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Case Study – Givono Retail
Objective
To work with a team to provide a proposal to Givono, a local electronic retail company, to help them
increase their sales revenue.
Background
Ginovo Retail, an electronic retail company, was formed ten years ago in China, and has grown to 310
retail stores nation-wide with over 10,000 employees, as a result of growing demand and its unrivalled
reputation for technical excellence and service.
The market supplied by Givono Retail and its competitors is broken down into three categories:
1) Computers, networks, software and computer accessories (e.g. printers, scanners) sold to
professional and small business customers (i.e. those with fifty or less employees)
2) Home computers, software and computer accessories (e.g. printers, scanners) sold to individuals for
home use.
3) All other electronic products including phones, mobiles, audio and DVD equipment, and game
consoles sold to both professional and individual customers.
Ginovo Retail does not manufacture products itself, but purchases the products in the first two categories
above from Givono Technology who also provides sales training and after-sales services of the relevant
products. The third category of products is purchased by Givono Retail from multiple external
manufactures who also provided sales training and after-sales services for their products.
(Note: Ginovo Retail and Ginovo Technology both belong to the Givono Group and operate independently.
Ginovo Technology manufactures computers and software, and sells them to larger corporate customers;
While Ginovo Retail sells the products to small business customers and individuals through its retail stores
and online official website.)
Table 1 below shows the growth in overall consumer demand for the products in the three market
categories in China. Market share of Ginovo Retail for all products has changed over time (see Table 2)
18
16
14
12
10
8
6
4
2
2010 2011 2012 2013 2014
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Table 1 -%Increase in China Market Demand for
Electronic products
Computers & software purchased by offices
Computers & software purchased by individuals
Other electronic products 50
45
40
35
30
25
20
15
10
5
2010 2011 2012 2013 2014
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Table 2 -China Market Share of Ginovo Retail
Computers & software purchased by offices
Computers & software purchased by individuals
Other electronic productsStart Workshop – Business Case
Before the end December 2013, Ginovo Retail maintained over 25% of sales increase each year. However,
after the annual review of 2014, management of Ginovo Retail found that the company had not reached
its sales target for this year – at least a 25% increase – and it seemed that there was a slowdown in sales
increase, as shown by the flowing data collected by the Sales and Marketing Department. Within each
product category, the average gross profit margin is 42%, 37%, 33%, respectively.
Gross Sales of Givono Retail (RMB million)(1)
2010 2011 2012 2013 2014
Computers & software purchased by offices 100 123 163 208 248
Computers & software purchased by individuals 85 84 118 152 165
Other electronic products 46 81 院103 122 138
Total 211 289 384 482 550
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Gross Sales of Givono Retail (RMB million)(2)
201计0 2011 2012 2013 2014
Sales contribyted by offline stores 190 245 307 357 358
Sales contributed by online facility 会21 43 77 125 193
Total 211 289 384 482 550
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Ginovo takes a different marketing strategy, compared to other companies in the industry, and relies
heavily on customer promotion in each individual store. The promotion strategy is normally centralized by
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the office headquarters at the beginning of the year, and then they rely on each retail store to apply the
budget and implement all promotion events accordingly. Some store managers put emphasis on marketing,
：
while other didn’t. In 2014, only 64% of the total budget has been applied by all retail stores. The table
below shows relevant data in different region of China in the previous year.
b
t Northern Eastern Southern Central
Budget applied for marketing in 2014 (RMB million) 3 14 13 8
Gross sales in 2014 (RMB million) 29 131 127 71
Number of retail stores 57 92 99 62
In Givono stores and regions work in isolation and are fully responsible for their own sales target. Each
retail store is supervised by a store manager who has staff ranging from 20 to 50 depending on the size of
the store. They are divided into a Sales team, Warehousing team and Servicing team. Store manager,
salespeople and servicing team are well trained in the technical aspects of their products but have little
sales or softer skills, such as people management and customer service. The Warehousing team is
responsible for keeping the shelves stocked and the store full, and also for processing of orders as an
unnecessary burden and do not encourage their staff to prioritize this work. Recently, several store
managers have reported losing some well-trained staff to their major competitor.
2 / 4Start Workshop – Business Case
The customer satisfaction survey implemented by Givono Internal Auditing (see table below) shows that
sales and customer satisfaction across the stores is remarkably consistent:
100
95
90
85
80
75
70
65
60
55
2010 2011 2012 2013 2014
Regarding competition in China, there are many companies offering a similar service as Ginovo Retail.
The major competitor is Compuland. This company is US based began operations in China seven years
ago. It has now built 60 to 75 stores in each of the four Ginovo Retail regions, selling a similar product
range. Compuland’s management focuses on branding and satisfying customer needs. It spent 40 million
RMB on branding through different advertising channels and gained the revenue of over 500 million RMB
last year. Managers and staff are selected primarily on their skills in customer orientation. Technical and
customer oriented training is provided where the focus is on understanding the customers’ needs and
incorporating them in Compuland’s products. The graph below shows the percent of market share for
compuland over the past five years.
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noitcafsitaS
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Givono Retail Survey of Customer Satisfaction
Computers & software purchased by offices
Computers & software purchased by individuals
Other electronic products
40
35
30
25
20
15
10
5
2010 2011 2012 2013 2014
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China Market Share of Compuland
b
Computers & software purchased by offices
t Computers & software purchased by individuals
Other electronic productsStart Workshop – Business Case
Tasks
Your team is expected to provided and present a proposal to management of Ginovo Retail, indicating:
a) The most two important reasons why the sales slowdown
b) The corresponding action to increase the sales revenue
Timing Activity Output
10min Material Reading
30min Group Discussion (CH) Work as a team to work out a proposal with suggestion of
corresponding actions
15min Presentation (EN) Everyone should participate in presenting your proposal in English
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10min Assessor Debriefing
65min in total
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