Growth of the Group’s own retail business online and offline via omnichannel offerings
Extension of the Group’s own retail business through omnichannel offerings
Over the past few years, HUGO BOSS has comprehensively realigned its business model with the requirements of the Group’s own retail business. By enlarging this distribution channel, the Group is able to present and sell its brands and collections to optimum effect without relinquishing its established wholesale business. HUGO BOSS is responding to growing customer expectations of seamless cross-channel shopping and brand experiences by stepping up its omnichannel activities. In light of new openings, productivity gains and takeovers, the Group anticipates that the share of sales contributed by its own retail business will climb to at least 75% by 2020 (2014: 57%).
Sales by distribution channel (in %)
Further expansion of store network
The Group sees good opportunities to increase its global market penetration by opening new stores and shop-in-shops. In this connection, the main focus will be on expanding the portfolio in metropolitan regions, which account for the bulk of the global luxury goods business. Although the rate of expansion will gradually slow compared with earlier years, the Group now sees the possibility of profitably operating larger stores than in the past due to the breadth and quality of its offerings. In addition, it is increasingly making use of opportunities to renovate and/or expand successful stores to further improve their economic performance.
Takeovers remain an important growth driver
In addition to opening new stores, the Group is also considering the takeover of stores that are currently operated by franchise partners, depending on the attractiveness and growth prospects of the relevant market. Independent management of shop-in-shops currently run by wholesale partners is another means of enhancing the attractiveness of the brand presentation and tapping additional sales and earnings potential. The Group believes it can significantly increase the sales productivity of the stores it takes over by autonomously selecting the product range, using its own specially trained sales personnel and assuming responsibility for replenishment.
Expansion of omnichannel offerings driving online and offline sales growth
Over the last few years, HUGO BOSS has boosted its sales significantly in both physical retail and online business. Moving forward, it will create closer links between these two channels to offer consumers a seamless, integrated brand and shopping experience. In a first step, HUGO BOSS acquired the online store front end from its former fulfillment partner at the beginning of 2014. Following on from this, it completely overhauled the hugoboss.com website and integrated the online store and brand world in the same year. In 2015, new features will be gradually introduced to further improve the online experience and user-friendliness of the store, so that a digital flagship store is created. In addition, the Group is investing in cross-channel customer relationship management in order to address consumers personally and on a targeted basis. Finally, the acquisition of crucial elements of the e-commerce value chain, particularly in the IT and logistics areas, at the beginning of 2016 will make it possible to offer omnichannel services such as “Click & Collect”.
Wholesale still an important distribution channel despite declining proportion of sales
Based on its customer relationships in the premium and luxury apparel segment, which it has built over decades, and its brand attractiveness, the Group is confident it can continue to offer its department store partners a convincing product range, best-in-class service and a high level of supplier reliability, and increase its market share in the process. In addition, the Group is expanding its business with specialist online retailers committed to high-quality brand presentation to leverage penetration advantages and to obtain access to new consumer groups. However, takeovers will exert pressure on wholesale sales. Moreover, HUGO BOSS assumes that business with specialist stores, which are frequently owner-run, will contract. In sum, it therefore expects a decline in the proportion of Group sales contributed by wholesale.