Dubai: A pro-active approach on inventory management helped the ready-to-wear brand Giordano weather the wear and tear from the recession. And now it's getting back into a growth mode.
While the brand suffered a negative growth rate during the first six months of the year, as the market picked up at the end of October, regional sales shot up 18 per cent from last year.
"During October and November, sales were better than even 2008, so that's the reason why we see a lot of potential," said Ishwar Chugani, executive director of Giordano Fashions. "People are spending again, tourists are coming back and there's more confidence in the market."
As was the case for other retailers, Giordano suffered a sharp drop in consumer confidence in 2009. During what Chugani terms the "survival year", Giordano focused on surplus inventory to turn the situation around.
Kiosk concept
"When we entered 2009 we were holding a phen-omenal amount of inventory," said Chugani.
"That was a learning year for us and the challenge was what to do with the inventory without dumping it. Being part of Giordano Global, we worked with all the [other] markets and shared merchandise, so that when 2009 closed, we had brought our merchandise to less than half, improved our margins and were able to bring our customers what they needed."
Even through the troubled times, a decision was taken not to damage the brand by offering sales. "Our merchandise should always be fresh; you should manage the problems at the back end," Chugani added.
"When customers are in the store they know it won't be sold at a reduced price several weeks later, which will encourage them to buy instead of wait for a sale."
As the company pulls itself out of its negative cycle, it has plans to open another 15 stores, including more outlets in Saudi Arabia and the UAE, as well as in Syria, Georgia and Armenia.
"We are still very confident of having 250 stores by 2015 in the region," Chugani added. "We also want to concentrate on the kiosk concept." Giordano is also looking to launch an on-line platform for regional shoppers.
Established in 1993 as a joint venture between the ETA-Ascon Group and Giordano International, Giordano Fashions currently operates 190 stores.
While the worst of the recession's impact is behind it, there are still obstacles in its path.
"However, the UAE is still the most challenging market and still the most expensive to operate in terms of rental and cost of living."
Another challenge that needs to be overcome is the rising price of cotton.
"In the UK many brands have already stated consumers can expect to see price changes of about 10-15 per cent in the New Year," Chugani said.
"It's going to be a challenge and that's why as a group Giordano is trying to see how best to manage it."
