Staff Reporters
May 21, 2015

Lack of focus drags down Hong Kong's Giordano

BRAND HEALTH CHECK: Poor decisions and a flawed merchandise mix have seen Giordano’s appeal fall dramatically.

Unclear proposition: Giordano must define itself
Unclear proposition: Giordano must define itself

Budget fashion brand Giordano faces growing pressure from the rise of ecommerce in China and an extremely competitive pricing environment.

In March, the retailer reported falling sales in all of its markets, with Australia fairing worst to decline by 20 per cent year-on-year. Overall, profit fell 35 per cent. Of the segments, Giordano Women, which contributes 24 per cent to sales, saw an 11 per cent decline owing to strategic errors, the brand admits.

In response to frustrated shareholders, the fast fashion retailer released a lengthy growth restoration plan. “Core to our success will be our ability to get the right products, at the right price, in the right quantities, in the right place, at the right time,” the plan said, adding it was “intensifying our efforts to train … [staff] in techniques that enhance this approach”.

DIAGNOSIS 1
Stuart Green
CEO
Interbrand Asia-Pacific

Catering to a diverse consumer audience in over 30 markets worldwide has clearly been a challenge for Giordano. But it is not alone and this is a challenge that has accelerated in recent years for most fashion retailers in an omnichannel world where consumers and brands are engaging in new ways.

This makes a distinctive brand experience all the more important. For Giordano, the experience appears to have been diluted by a series of poor merchandising decisions and the creation of C-grade shops. At the same time, its portfolio restructure created products that target a more affluent mass consumer, so it’s not entirely clear what the brand stands for.

A key question is how can Giordano differentiate and be relevant in a sector where there are big, successful players with very clear brand propositions and market positionings? We also see brands from other categories, such as Nike, Adidas and Muji, all breaking through into the “young lifestyle” segment. In China, meanwhile, we see local fashion brands, such as Metersbonwe and Yishion, chipping away at Giordano’s customer base.

Giordano needs to develop a differentiated strategic vision that is grounded in consumer insights to drive all brand experiences, both online and offline.

DIAGNOSIS 2
Michelle Froah

MD
Brandable

The pursuit of simplicity and investment in service excellence and efficient systems has been a strong base for Giordano to expand into more brands and markets. However, this has diluted its focus. Giordano must adopt a challenger mindset and contemplate new strategies with regard to global versus local marketing, genuine points of difference, and an optimised ecosystem for an increasingly digital world.

The noble ambition to be a ‘world brand’ — think global, act local without a centre — leads to tension in maintaining a consistent international feel and flexibility for markets to adapt to local relevance.

The efforts for more global programmes and structures to improve cooperation between central brand product development and markets will need to extend to marketing efforts as well. Instagram feeds show its approach has generated disparate ways to build the brand, ranging from editorial looks to heavily price- focused promotions.

Giordano’s view that in-store experience is the most important part of its ecosystem will leave it vulnerable as consumers live in a digital world, purchasing and connecting with brands online. Giordano needs a sustainable ecosystem strategy that more closely connects ecommerce, in-store and social media.

 

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