Dubai: Being perceived as an ‘everyday fashion' brand has its merits. For one, there is less chance of it having to go through the wild swings in taste and preferences that high fashion is subjected to, routinely and often overnight.
Moreover, being accessible, the former stands a much better chance of seeing off a recession, as the trendy ready-to-wear and mid-priced Giordano has shown in the region during 2009. But in Giordano's case, a third factor has come into play in the form of the Saudi Arabian marketplace.
"To a great extent our positive numbers in 2009 had to do with Saudi Arabia where the brand was able to put in another high double-digit growth," said Ishwar Chugani, executive director of Giordano Fashions, which holds the regional franchise. "Unlike Dubai where retail movement is more tourist-oriented, our topline numbers from the kingdom have not been subject to major fluctuations, and the margins have been more healthy than anywhere else even in a difficult year."
Giordano operates 60 stores in the kingdom with an equitable mix of stores across all the major malls and provinces. "Saudi Arabia represents 30 to 35 per cent of our regional revenues and, based on what has been recorded in the first four months, we are looking at another 10 to 15 per cent sales growth this year," said Chugani.
Creative
But the senior management at Giordano did not just rest on what was achieved in the kingdom. It got creative with its inventory management strategy all through the worst phase of the recession.
"When the downturn started in the fourth quarter of 2008, we were holding 150 days of inventory as against the 90 days we used to average," said Chugani. "Historically it's never Giordano's policy to offer sales as an incentive to move merchandise, so that was never an option on the table.
"What we did was move the older stock to select stores which fed a certain demographic and move in new stock into the other outlets. This way we were eventually able to convert stock into cash and without ever having to dump any of it or even offer them at cut-throat prices.
"By the end of last year, we were able to bring down inventory to less than 90 days and that to me was one of the best lessons we learnt from the crisis."
In Dubai, the brand is not averse to opening additional outlets despite having a well-entrenched network. But it will be subject to factors such as the developer profile, the rentals on offer and the shop size that is available.
Over-sized shops
"There is no longer any merit in seeking over-sized shops, and as such there are not many new malls scheduled to open in Dubai in the near term," said Chugani. "And yes we will maintain our high-street stores in high traffic locations such as Deira, Bur Dubai and Satwa. They continue to be among our best performing locations and there are days where they churn even better numbers than our in-mall stores."
Apart from Saudi Arabia, India represents another strong growth market for Giordano. More stores are on the cards which will raise the tally from 21 now to 30 outlets in 2012. There is also the immediate opening of its corporate office in the southern Indian city of Chennai.
"To make the brand even more accessible, we are considering local sourcing of the merchandise in India," said Chugani. "Presently, it's done from the Far East, and this is what we are trying to change.
"This has the full backing of the principal and will not just be limited to India. The intention is to repeat the strategy across all of the brand's global operations." By the sound of it, managing change is going to be a continuous process at Giordano.
Eyeing rapid expansion
For 2010, Giordano is looking to pull out a double-digit growth on the revenue side and a much-improved showing on operating margins.
"After all that we did on the operational side during 2009, our costs are in control, efficiencies have improved and this will obviously work to improve margins," said Ishwar Chugani.
"Also this year we expect better returns from the two additional lines — Giordano Junior and BSX [targeting the youth] — we have. With BSX we could have more opportunities through standalone stores in markets such as Saudi Arabia, while Giordano Junior will solely be a shop-in-shop concept.
"The everyday fashion scene has changed out of sight from the time we launched Giordano here in 1993. At the time there were about five brands competing in this space. And now? I have lost count.
"A downturn highlights the tiny fractures of a business that went unnoticed during the good times. This has given the smart retailers a chance to learn from the legacy of the past to form the wisdom of the future."
