GUESS History Case Study- The Whole Story

GUESS History Case Study- The Whole Story

Introduction

GUESS Inc. is well known as a retail apparel brand that operates and manages over five-hundred retail stores across America. It’s famous for selling apparel while specializing in clothes, perfumes, watches, jewelry, and other fashion accessories. Like other top fashion outlets of its kind, GUESS History dates back to many years of tireless effort to be the best. The company also has a strong presence in Canada which, along with its wholesale distribution channel, contributes about 33% of GUESS Inc.’s total revenue.

A well-known fact is the vast and highly developed competitive retail landscape in the United States. Therefore, it’s easy to interpret that; there’s substantial room for improvement. But, that’s not limited to the United States. Throughout Europe, there’s significant room for retail businesses to perform relatively well and garner extremely positive store sales in the high-single digits. A quick look through GUESS History shows the resilience in trying to take a significant share of the cake—consistently increasing and elevating the quality of sales and merchandise. 

But, that’s only the tip of the iceberg among the things the company has implemented to cause the significant success it has recorded so far. GUESS Inc. has also had its fear share of challenges, many of which would have torn some companies apart, but GUESS Inc. stands through all. In the following paragraphs of this article, we’ll be looking into some of the challenges and ways GUESS Inc. has managed to survive, scale through the hurdles, and gain a significant amount of ground. But first, let’s talk a brief look into the company’s history.

  • GUESS History Case Study- The Whole Story
  • Introduction
  • GUESS History—Origin, Development, and Evolution to Date
  • GUESS Inc. Success Strategies

GUESS History—Origin, Development, and Evolution to Date

GUESS History—Origin 

In what seemed like a consortium, four brothers—Paul Marciano, Georges Marciano, Maurice Marciano, and Armand Marciano—came together to establish what we know today to be GUESS Inc. The year was 1981 when the first GUESS store started operation in America. But, it all begins in France, where the brothers founded their first retail store called MAG. The store was a huge success, and the brothers decided to move to America. That’s how the GUESS store was founded in America.

The name GUESS has raised many questions, with people seeking to know what that could mean. You’re probably thinking it to mean GUESS as in to GUESS something literally, and you are correct. George—one of the brothers—came up with the name on a long drive home. Of the four brothers, Paul is the youngest, born in 1952. He handled the advertisement and public relations business for the GUESS brand. He later became the chief operating officer and president of the brand, which he still holds today.

Maurice Marciano was the designer. He was born in 1949. He handled several other positions within the company before retiring in 2012. He went on to buy a new mansion and made additional investments. Armand was born in 1945, and he handled the company’s operations for many years before he left in 2003 to be a part of a project that had to do with women’s contemporary brand. 

GUESS History—Development

After GUESS opened a clothing store in Beverly Hills in 1981, they introduced a line of European-inspired jeans. The brother was able to seduce Bloomingdale’s into taking thirty pairs of the GUESS Jeans on consignment. The consignment sold out so fast. That marked the beginning of the GUESS phenomenon and launched them about three-decade decades of GUESS History as a brand that includes a highly published struggle for ownership and control. 

There are also the controversial, edgy ad campaigns that skyrocketed the career of many supermodels. However, GUESS continued to grow, diversify, and expand the brand’s product line amidst all. They looked beyond the known denim and provided a wide selection of clothes, apparel, footwear, and accessories. 

GUESS History— Where it Stands Today

Today, GUESS Inc.’s notable brands include the youth-oriented, upscale GUESS and the women’s fashion-oriented GUESS by MARCIANO, which we can consider more upscale. GUESS has a brand that was recently recognized as one of the most consistently profitable U.S.—based apparel companies. It also consists of the aspirational but affordable youth brand G by GUESS. Two of the Marciano brothers still led the brand even after it had gone public and now has a revenue of over $2.1 billion while it records no less than $242 million annual income. 

What started as a retail store primarily became a wholesaler through the 1990s. Then it began to add stores in both outlet malls and high-end malls. 

Since 2003, its sales volume has tripled, and through the diversification of its product mix, the company has built a solid business model. Today, about 85% of its revenue comes through direct-to-customer gotten from its over 450 stores and thriving e-commerce business.

