In this town where money talks, good service is not for sale.
Neither the threat of job loss or the reward of sales commission seems to
have much of an effect on the collective attitude of Hong Kong's army of retail
sales people who are better known for their curtness than their courteousness.
The millions of ad dollars spent by the government and the Tourism Board to
promote good service in the retail sector are seen by many marketing and
advertising gurus as money misspent because, as they say, you can't just tell
someone to be nice to the customers and expect results.
The carrot-and-stick approach works, but only to a limited extent, says Peter
Lau, chairman and chief executive of Giordano, one of the best-known names in
Hong Kong's retail industry. "Good sales persons are those who can feel the joy
of being nice to other people," he says. "They believe that being nice to people
has its own reward," Lau says.
This kind of talk may sound a bit corny coming from someone else. But Lau is
a widely-recognized retail guru who holds sway over a Hong Kong-based
clothing-store empire that has established a strong presence in many Asian
markets, including the mainland.
Although the company has never seemed to aspire to be the region's fashion
trend setter, it has become a recognized leader in service, a reputation backed
by the many service awards it has won in past years. "I've lost count of the
awards we have won," Lau says. "There are so many of them."
The secrets to his company's success are neither simple nor straightforward.
Giordano has 39 outlets in Hong Kong alone and employs 10,000 people. "We just
can't force everyone to deliver the kind of service that meets the standard we
have set," he says. "We have to let them, our employees, find out for themselves
what good service is all about, and to encourage them to manage themselves," he
says. That way, "good service becomes the staff's own culture and they are going
to defend it".
Unlike what many people in the retail business think, management of service
is not just a matter of reward and punishment, Lau says. The attraction of high
sales commissions can be counter-productive in that the sales staff may be
encouraged to overly pamper a few big spenders while ignoring other potential
customers.
Discipline is important but it is a negative approach that can turn employees
against management and customers. "At the beginning, we found that we had no
other choice but to force the concept of good service on our sales people
because they didn't seem to understand it," recalls Lau. The approach was
drastic. Any sales person against whom there were two complaints by customers
would be automatically dismissed, Lau says.
But in the longer term, on a sustainable basis, "we have to establish a
culture of excellent service," Lau says. To achieve that, "our staff will have
to learn that being good to other people has its own reward".
To drive home the lesson, Giordano encourages its sales people to take time
off each year to participate in community services, such as visiting homes for
senior citizens or helping out in orphanages.
On one occasion, a team of Giordano sales people raised money for the
building of a school in a remote mountain region on the mainland. "When they
visited the school after it was built, they saw many smiling children's faces,"
Lau says.
"This way, they have really experienced the joy of helping people," he adds.
Such a spirit has "cascaded" down to all levels of the staff, Lau says. Now, the
staff can be counted on to police themselves, according to Lau. "They form their
own small groups, service-excellence groups, to not only supervise but also to
look for ways to improve customer service," he says.
Despite its reputation for service, the company, nevertheless, is facing
tremendous competitive pressure. Over the years, there have been many imitators
who have been trying to take a cut from the pie. Their common strategy is to
undercut Giordano, the market leader, with lower prices. "If we have to compete
with them on price alone, it would be suicidal," Lau says.
Instead of going downmarket to compete, Giordano has tried to position itself
in the medium- to high-end, according to Lau. In some markets, including the
Philippines, Giordano has been accepted by consumers as an upmarket designer
brand. "We are aiming to position our brand internationally in the same league
as Polo Ralph Lauren", or other relatively higher-end casual wear makers, Lau
says.
At one time, "we were facing stiff competition from many copycats," Lau
recalls. "That was a very difficult time for us. As it tries to pull itself away
from cut-throat competition by moving up market, it must tackle the twin
problems of ingrained consumer perception and entrenched internal culture
arising from its roots as a vendor of mass-market clothing.
The risks of revamping the entire line of products are simply too high to
contemplate. An alternative is to establish a new upmarket line that can help
change the company's image. In 1996, the company launched Giordano Ladies aimed
at the rising ranks of working women in Hong Kong.
"We set up the Giordano Ladies shops as a catalyst of change," says Lau.
Although the Giordano name is retained, the decor of the Giordano Ladies shops
is totally different from the other Giordano shops. "The aim is to arouse the
curiosity of the consumers, tempting them to come into our new shops to take a
look of what we are offering," he says. The company hopes that the impression
consumers get from visiting the Giordano Ladies stores can help change their
established perception about the group, he says.
Changes are already taking place internally after the launching of the
Giordano Ladies line of clothing, Lau says. Now, the Giordano team is engaging
in a healthy competition with the new Giordano Ladies team in design and
quality, he says. The company is slowly shaking off its mass-market culture, he
adds.
Meanwhile, the company has added a new budget line, Blue Star, to compete in
the lower segment of the market. With that, it has the low- to medium-price
segments of the market covered. The task ahead is to continue to move upmarket,
Lau says.
"Moving downmarket is easy," he says. "It's just a matter of cutting your
price and we had done that before," he adds. But moving the other way up the
value-added chain that promises wider profit margins is considerably more
difficult and time consuming. "It will take at least several more years for the
market to change its perception of us," Lau says.
