GIORDANO: MIDDLE EAST EXPANSION

By Andrew Jobling, WGSN, 06 January 2012

The Hong Kong-listed fashion retailer is on an expansion drive in the Middle East, opening a landmark 200th store in November 2011. Ishwar Chugani, executive director at Giordano Middle East, talks strategy.

FACT FILE
Giordano made its debut in the Middle East in 1993 and had a regional store count of 214 by the end of 2011 There were 31 store openings in 2011: 16 in Saudi Arabia; 8 in India; 2 in Syria; and 1 in the UAE, Kuwait, Morocco, Sri Lanka and Lebanon
Giordano, The Avenues Mall, Kuwait Giordano, Mall of the Emirates, Dubai

Giordano opened its 200th store at the Mushrif mall in Abu Dhabi, one of 31 openings across the region, in 2011. A remarkable feat considering its originally made its Middle East debut in 1993 with a store in the Burjuman shopping mall in Dubai. By 2015 the group plans to grow its stores further, with a total of at least 250 stores scheduled to open in region. Ishwar Chugani, executive director at Giordano Middle East, sees the Middle East as an increasingly important market for the company. It currently accounts for 8-10% of Giordanos sales globally and he is confident the figure will increase further. We expect 10-12 new stores in 2012, on average one a month, Chugani said, adding that the company allocates $15m-20m each year for openings and store renovations, with a policy of renovating stores every 3-4 years around the region. We are in full swing getting our shops closer to our customers across the region, Chugani continued. The substantial investments earmarked for this expansion programme seal our commitment to be a leading player in the retail apparel industry, not only in the gulf but also across the Middle East, North Africa, central Asia and the Asian subcontinent.

The aim for 2015 is a regional store count of at least 250, with 12-14 new stores expected to open in 2012 Chugani expects to roll out stores in West and South Arica during 2012, while the company has also identified strong potential in Central Asia and the Indian subcontinent

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Ishwar Chugani, executive director at Giordano Middle East

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Chugani described 2011 as the best-ever year for all of us, with double-digit same-store sales growth across the board as well as overall growth. That has been achieved through a combination of streamlining regional operations and rolling out high-demand product lines, which has led to lower inventories and stronger cash flows. We get feedback from all the regional heads and find out whats important, Chugani said. Then we all buy into it. We can see which items are must-haves. Each of us has access to Giordanos global database we can request items from Korea, China etc. if an item is selling well there that we havent bought. Regional nuances are still taken into account, however. 80% of the collection must come from the global range but 20% can be developed locally, Chugani said, with those products subject to review by Giordano to ensure they fit with the main collection.

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WE GET FEEDBACK FROM ALL THE REGIONAL HEADS AND FIND OUT WHATS IMPORTANT. THEN WE ALL BUY INTO IT. WE CAN SEE WHICH ITEMS ARE MUST-HAVES."

Ishwar Chugani, executive director at Giordano Middle East

Geographical development
In terms of geographical spread, Saudi Arabia is the biggest market for Giordano Middle East, with over 70 stores, and Chugani said demand in the country is in a particularly healthy state. Lots of initiatives have been given to boost employment and market confidence, he said. Theres a lot of liquidity in the market. Chugani also said that both Georgia (with 11 stores currently) and Iran (14 stores) offered good potential for growth, although trade sanctions and various other challenges in Iran mean the company is holding back expansion plans there until the market is more open. But there are also new markets to explore, with Chugani saying he wants to use the Middle East as a hub to expand further. There is a significant opportunity in West Africa and South Africa, he said. I would expect to roll out there in 2012. Central Asia and the Indian subcontinent are also brimming with potential, Chugani said, adding that relatively unexplored territories can offer fewer challenges for expansion. Its easier to expand into developing rather than developed markets, he said. Its new, the competition is less. We have to get there before the other big retailers do. However, he described the greatest challenge for Giordano as one of changing perceptions.
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