Hugo Boss explains focus areas of digital transformation

Hugo Boss has explained the opportunities in its online business and focus areas of digital transformation in its annual report for 2018.
Hugo Boss digital transformation
The Hugo Boss Group plans to quadruple its sales in its own online business by 2022. Hugo Boss has increased the number of employees to 14,685. The increase in the number of employees reflects the Company’s increased activities in the areas of retail, IT, digital and own production.

Hugo Boss said its online channel is expected to contribute to its objectives in the coming years, in particular by expanding the concession model and fully utilizing the potential in the Group’s own online store, hugoboss.com. Its own online business grew 26 percent during the first quarter of 2019.

Digital transformation offers attractive possibilities for sustainably increasing customer value and for improving efficiency. Hugo Boss is building on its IT and logistics capabilities as part of the digital transformation plans.

The company is increasingly developing its products digitally. In particular, the use of digital prototypes helps to shorten development times. The high degree of detail provided by 3D virtualization permits a realistic depiction of colors and contours. The company has digitized the product development of parts of the HUGO collections. Hugo Boss will expand this new technology to the BOSS brand as well.

Moreover, through the increased use of tools for digital trend recognition as well as a digital fabrics and trimmings database introduced in 2018, Hugo Boss expects to further shorten the collection development phase in coming years.

Hugo Boss is focusing on the digital transformation of its largest production plant at Izmir in Turkey. The company has done digital networking of all production machinery, employees, processes and products. This allows the real-time tracking of various production data. Digital networking with suppliers reduces lead times and ensures uniform product standards.

Hugo Boss relies on a uniform modern IT platform and automation at its distribution centres. The company has connected both the three distribution centres located in proximity to its headquarters in Metzingen for hanging goods, flat-packed goods and its European online business, as well as logistics facilities in Midway, Georgia, United States to the Group-wide ERP system.

Digital systems optimize inventory planning in the Group’s global retail business giving the company an integrated view of the inventory flow and allow it to align inventory planning with customer demand.

Hugo Boss can optimize on the basis of the capacity of individual stores, the characteristics of the specific locations and the individual product life cycles. Hugo Boss will re-allocate goods across different regions and channels by achieving more flexibility in the inventory flow.

Hugo Boss will keep around three-quarters of the marketing budget to digital marketing channels vs around 70 percent in 2018. Hugo Boss will be using advanced analytics. The newly launched store concepts for BOSS and HUGO, which differ substantially from the old one due to the integration of omnichannel services, are designed to offer customers an improved shopping experience.

Hugo Boss is relying on large touch screens for customer advising. Digital channels also extend the aftersales services on offer.

Hugo Boss is also advancing digitization in its wholesale business. The company is already relying on a digital showroom in the distribution of the HUGO collections. This offers wholesale partners a flexible, convenient and fast alternative to conventional ordering, covering such aspects as the inspiration for the collection, the selection of individual products and the completion of the ordering process.

Hugo Boss said its online business posted sixth consecutive quarter of double-digit growth in Q1 2019. In addition to the growth in hugoboss.com, the expansion of online concession also contributed to this development.

Hugo Boss has increased retail productivity by 3 percent on a 12-month rolling basis in the first quarter of 2019, driven by the rollout of new store concept as well as various initiatives to optimize store network, including rightsizing or relocating some of the stores.

Administration expenses of Hugo Boss increased 10 percent in the first quarter, mainly due to digital investments aimed at driving the digitization of business model.

Rajani Baburajan