Posted at 10.29.2018
Padini Holdings Berhad is a Malaysia-based investment having company. Padini has setup its operation in Malaysia's apparel industry, processing and trading. Its product line includes clothes for men, women and children; women shoes, maternity wear and products for men, women and children. . It functions in Malaysia and Hong Kong. Its major subsidiaries include Vincci Gals' Specialties Centre Sdn. Bhd. , Padini Corporation Sdn. Bhd. , Seed Company Sdn. Bhd. , Yee Fong Hung (Malaysia) Sdn. Bhd. , Mikihouse Children's Wear Sdn. Bhd. , Vincci Holdings Sdn. Bhd. , Padini Dot Com Sdn. Bhd. , THE BRAND NEW World Garment Manufacturers Sdn. Bhd. and Padini International Limited.
In order to boost consumers spending in the clothing industry, "Mega Carnival Sales" has been executed by the Malaysian federal is to be held 3 times per year. Its main purpose is to market Malaysia as a "affordability shopping destination". This extreme approach attracts the tourist to look at the local apparel outlets, which in turn would increase international visitor spending and boosts our country's foreign exchange earnings. This would also encourage the Malaysians to look locally, which would profit Padini Holdings Bhd in terms of these sales. It has created a chance for the domestic companies. However the side effect of such activities would induce the domestic market and escalates the number of opponents in the local market. Nevertheless, Padini Holdings would still stick out as market leader.
Malaysia's economic progress is usually to be has been unstable fluctuating from -1. 5 to -2. 6 from 2008 to 2010. The best growth was over March to September 2009 which boosts from -7, 8 to 5. 7. The financial growth is expected to be because of the home market with development in the private sector. The private sector makes up the majority of the Malaysian current economic climate, with private intake accounting for nearly 44% of GDP. "Love Malaysia, Buy Malaysia" advertising campaign was launched to by the federal government to get Malaysians to support home market and take holiday seasons in local visitor sites. The government also consequently launched a countrywide campaign on smart spending, with the aim to educate consumers on the importance of local demand on the GDP growth and economic restoration as a whole.
Malaysian is categorized as an top middle-income country, and regarded as one of the most developed on the list of developing countries. Middle class households defined as those getting between RM1, 500 and RM3, 500 monthly, and has increased from 32. 3% of total household population in 1995 to 37% in 1999. The low-income group, grouped by household income as high as RM1, 500 monthly, spends a percentage of this amount on food. In the meantime, the high and middle income households spend almost all of their money at hypermarkets. 3. 4% of these income is allocated to clothing and feet wear. Malaysia's consumers' lifestyle has been changing for the better because of the surge in education levels. Visible vendors as well as global mass media have shaped consumers' buying behavior, resulting in the Malaysians being more westernized. The Malaysian's life leisure life revolves around trendy stores. Therefore Padini Holdings Bhd has to be more upgrade with the latest movements. They have to advertise and keep the consumers enlightened and reminded that they still exist and provide the clients with quality and trendy clothes.
With the web and e-commerce, retailers can now sell their products online and deliver it to customers on the door-step efficiently in just a timely manner. It could make customers' life more convenient as they don't have to get their house to visit buy a product in the hypermarket and making the purchase at the comfort of their own house. Furthermore, retailers can also sell their products to the overseas market without the need to open a physical store in the foreign country. This helps Padini Holdings to earn more profit using online intermediaries and spend less by not establishing new stores using areas.
4. 0 PORTERS 5 FORCES
4. 1 Power of rivalry among existing competitors
In today's industry, many company has increase its size to be able to competitively fit. Most company now is equally big in terms of size. When the organizations are of equal size, they have to compete for the same resources such as brand image, market share, customers' loyalty, and other factor. This would result in a high rivalry and a hazard for Padini Holdings Bhd, especially since its challengers: Giordano Holdings Bhd, Bonia Corporation Bhd and Esprit are of equal size. Hence, Padini must compete with intense strategies, such as starting more outlet stores and creating new and trendier designs and styles to fully capture customers' attention.
Cost of transitioning is low
The cost of transitioning is low, because customer will only have to compare prices of competition clothing and services offered. They are able to also compare the varieties of the clothing season. This increases the rivalry among competition and Padini will never stop fighting against Bonia, Esprit, Giordano to ensure that they make a deal, and that customers will always keep retuning because of the trendy clothing styles. This is a big get for the competitors because constant advertising matters in calling to the customers.
Threat of Substitutes
In the retailing and making industry for apparels, there is absolutely no visible swap, because clothing is a basic need and need. However, there are potential substitutes in getting to the customers. This is in the form of a non-retailing store, where by it is slowly and gradually gathering popularity in the Parts of asia. Non-retailing include direct email, online shopping, direct mailers, phone sales, door-to-door advertising. In Malaysia, we have already seen this showing such as SmartShop,
Cosway, Amway, among others. Nevertheless the treat of substitutes is fragile, because there is not an accessibility yet on clothing only perhaps online shopping which happens to be available at large, but hasn't gained reputation in the Asian culture.
