Everyone Is Trying To Buy A Bag Of Hugo Boss. How Do You Brush Your Face?

Hugo Hugo Boss AG is no stranger to Chinese people. A long time ago, the group was regarded as a "boss card" by focusing on selling high-end suits and brand synonyms for successful people. Not long ago, its brand Boss released the 2020 early spring series at the Shanghai oil tank Art Center. The bright fluorescent color and the AR expression filter on the social media before the show "Boss love Shanghai" brushed the screen -- this is different from the "bosses" who used to be so taciturn in the past.
Mark Langer, group chairman and chief executive officer, said: "the purpose of our series is to achieve a kind of" intellectual integration "and get out of the traditional concept of confrontation between two aspects of formal dress or leisure. The Bauhaus architecture inspired men and women stripped almost all the redundancies this season. Although the opening style is still Boss's iconic tailored suit, lightweight suits, windbreaker and Cuban collar shirts continue to highlight the creative direction of Ingo Wilts, the chief brand officer, to make Boss light and fast.
It is not just the Boss fashion series that wants to be lighter and faster, but also the whole group behind the brand. With the dramatic changes in the rules of the luxury goods industry, the impact of Hugo Boss AG is not small. Shortly before the big show in Shanghai, the company issued a profit warning for the second time in two months. Its sales volume is expected to grow in a low single digit figure in the 2019 fiscal year. The group also said its operating profit in 2019 will drop by 5% as compared with last year. After that, the group's share price fell 13.45%, falling to its lowest level in nearly ten years.
The Mark Langer, which took office for three years, is the one who has been challenged and tried to make the group "lightsome".
Efforts to return to orbit
Since the chairman and chief executive of the group took office in 2016, the former McKinsey consultant and group chief financial officer first announced the reduction of investment in the luxury sector and transformed it into a "high-end fashion group". When it comes to cutting off ties with luxuries when it comes to taking office, Langer said, "I won't say that, but what we do is to maintain consistency in the global market after the adjustment of the brand line. For example, we increased the price in some European markets and made some reductions in some other markets."
Based on this market position, he has weakened the creative position of star designers in recent years (Boss dress has asked Wu Jigang Jason Wu to design), removed and integrated sub brands, adjusted prices, cut down the huge number of stores in the US and China market, reduced inventories, and promoted the development of line businesses and Asian businesses. In addition, the intellectualization of the group plant and the shortening of the lead time and the use of Digital Showroom also play a role in the supply side.
The brand lines that were originally distinguished by color and easily confounded were highly concentrated. This Boss in Shanghai is one of the two major brands of the group. It continues the tradition of business group suits and joins sports and leisure products to meet the needs of core customers. The other brand is aiming at a more fashionable style Hugo to attract young customers. Formerly used Orange and Green secondary lines were abolished. Women's clothing business is also divided according to the two brand lines of Boss and Hugo.
The two major brand lines have been adjusted. Simply using "formal dress" and "leisure" to summarize today's group double brand line management ideas may not be accurate. Langer refers to the recent observation of men's clothing floors in top European department stores. Nowadays, the boundaries between men's clothing and casual wear have been very vague. Boss and Hugo's separate stores operate separately, providing tailoring services to customers from tailoring suits, shirts, ties, T-Shirts, trousers, leather goods and footwear.
"Leisure and formal dress are not two choices. I think a combination of wisdom and understanding is the key to seizing these two market segments," Langer said.
These efforts brought the group through a "successful 2018". In a letter to shareholders, Langer said that sales increased by 2% to 2 billion 796 million euros over the same period, and the first breakthrough of the 100 million euro Mark's online business and strong Asian business became a highlight. A year ago, the group also announced a strategic plan, which aims to increase sales by exchange rate of 5% to 7% by 2022.
The crux of positioning adjustment
The core business Boss brand, which occupies a larger proportion, still attracts customers who want to be rational and want to get high-quality men's clothing products with clean and clean tailoring, fit, real wear and cost-effective. Meanwhile, its Made-to-Measure customization service is the core of brand differentiation. But compared with competitors, in China, the cleverly linked relationship between Boss and younger, fashionable or interesting is weaker, and more is associated with "high-end", "suit suit" and "luxurious formal dress". At the same time, Hugo may also be challenged by tide cards, and the sense of existence is not strong. How to coordinate the series of creative breakthroughs and product attractiveness seems to be one of the main sticking points.
This may also be related to the positioning and image of Hugo Boss AG in China. "Especially in China, our daily operation has adopted relatively higher pricing, more luxury goods, and even the Chinese market is the nearest location for luxury goods in all our markets," Langer said. "Our Chinese customers are particularly fond of products on our high end range. China is the largest sewing suit and custom market. We will compete with brands like Zegna here. "
Bloomberg columnist Andrea Felsted believes Langer may be too optimistic about the outlook. He points out two weaknesses of the group: first, 90% of the group's sales come from clothing, and clothing is more vulnerable than leather goods. Today's luxury group's profits depend heavily on these more profitable and popular leather products, especially for the middle class and young Chinese consumers. Second, brand positioning of high-end brands, rather than high luxury brands, in the face of political and economic instability, very rich consumers are more flexible than those who are "easy to get".
Langer realized this. He said: "no matter what age consumers are, the materials, processes and details of products are the most important. This is the cornerstone of the success of all fashion brands. " He also mentioned that the leather business of the group has now become an important breakthrough. Luxury sports shoes become the third main products of western style clothes and casual wear.
Capture of young Chinese customers
The group said that the downward outlook was attributable to the poor performance of the North American market and the deteriorating retail situation in Hongkong. Its sales in the United States account for about 15% of its total sales. Because of the strong US dollar, the huge discount of competitors and the reduction of tourists, it has made a great impact on it. However, the group has only 2~3% sales from Hongkong, China. Compared with 6~7% in mainland China, Hugo Boss AG should have a bigger buffer zone than other luxury brands that can make up for Hongkong's losses in other markets.
Langer realized this and led the group to focus more on the development of mainland business: as the "millennial generation" market in mainland China has become the main consumer group of group services, Langer said they are adopting more yuan marketing and communication methods, trying to unify Boss's market activities and brand language, and focus on how to present them in social media. In addition, its brand is mainly through the brand ambassador, the joint capsule series, the art fund and exhibition support, the digital content digital marketing strategy based on the continuous content flow, and so on. The screen of "Boss loves Shanghai" is an example.
"Our CRM system plays an important role. People are bombed all day by information from a large number of brands, and our communication with consumers in social media is to provide something valuable and valuable to them, "Langer said." the use of these technologies enables us to know where consumers are interested, and then have a definite purpose.
For Boss and Hugo, to find out more interests of Chinese menswear consumers (including women's clothing business that currently occupies a small part of the group), how to adhere to the exquisite men's fabric and tailoring process and high cost performance, and further open up the situation with vivid and powerful brand communication? Hugo Bosse group needs to make greater efforts to relocate the brand positioning and innovation in the global market.
In its announcement, Langer stressed that the group's EBIT target of 15% of the profit margin remained unchanged, and pointed out that the profitability of the structure should be improved. His prescription to the group, which is clear and concise, is still very logical, but because of the uncertainty and weakness of the market, the rules of the luxury market have been continuously subverted, and his 2022 plan is still in urgent need of testing.
"In the US market, we still need time to rebuild our strong position," Langer said. "At the same time, we have great confidence in the Chinese market, there are many opportunities, and many doors are waiting for us to push."