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.

Close

Today's Top News		Top Business News
+Analysis: Taiwan bill threatens Strait stability ( 2003-12-02) +Handshake highlights fight against AIDS ( 2003-12-01) +Foreign banks get green light ( 2003-12-01) +Quake leaves 11 dead in Xinjiang ( 2003-12-01) +Pu Cunxin, AIDS' leading man ( 2003-12-02)		+Service-oriented Giordano moves upmarket ( 2003-12-02) +CEPA will benefit mainland, HK, Macao and Taiwan economies ( 2003-12-02) +SST fleshes out flash memory ambitions for China ( 2003-12-02) +Non-market WTO clause ups dumping charges ( 2003-12-02) +Government's proactive policy pushes shares up ( 2003-12-02)