Describe and evaluate Giordano product business and corporate strategies?

Answer 1

Product Strategy: Giordano sees itself as being more than just a retailer of casual apparel. It was able to successfully incorporate customer service as part of its product. Besides its brand name, logo, style and quality, excellent service has become part of the tangible products sold at Giordano stores. Customers have come to associate service excellence as an integral component of Giordano's merchandise. Giordano is able to provide a high level of customer service through a concerted effort, which involved every employee of the company. However, it is also essential to recognize the importance of the management and leadership's commitment to be customer-oriented and to provide high quality service.

Besides incorporating service as part of its product, Giordano focuses on the concept of value-for-money. Giordano is constantly aiming to improve the value of the product. Being customer-oriented allows Giordano to focus on what the company's products mean to the consumer. Customers are often encouraged to request certain product adaptations if current products fail to meet their expectations. For instance, Giordano removed its logo from some shirts. Another example is Giordano's invitation to customers to set the price of its jeans.

Giordano's other product strategy is to sell a small number of core products in its stores. While other retailers have 200-300 items, Giordano features no more than 100 variants of 17 core items. Flexibility and speed is essential in the retailing industry, especially when the fashion trend is evolving constantly. Maintaining a restricted range of core products has allowed Giordano to respond to market changes faster than its competitors, and to keep costs down.

Business Strategy: There are three generic strategies advanced as business strategies (Porter): cost leadership, differentiation and focus, and combinations of these three pure strategies. Giordano seems to pursue a combination, i.e. a focused differentiation strategy. 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 illustrated by its dedication to training and motivating its front-line staff as well as its no-questions asked return policy. Giordano's strategy is focused on customer responsiveness understanding what its customers want and putting their interests first, as well as on a specific niche - value-conscious consumers who want affordable yet trendy casual apparel with reasonable quality.

Giordano is changing its focus to expand the market niche that it has been serving to include a more up-market segment. However, this is done carefully to prevent a loss of existing customers who may become confused by the value proposition that Giordano provides to them. For instance, its launch of the Blue Star Exchange (BSE) line clearly indicates its commitment to the existing value-for-money segment, but at the same time it is upgrading its core brand's position so that customers may eventually perceive that Giordano stands for more than just 'low priced' apparel. With the successful launch of the new product line and re-launching of Giordano Ladies and Junior, Giordano appears to have overcome the main problem that niche strategies face i.e. the inability to move to new niches.

Corporate Strategy: Giordano initially adopted a tapered vertical integration (backward) strategy, as it had manufacturing plants in the Philippines and Mainland China, while also sourcing from external suppliers. This was deemed necessary to allow better cost and quality control, and the strategy worked until the currency crisis hit Asia. Competition amongst suppliers (manufacturers) of good quality apparel became so intense that prices came down dramatically, and it became an opportunity cost to rely on Giordano's own manufacturing division for supplies. There could be other reasons, such as rising operating costs, putting pressure on the firm to look for alternative sources of supply. In fact, in 1999, the Philippines plant was closed down, and Giordano is now concentrating on their core business in retailing/ distribution. This can also be evident in their allocation of investments to expand its retail outlets. This strategy is risky but consistent with Giordano's core competency i.e. in customer responsiveness as opposed to operational efficiency.