The electricity of Buyers
Padini has the same customer platform as its opponents. Therefore, transitioning cost is low if customers are not satisfied with the product quality, and service offered it can swap easily to its competition and purchase from them. The issue here is the fashion, how fashionable is the products of Padini and does it supply the less expensive to the customers than its adversary. The bargaining power of buyers here is moderate, and they can impact fashion and style. Thus Padini must be hypersensitive to the customer's ever changing tendency to satisfy their needs. However, the products are differentiated, thus clients are unable to find the same style and instead have to acquire from Padini even if the purchase price is moderately high.
Threat of entry
The existing companies such as Padini, Bonia and Elba have already founded themselves with production. They are already operating at the lowest cost possible because their selling prices are much cheaper than overseas competitors. Given that they achieved economical of range it is difficult for newbies to enter into the marketplace, because they'll face retaliation from the prevailing companies. New companies will come in to the market, nonetheless they cannot operate in a big level immediately, instead they can compete with smaller competitors that aren't detailed in the KLSE, as soon as they have been around in the marketplace for long and have expanded in size, can they commence to compete with Elba, Padini, Espirit and Bonia.
Established firms like Padini, Elba, and Bonia already have brand recognition and customer loyalties. It has taken several years to acquire this through heavy expenditures spent on advertising, developing a good customer service, creating the products with style and fashion. As for Padini, they may have acquired a large amount of market show after building its brand for a long period. Thus, access here will be low because new companies must study the market and do good pr to succeed the center of consumers. Furthermore, it's very risky to build a brand name, since there is a potential of failure even if a major sum of money has been spent on advertising, thus experiencing a set up loss which might take years to recover.
Within the attire industry, here are lots of retailers which have already been more developed such as, Bonia, Espirit, and Giordano that are direct rivals of Padini. They are selling the same product but it is highly differentiated in their style, design and services provided.
Bonia Company Bhd
Bonia was incorporated as an exclusive company on 28th August 1981, and became open public on 22nd June 1993. The Bonia Group is mixed up in designing, making, marketing, retailing, wholesaling and franchising of fashionable leather goods, accessories and outfits for the neighborhood and overseas marketplaces. Bonia's market show in Malaysia and Singapore happens to be between 35% and 40%. Bonia has two factories in Malaysia. The talents possessed by Bonia is that have a superior and well established brand name, compared to the formal wear at Elba's fashion menswear. They also have expanded in to the international market such as New York, London, Paris, Tokyo, Hong Kong, and Thailand. Bonia has several promotional activities such as the members' cards, whereby point can be accumulated. The weakness of Bonia is that during the 97'turmoil, their financial performance have been infected, and in the old age, they had to improve their strategy and focus on the central products and to ensure a profit, they had to get rid of their land which was designed for the development of rentals.
Esprit Holdings Limited
Headquartered in Hong Kong, Esprit Holdings Small is engaged in the sourcing, retail and low cost distribution and licensing of quality and lifestyle products designed under the globally identified ESPRIT brand name. It has been a stated company in Hong Kong since 1993 and has a secondary list on the London Stock Exchange since December 1998. The strengths of Esprit is that they have a very more developed brand, plus they have been increasing enormously in the abroad market, and have ventured into new products such as activities wear and clothes for kids. They have got been
successful in their financial performance, and also have managed to survive with positive information even through the turbulent happenings that took place throughout the market.
However, the weakness is that in Malaysia itself, they are not very aggressive in their advertising. They rarely advertise when there's a sale or when every other promotional events are taking place or when they are releasing a new clothing design.
The company was proven in 1981 which is one of the well known and set up brands in the Asia Pacific region especially Malaysia. Giordano is a store of unisex casual wear apparel wedding caterers to a market which is young and looking for affordable clothes. Convenience is perhaps the most important guiding primary of the brand Giordano seems that by keeping everything simple. The talents of Giordano are that it provides simple clothing in terms of its designs. It is cheap in comparison to other foreign competitors like Esprit, and despite having these affordable prices, their products are of good quality. The weakness however is they have been doing poorly in their financial performance ever since the 97'crisis occurred. Thus, with inadequate funds, they are not able to aggressively advertise and extend their outlets over the Malaysia region.
The key success factors of Padini are that they are incredibly competitive in their advertising compare to the majority of their rival. They recognize the value of campaigns and advertising as a means of building a brand image. This incepts a solid image in the customers' mind that it is a make of great value and affordable for them. Padini is usually one of the top few brand in the customer's list when they buy their clothes especially formal dressings. Padini is often implementing new principles diversely in the clothing industry to become unpredictable and stand out from its rivals. The firm is also started out to extend into overseas neigbouring countries such as Bangkok and Thailand. This makes up about one of its globalization strategies. The disadvantage of this company is the fact it has way too many different brands. Their famous brands is Padini Idea and Vincci which is widely known by the consumers whereas the other brands aren't well subjected to the customers. Some of them maybe known to the customer nonetheless they have no idea that they belong to the same family.