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Customer loyalty is of the utmost importance, retailers have strived to attain superior customer responsiveness by employing various methods

of advertisements and promotions, loyalty programmes, as well as to increase customers perceived value of a brand. Brands catering to this expanding group of consumers have become numerous but more often than not, these brands pay more attention to the pricing strategies than to the perceived quality of the products under their brands. Padini's products cater to a wide range of audiences, the more pronounced differences being the styles and pricing of the brands they carry. The SEED and Padini brands are more trendy while the PDI and Vincci brands are more neutral. The Brands Outlet's products, on the other hand, houses lesser-known value-for-money labels,which include off-season and surplus branded items Padini designs its garments while Outsourcing the manufacturing operations to OEM manufacturers. Knitwear and graphic Ts are manufactured locally while the more complex woven items are sourced from China and Sri Lanka Party, casual and formal. The companys team of 7 designers comes out with a total of 50 new shoe designs every month. Occasionally, some shoe designs are also sourced from its China factory in order to provide variety. The 3 main categories of Vinccis shoes Party, Casual and Formal cater to a broad clientele. Each month, the bestselling items are highlighted and the designers responsible for such items will be recognized. Normally, casual shoes such as flats draw a higher selling volume compared to high heels. Manufacturing of the products is outsourced to 21 footwear manufacturers in Malaysia, while besides importing certain special materials from China, most of the raw materials is sourced locally. 3 warehouses.

Hicom Glenmarie industrial park

These 3 warehouses are situated along the same road. We visited the apparel warehouse just a block away from Padinis headquarters. The other 2 warehouses are for Vincci shoes and non-trading items such as hangers. Each day, the warehouse will receive 200k-300k pieces of garments from China, Vietnam, Hong Kong and other countries. Packing and pallet labeling is carried out according to brand, quantity, product type and outlet. Typically, it takes 3-5 days to distribute the goods to the outlets. Apparel warehouse. In the double-storey apparel warehouse, each level can store up to 4k pallets, giving a total capacity of 8k pallets. The first level is used to keep the new arrivals waiting to be transferred to the outlets, while the 2nd is for off-season and returned merchandise. Similar to manufacturing, the logistics work is outsourced to freight forwarders and the companys internal logistics department is only responsible for coor dinating the logistics arrangements.

Padini controls the design of its apparel and shoes while outsourcing the manufacturing operations to original equipment manufacturers (OEM). Shoes and knitted items such as graphic t-shirts are sourced from OEMs in Malaysia (mainly Ipoh) while woven items such as jeans and slacks are sourced from southern and northern coastal areas of China. We believe this is an appropriate strategy for the company as it could focus on other business processes which are more value add such as designing, branding, marketing and forecasting the fashion trend. Presently, the company has more than 10 OEM suppliers and is planning to start diversifying some manufacturing operations to other countries which have similarly strong apparel manufacturing skills such as Sri Lanka. the lead-time for Padinis new product launching is longer than its international peers. Typically, Padini takes about 6 months to complete a new product launching, from design to delivery. Firstly, garments designs are sent to OEMs to produce the sample. Then, the designer team would review the sample product for several times before it confirms its production. Given the seasonality of fashion retailing, new designs from Padini could always lag its international peers, which usually take less than a month to roll out their new designs. Management had acknowledged this weakness and plans to reduce the product launching lead-time, which could be turning the current weakness to opportunity in future Padini also exports to the ASEAN market with the strongest distribution networks of 12 dealer stores in Thailand. However, management revealed that sales to Thailand have always been lagging behind its export sales to other countries as its Thai business is undertaken via the dealership structure instead of franchise, where the latter offers Padini more control over retail pricing strategy. In order to improve its revenue in Thailand, the company had decided to sell its goods at a lower price to its Thailands dealers in exchange for pricing control for its Thailands business since early 2012. We believe this could help Padini to set a more competitive retail price and therefore, gain more market share in Thailand going forward