GUESS Inc. Success Strategies

GUESS is still popular with many different product types, including watches, perfume, shoes, children’s clothing, etc. We can project that this is a brand that will live forever in many people’s books because of the grand style that they’ve managed to create so far, but that’s not all. Even though the brand’s face has changed several times, some things remain unchanged, and they seem to know the strategies to pull to stay in the picture for long; these strategies include;

Diversification

According to the GUESS’s CIO, Mike Relich has helped the company significantly. That’s because the company’s economic strength in one country will help make up for its weakness in another. Also, diversification in brands, products, and business models helps the company’s bets. 

So, in the past five years, GUESS has managed to strike a balance and leaned towards wholesale and expanding its presence in Asia and Europe. In no time, revenue from Europe has grown from about $150 million to over $700, and that of Asia rose from $14 to over $132 million within the years 2005 and 2010.

However, diversification is not without its challenge. For example, a global company like GUESS would want its divisions worldwide to operate using the same business model. In an ideal world, that should work. However, it isn’t practical to have such uniformity in the real world.

Well Thought-out Strategies

Because of the uniqueness of GUESS’s operations, they came up with two strategies that made the company grow rapidly. The first was to create a core global product line that primarily included denim apparel, and then they’ll augment it with a set of localized products for every market they operate. Secondly, they choose to centralize the product sourcing system. 

That way, they could reduce the number of vendors to only the reliable ones. They treated them more like partners and expected, in return, that these vendors maintain a high standard in terms of quality, pricing, and, most importantly, on-time delivery. This strategy resulted in an increase in order and reliability—forming a grading system for the vendors and making the company grow and become dependable.

Using High-End Technologies

GUESS employed Dassault Systèmes’ ENOVIA solution to handle PLM (Product Lifecycle Management) and ENOVIA Apparel Accelerator for Sourcing and Production. They assigned all style numbers in ENOVIA, so there were no longer issues of style duplication. They pushed the style data into the ERP systems, and each region independently executed its transactions. At the end of the process, the data definitions and standard style numbers allow the data to be recombined in the data warehouse for easy and quick reporting. That’s one way they ensured the commonality of data and its low risk and cost-effectiveness.

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GUESS also brought the vendors into the PLM system to improve accuracy further. So, if a vendor wanted to get information on the trim of fabric, they could send an e-mail having the word “Templates.” Therefore, the function in the PLM made requesting fabric information uncomplicated. Vendors had to click on a link, log on, and enter it directly. After the pilot project, they trained vendors on how to enter the trim, fabric, and costing information.

After performing it in ERP, they moved it to PLM to facilitate the what-if analysis. The PLM system produced the cost estimate. It allowed designers to gauge the cost at the early design stage—without the style attributes, etc. The costing in PLM also made it simple and easy for designers to experiment with various versions of the style, and then they decide which one to keep afterward—based on the cost estimates. The PLM was the playground before all the data elements were entered into the ERP—that is, after designers were sure the style could be adopted. The strategy helped GUESS a lot in terms of productivity.

Going Mobile

Along with the use of various disparate operations, GUESS is keen to implement an advanced-technology initiative, including the creative use of mobile devices. A typical example includes the daily push of Business intelligence reports to managers. Therefore, they get to see what the store sells for each day at a glance. It also indicates margins, conversion rates, year-to-year comparison, traffic, and planned-to-actual comparison.

There’s also a new iPhone application that customers can use to create virtual closets of their favorite outfits before purchasing them. Store personnel can also use a mobile POS to pre-process the customers if the line gets too long. They scan the items while the customers are waiting in line, and the customer only has contact to the checkout counter to pay and wrap the things.

Assortment planning, Traffic counting, Loyalty programs, etc.

GUESS uses daVinci’s assortment planning solution to do assortment planning to replace the Excel they were using initially. Now, the process is automated—the pilot test worked well, and stores across Europe currently use them. The ShopperTrak solution also helps to count retail traffic against each period. It helped to understand the sales fluctuations and know the correct number of personnel to hire per period.

Conclusion

GUESS History contains a depth of resilient desire to be successful and sustain it for a long time. So far, they have succeeded in overcoming the obstacles and beating through the hurdles by developing effective and efficient strategies. That’s why the company is a perfect case study for how to remain relevant and thriving in the modern-day retail business.

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GUESS History Case Study- The Whole Story Retail business can be challenging; however, we see strategies that make for success in this kind of business environment through GUESS history. Check out some of these strategies here.
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