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Thu 28 Feb 2008 04:00 AM

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Core example

UAE's hypermarkets could pick up a lesson or two from Giordano's centralised logistics strategy.

As fashion retailer Giordano develops its centralised logistics strategy, the UAE's hypermarkets could pick up a lesson or two.

Given the fickle nature of the fashion industry, staying ahead of the competition is often considered a laborious task.

At the moment we operate a number of different warehouses, but I believe moving everything under one roof should create huge benefits for us.

After all, the brand value of a retailer is directly related to the success of their latest fashion range, with even the biggest of industry heavyweights falling out of favour with customers following a weak or undesirable season.

Although this unforgiving scenario has resulted in the downfall of countless retailers over the years, it hasn't deterred the Hong Kong-based company Giordano from taking up the mantle of providing casual garments at affordable prices for customers throughout the world.

It's a simple concept, of course, but the company's business model has evidently worked on a grand scale - from humble operations with a single outline in the early 1980s, Giordano has transformed itself into an international powerhouse with approximately 1800 stores in the Middle East, Asia, Australia, India, Eastern Europe and North America.

"Giordano embodies the contemporary lifestyle of its customers, with simplicity in design and quality in substance," says Ishwar Chugani, executive director for Giordano in the Middle East and Africa.

"It's a concept that has found appreciation in all corners of the world.

"Today, we have established retail operations in over 40 countries, developing brands such as Giordano, Giordano Concepts, Giordano Ladies and Giordano Junior, each with its own individual marketing position and retail identity."

The Middle East has played an important role in the company's success story. Its local operations commenced in 1993 and Giordano quickly created an enviable niche for itself in the regional marketplace.

In particular, it experienced a breakthrough year in 2007, with annual growth rates touching the double figures - the fastest increases in the company's history. "2007 was a banner year for Giordano in this region," says Chugani.

"Globally, our company has been witnessing an average of between 15% to 20% growth rate. So achieving over 30% is a real accomplishment for the management and staff here."

"It also demonstrates that there is a market for timeless, relevant and easy to mix and match apparel in the Middle East."

Over the next three years, the company is planning to invest over AED50 million on renovating and upgrading its existing stores, in addition to opening another 50 outlets throughout the region.

"We've always been keen on reaching out to consumers in this region, which is why the company has been significantly investing in developing new markets, opening new stores and regularly upgrading our existing stores," says Chugani.

"The growth of Giordano in the Middle East has been fantastic and there are no plans of slowing down. By focusing on just one single brand, we have already built a network of 150 stores in 15 countries in the region. By the year 2010, we expect that number to reach 200 stores."

In fact, Giordano's expansion plans are already in full swing, with 12 stores launched within the Middle East last year, including the company's first stores in Egypt and its first outlet superstore in Dubai Outlet Mall.

"The plan is set to improve the total shopping experience at Giordano stores and support this by providing more variety to customers," says Chugani.

To encourage the growth in the Middle East, Giordano has recently invested in two warehouses in Dubai.

The first is a 20,000 square feet facility in Al Quoz, which will serve the local market, while the second is a 10,000 square feet facility in Dubai Investment Park to serve the Middle Eastern market as a whole.

"The warehouses will be used for logistics and distribution purposes, covering our different markets in the Middle East, as well as India, North Africa, Central Asia and Eastern Europe," says Chugani.

"We researched a variety of different locations before making a decision. For example, the warehouse and distribution complex at Dubai Investment Park consists of approximately 100 storage facilities of different shapes and sizes."

"We identified one of them that matches our requirements and took out a 30-year lease for the facility."

"We will basically transfer the bulk of our supply chain operations for the Middle East to that facility, whereas the other warehouse will specifically focus on our logistical operations within the United Arab Emirates."

Chugani believes this centralised approach will help simplify the company's supply chain operations, coinciding with its basic ethos on business operations.

"It is perhaps this core value of simplicity in every aspect of our operations that has kept the company going. At the moment we operate a number of different warehouses, but I believe moving everything under one roof should create huge benefits for us," Chugani says.

"We believe these changes will not only affect our operations in a positive manner, but our employees will also prosper. To support this, we have involved a number of our workforce in the changes taking place, which is normal protocol with Giordano."

"Operational transparency, information and knowledge sharing has helped the company to imbibe its values across all levels in the organisation."

The company, which is currently in discussions with a number of material handling vendors in the Middle East, will soon make a decision on the types of racking, forklift trucks and technology that will be implemented in the new facilities.

"The number of suppliers for material handling equipment is growing in this region, and the quality of service is improving too, which is great news for companies such as ours," he says.

"We've invested a lot of time analysing the market, because the efficiency of our warehousing operations will depend, in part at least, on the efficiency of the equipment we purchase for the facility."

"So selecting the right partners is essential and we should be making our decisions very soon."

Operations in the Dubai Investment Park facility are expected to commence later this year and the company will join a growing list of companies based in the industrial area, including the likes of Global Shipping and Logistics (GSL), Al-Futtaim Motors and the MCT Group.

"The future is bright for Giordano. We want to keep growing at the same pace in the coming years and have many exciting plans in place," ends Chugani.

"We hope to surpass the success of 2007 and this will, of course, require an efficient supply chain to support our operations."

LOGISTICS PROFILE: GIORDANOFew industries are as dynamic or energetic as the retail and fashion industry, which is characterised by constantly evolution trends, seasonal demand and tight deadlines.

Facing the ever-increasing demands placed by customers, Ishwar Chugani, executive director for Giordano in the Middle East and Africa, believes that Giordano's philosophy on Quality, Knowledge, Innovation, Simplicity and Service (QKISS) is the main catalyst behind the company's successful operations.

Acknowledging the value of supply chain management, Giordano's operations in terms of stocking norms have proved very useful in achieving significant market share.

"With monthly bookings, and a month's delivery lead-time, Giordano works with 70 days inventory in the pipeline and dormant stock of less than five percent. Even with basic merchandise, Giordano keeps its stores looking fresh with visual merchandising changes every two weeks, with reallocation of merchandise across the chain.

The brand's logistics requirements are met and facilitated in lead times for all its markets. Having a central distribution centre and an efficient process driven approach helps prioritise the needs of different markets, which are acted upon quickly.

"Once the buyers confirm the delivery, all the merchandises are consolidated from nominated vendors and are delivered to the forwarder," says Chugani.

"Giordano's regional shipping department in Hong Kong coordinates between buyers, factories and the forwarders to ensure the shipments are delivered on time."

To manage sourcing and facilitate production, Chugani shares the importance of spotting trends at an early stage, which is done in coordination with the regional team, and placing orders to vendors to meet the seasonal launch.

"The use of simple designs and basic fabrication helps cut short the lead time and bring in the merchandise at a faster pace," he says.

As for the company's fashion statement, Giordano has been gradually introducing more style elements to its product line-up over the last couple of years.

While the brand has continued to focus on its core range of simple casuals, such as the dry polo, flat front khakis and denim range, the company has also introduced a new range of dressed up casual merchandise, which have received more prominence in the seasonal collections.

"We can be fashionable without being trend related, that is to say we have reinterpreted what casual is and what simplicity means," says Chugani. "Every apparel retailer needs a little flavour, and that is what the icings achieve."

"It also allows our creative team to spread their wings; they can create something that, while trendy, has a longer shelf life."

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