Hugo Boss digital transformation improves business efficiency

Hugo Boss CEO Mark Langer has revealed how the fashion retail company is creating business efficiency by making investment in digital transformation.
Hugo Boss digital transformationJosef Richter is the CIO of Hugo Boss, responsible for the execution of digital transformation programs.

Hugo Boss recorded strong double-digit growth in its own online business and achieved sales of more than €100 million in 2018.

“We increasingly develop and distribute our collections using digital tools. This enables us to respond faster to changing market trends. This is particularly true for HUGO, our digital speedboat, where product development for certain parts of the collection is fully digitized already,” Hugo Boss CEO Mark Langer said

Hugo Boss relies on the use of digital showrooms, which have been in operation for the HUGO brand since the end of 2017, for distribution for wholesalers. Digital showrooms allow wholesale customers to browse the HUGO collection and place orders directly.

The company provides seamless shopping experience at physical stores thanks to a large number of digital services across all distribution channels.

Hugo Boss said its operating expenses will increase moderately. First positive effects from the efficiency program will be largely offset by further digital investments including the expansion of the concession model, as well as the rollout of the website to new geographies.

Hugo Boss expects capital expenditure to increase to €170-190 million due to investment in own retail business and IT-infrastructure. Investments in IT-infrastructure will mainly focus on further strengthening the online business, and expanding digital brand communication and CRM capabilities.

Hugo brand will play a key role in driving the digital transformation of Hugo Boss. After introducing the digital collection in 2018, the company will extend the digitally developed assortment this year.

“By year-end, we are targeting up to 10 percent of HUGO’s total collection to be developed digitally. This compares to 1 percent in 2018 and is consequently a major milestone towards commercial reality,” Hugo Boss CEO Mark Langer said.

The company will expand to additional geographies including Scandinavia and Ireland markets in the second half of 2019.

Hugo Boss sales rose 2 percent to €2.8 billion in 2018. Hugo Boss said administration expenses grew 4 percent, reflecting investments in the digital transformation of its business model.

Hugo Boss has reported €489 million of EBITDA before special items due to investments in product quality and in the digital transformation. Hugo Boss CFO Yves Muller is driving the company’s cost optimization initiatives.

Rajani Baburajan

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