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IFF brand watch on Zara & Giordano
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| Devangshu Dutta |
The two most aspirational brands, both examples of efficiency
and growth, Zara of Spain and Giordano of Hong Kong made a special appearance
at the Images Fashion Forum with discussions on their value and supply chain.
In his study on Zara, part of the Euro 4 billion Inditex Group, retail and fashion
industry consultant Mr Devangshu Dutta contrasted traditional seasonal cycles
of several months with Zara’s famed delivery-cycle of 15-30 days. This
is enabled by Zara’s trend-spotting capability, the commitment to vertical
control of fabrics as well as in-house production capacity, and the quick-decision
making mechanisms.
Zara’s investment in fabric and own production give it a margin edge over
other retailers by ensuring that more accurate merchandise hits the shelves
in a timely manner, with lower markdowns.
The implications of Zara choosing to follow rather than create
fashion trends were also discussed by using systematic trend-spotting, Zara
manages to latch on to trends early enough, and appears to be innovating on
product design. It consistently follows the “innovators’ strategy”
of letting go of products before competition makes them obsolete, and yet its
rapid response system scales up quickly enough so that it can maximise sales
in the shortest possible time.
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| Ishwar Chugani |
Giordano, also known as ‘The Gap of Asia,’ was presented
by Mr Ishwar Chugani, executive director of Giordano’s partner company
in the Middle East and in India. Giordano currently runs around 1,400 stores
in Asia under its different fascias. Mr Chugani traced the brand’s history,
from its birth with unisex T-shirts to technically-innovative products including
Dry-Tec, Nano-Tal (wrinkle free with stain-resist), etc.
He highlighted Giordano’s philosophy named QKIS (Quality-Knowledge-Innovation-Simplicity)
as underpinning the company’s success across markets. He specifically mentioned
the company’s human resource policy, of growing managers upwards from frontline
sales associates, as a reason for its low staff attrition and consistent performance.
In response to a question on stocking norms, Mr Chugani said that there were
six base colours around which 70-80 per cent of the range was planned as core
merchandise. With monthly bookings, and a month’s delivery lead time, he
said that Giordano works with 60 days inventory in the pipeline and dormant
stock of less than five per cent. Even with basic merchandise, Giordano keeps
its stores looking fresh with visual merchandising changes every two weeks,
and adjustment of reallocation of merchandise across the chain. Referring to
Giordano’s plans in India, he said that a key part of the strategy required
Giordano to own and operate its stores in each country either directly or through
a close franchise relationship. However, he said that the brand had already
begun sourcing for its Australian and Taiwanese stores, preparing the supply
base for launching its business in India.
Key takes from IFF sessions
Devangshu Dutta, Chief Executive of 3i, a retail and fashion services firm:
Retailing in India is set for the next big leap - what began as forward integration
for manufacturers such as Bombay Dyeing and Raymond in the 1960s, has almost
suddenly reached a stage where even smaller companies, individual entrepreneurs
and real estate owners are willing to build organisation and structure into
their businesses. The availability of quality real estate in the form of shopping
malls is probably the biggest enabler of the organisation of retail business.
From small 300-400 sq ft outlets in disorganised high streets, one now has the
option of opening a well-furnished store in the well-equipped environment of
a mall.
The biggest challenge for the mall owners is going to be to find enough different
brands to fill the space, so that the differentiation between the malls is maintained.
Otherwise the 35-40 million sq ft that is coming up will end up looking the
same all over, and one can foresee a bloodbath in the mall business.
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