emphasis on versatility and simplicity.
- While Hang Ten and Baleno were more popular among teenagers and young
adults, Bossini had a broader appeal. Although their distribution strategies were
similar, they targeted different markets: Hang Ten was strong in Taiwan, Baleno was
expanding in Mainland China and Taiwan, and Bossini excelled in Hong Kong and
was relatively strong in China. The company aimed to make its Chinese operations
the group’s largest source of turnover.
- Esprit is an international fashion lifestyle brand that promotes a “lifestyle” image,
positioning its products as high quality and good value—similar to Giordano. By
2008, Esprit had a distribution network of over 12,000 stores in more than 40 countries
across Europe, Asia, America, the Middle East, and Australia, with Europe accounting for
approximately 86.7% of its sales. Esprit products were primarily sold through directly
managed retail outlets, wholesale customers(khách hàng bán buôn) (including
department stores and specialty stores), and through licensees using their own
distribution networks.
- Although each of these firms had slightly different positioning strategies, they competed in
a number of areas. For example, all firms emphasized advertising and sales
promotion heavily, 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 was emerging from US-based The Gap( sự đe dọa đến từ hãng The Gap),
which had already entered the Japanese market. Following the 2005 abolition of
garment quotas, imports became more cost-effective for this competitor. The Gap
expanded its international presence through franchise partners like FJ Benjamin Holdings
Ltd., establishing franchises in countries including Bahrain, Greece, Indonesia, South
Korea, Kuwait, Oman, Qatar, Malaysia, Russia, Saudi Arabia, the Philippines, Singapore,
Turkey, and the United Arab Emirates. Financial data for Giordano, Esprit, The Gap, and
Bossini is presented in Exhibit 7.
8. Giordano’s Growth Strategy
Giordano’s management recognized the need for regional expansion to achieve substantial
growth and economies of scale. By 2007, the company had over 1,800 stores across more
than 30 markets. Despite a profit drop in 2006 due to an unusually warm winter and rising
rental costs in Hong Kong, Giordano rebounded in 2007 with a 39.4% increase in profits.

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(sự trỗi dậy của cuộc khủng hoảng kinh tế),
Giordano targeted markets outside Asia, beginning with Australia, where retail outlets
grew from four in 1999 to 56 in 2008. The Asian financial crisis prompted a reevaluation of its
regional strategy, but Giordano continued to expand in new Asian markets, successfully
increasing its presence in Mainland China from 253 outlets in 1999 to 881 in 2008.

The company also opened more stores in Indonesia, reaching a total of 100, and planned to
refurbish outlets in Malaysia while enhancing local promotional campaigns to strengthen its
market position. To boost profitability, Giordano converted some franchised Malaysian
stores to company-owned. After establishing a foothold in the Far East, Giordano began
expanding into India in 2006 and into North America and the Middle East in 2007, launching its
first franchised store in Cairo, Egypt, in June 2007. Since entering India with its first store in
Chennai, Giordano has grown to nine stores in five cities.

=> The senior management team understood that Giordano’s future success in new
markets would rely on a detailed grasp of consumer tastes regarding fabrics, colors, and
advertising. Previously, the firm had maintained a consistent strategy across countries,
covering aspects like positioning, service levels, information systems, logistics, and HR
policies. However, local managers primarily handled the implementation of promotional
campaigns. Regional headquarters, such as the one in Singapore for Southeast Asia, and the
Hong Kong head office monitored overall performance through sales, contributions,
service levels, and customer feedback, with weekly performance reports distributed to all
managers.

As Giordano expanded beyond Asia( ngoài châu á), it became clear that tailored strategies
were necessary for different regions. For instance, to boost profitability in Mainland China,
the company recognized the need for better sourcing to enhance price competitiveness. In
Taiwan, the focus shifted to basic designs, streamlining the product portfolio (hợp lý hóa
danh mục sản phẩm), and aggressively implementing a micromarketing strategy( chiến
lược tiếp thị vi mô mạnh mẽ). Meanwhile, Giordano was exploring various market entry
opportunities in Europe.