Strategy

HUGO BOSS believes that the desirability of its brands will be the most important factor in the Group’s long-term success. The objectives of employing the right people, maximizing customer satisfaction and offering the best products in the industry are in line with this fundamental concept and are predicated on profitable growth. The strategic framework for the Group strategy is formed of five attributes: First and foremost, HUGO BOSS wants to ensure that all its activities are consistently aligned in a customer-oriented manner. Taking this as a basis, the Group must act in a digital, agile, sustainable and global manner in all areas. This requirement guides the Group’s specific actions within the following four strategic fields of action.

Realigning the brand portfolio

In order to address customers clearly and convincingly, the Company will only operate with two brands in future – BOSS and HUGO. Through its BOSS brand, the Company reaches out to status-oriented, rationally-minded customers who wish to dress in a classic yet modern and high-quality style. The BOSS customer has exacting standards when it comes to quality and fit, and attaches great importance to an advantageous value-for-money proposition. BOSS offers this customer confident business wear and refined casual wear collections in the upper premium segment, characterized by the highest quality, sharp cuts and clear designs. The previously independently managed BOSS Orange and BOSS Green brands will be integrated into the BOSS core brand as of the Spring/Summer 2018 collection in order to provide the customer with a consistent brand experience for all occasions – business, casual and athleisure. The current BOSS Orange range, which will form the casual collection element of BOSS, will be upgraded and its fashion statement brought closer in line to the BOSS values. 

In contrast to BOSS, HUGO is targeted at customers who are significantly more fashion-conscious and who consider their style of dress to be an important element in expressing their personality. The HUGO customer is open-minded, individual and spontaneous, and likes to shop, frequently doing so via online and mobile channels. HUGO offers this broad and generally younger customer base fashionable business and casual wear collections that are distinguished by their progressive designs and clear fashion statement. HUGO will remain anchored in the premium segment of the market, but will be more differentiated from BOSS in terms of price and fashion statement going forward. Womenswear remains an important part of the HUGO BOSS business. Due to its commercial importance, the Company will, however, once again focus more on menswear than in recent years. The brand’s prices will be around 30% lower than those of BOSS.

Further refinement of the distribution strategy

HUGO BOSS aligns its distribution to its customers’ purchasing behavior. Both brands – BOSS and HUGO – are sold both via the Group’s own retail business as well as wholesale, via both bricks-and-mortar retail and online. The significance of the Group’s own retail business, which generated 62 % of Group sales in 2016 (2015: 60 %), will continue to grow. However, the Group also sees selective growth opportunities in wholesale.

HUGO BOSS is concentrating on improving sales productivity in the Group’s own retail business. The Company has set itself the objective of increasing its sales per square meter by approximately 20 % over the next five years. It intends to achieve this objective by increasing volumes. In addition to changes to the product offering, service improvements also play a major role in the upgrading of the shopping experience in own retail. In addition, omnichannel services are integrating the online offering with in-store retailing. In addition, HUGO BOSS is working to further improve its customer relationship management. HUGO BOSS is also continuously optimizing its store network and the construction of stores to meet changing consumer requirements at the best. The modernization of existing stores forms an important focus of investment activities. The Group also sees attractive opportunities to exploit additional growth potential by opening selective new stores.

The Company sees opportunities to increase its market share with BOSS and HUGO in the wholesale business. In the online channel in particular, the Company sees opportunities for expansion, especially in the form of shop-in-shops on partners’ websites that are operated on a concession model. As a globally active group, the Group’s distribution strategy aims to ensure a globally uniform brand and shopping experience. Where necessary, the Company therefore withdraws from distribution formats that do not meet the Group’s requirements. The Company has also undertaken extensive measures to align its global sales prices more closely.

Digital transformation of the business model

Digitizing the business model offers HUGO BOSS attractive new possibilities to increase customer value and improve efficiency. In doing so, the Group is building on its strong IT and logistics platform. The hugoboss.com website is at the heart of all the Company’s digital activities. Its purpose is not only to sell products, but also to serve as a medium to inspire, entertain and advise interested visitors. In addition, the increasing offer of omnichannel services closely integrates the site with the bricks-and-mortar retail operations and so leads customers to stores. In order to take account of the increased proportion of users visiting the site from mobile devices, HUGO BOSS also launched an iOS app in October 2016. The app will be continuously developed and supplemented with new functionalities over the course of the year 2017. In addition, the user friendliness and technical performance of the hugoboss.com website are to be enhanced in order to put the e-commerce business back on track for growth.

Over the long term, the potential to digitize the business model along the entire value chain should be utilized wherever it is economically viable. The digital exchange of product specifications with suppliers provides an opportunity to reduce lead times and ensure uniform product standards. In the long term, digital showrooms will be able to simplify the process of selling to wholesale customers. The use of digital elements is becoming ever more important in the Group’s stores. In addition to the use of tablets to advise customers, large touchscreen displays will be tested in selected pilot stores in the year 2017, allowing customers to order missing products and combine different styles. 

Active transformation of the corporate culture

HUGO BOSS must always meet the ever-increasing demands of its customers and master the challenges of technological upheavals. To keep pace with these changes in the market environment and remain successful in the long term, HUGO BOSS is working on an active transformation of  its corporate culture. The Company wants to encourage its employees to embrace change in order to realize their own potential and create additional customer value. This requires the abandonment of complex organizational and reporting structures and the establishment of an environment that encourages innovation and forgives mistakes. In 2017, HUGO BOSS will focus its efforts on driving this transformation forward by providing suitable concepts and instruments in human resource management. Speed often equates to economic success in the apparel industry. HUGO BOSS is therefore endeavoring to create its collections more quickly and flexibly. The Company is therefore complementing its regular development process with a “fast track” concept that will permit adding products to its collection based on short-term trends. It will also enable the restocking of top-selling items within the season. 

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