Developing Global Fashion Brands

Boss

Continuous innovation and the nurturing of staff and sponsors are crucial in keeping a fashion brand fresh and relevant. Hugo Boss shows us how.

To successfully sell a fashion brand you need to tell a story, sell a lifestyle. The Hugo Boss brand does this by selling culture and lifestyle through the sponsorship of sporting events and by diversifying the brand into distinct categories, but the company has an equally enthusiastic policy on giving back to its employees. For a brand to grow internationally you sometimes need to trust in invisible relationships that you’ve set up with people around the world. This is where putting staff first has paid off for a company such as Hugo Boss, who have instilled a family-centred approach to business.

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A fantastic work environment at their head office sees a creche for working moms, designer furniture throughout the workplace, an in-house gym, a restaurant and communal roof top terrace, to name a few. For people working at Hugo Boss its more than just a job, it becomes your life and that is why the brand is so successful, it identifies with what you do, it’s real and honest, it touches peoples lives. There are plenty of other firms where you might make more money, but the company has perfected the art of customizing employees personal needs to those of your work. Small things, such as allowing staff to fit in a run along with their lunch between 12pm and 2pm, followed by a shower at their in-house facilities, can make the difference between devoting yourself to the brand and begrudging it. Many fashion houses have produced the latter by watching over employees shoulders and demanding things are done according to their time schedule.

This low hierarchy approach has turned employees into a loyal and devoted workforce, with a realization that they (and they alone) are responsible for their departments success or failure. The unwritten rule with this soft management style is that no other manager or department head will ever take any responsibility for your actions. While very empowering when you’re winning, it does not bode well for when you’re not.

However, having managers who need to check on managers, who in turn need to check on others, creates a bloated payroll of unnecessary employees. Hugo Boss prefers to invest more power in fewer hands and the formula seems to be working. They believe in their employees and seek people who are prepared to take on serious responsibility and have somehow made the people who work for them feel that it’s a privilege to sell the Hugo Boss range. The selling power of the brand globally has been strong and Hugo Boss now has licensing agreements with companies worldwide to produce branded products. These include agreements with Samsung and HTC to produce cell phones, C.W.F. Children Worldwide Fashion SAS to produce children’s clothing, Procter & Gamble Prestige to produce fragrances and skincare, Movado to produce watches and Safilo who produce sunglasses and eyewear.

Hugo Boss currently has at least 6,102 points of sale in 110 countries and directly owns over 364 retail stores with over 1,000 stores and shops owned by franchisees.

Hugo Boss used to be a menswear label only and originally made a good suit, shirt and tie. Founded by Hugo Ferdinand Boss in 1885 in Metzingen, Germany, its head office is still located in this small town 30km south of Stuttgart. Two of Boss’s grandsons, Uwe and Jochen Holy took over the business in 1967, 19 years after the death of Hugo Boss in 1948 and the brothers ran it like a family business, never keen on the idea to list the company publicly. Inevitably, they recognised the need to grow the business beyond what they could manage and did what was best for the brand. In 1985 the company was floated on the stock exchange and renamed Hugo Boss AG. In 1991, the Marzotto textile group acquired a 77.5% stake for $165 million Marzotto spun off its fashion brands into the newly created Valentino Fashion Group in 2005.

Once the company had gone public it diversified into business units, each focussing on a particular market segment. Boss Black is men’s suits and business wear for women, Hugo, defined by its red box with black text emerged as a younger, sportier image, its Orange label was developed as sportswear for men and the Green label was launched as active wear, personified by sports such as golf and Formula One. A key strength of Hugo Boss has been developing its strength in its home market Germany first, before expanding abroad. Getting the brand to work locally first and then sending local people out to explore all the main markets is a good strategy. This entailed travelling to key global markets twice a year to explore the potential for growth. Where the market was sustainable Hugo Boss started with creating subsidiary companies. Markets that weren’t that big were penetrated through a network of distributors and direct clients or customers.

A Global research company did a study for Hugo Boss over ten years ago and decided South Africa was not yet ready for a subsidiary company, the market was just too small. Political factors at the time also played a role in this decision, which have of course changed substantially since then. Without a big presence in Africa, the brand has been confined to pockets of international consumerism, such as airport duty free zones and major shopping malls which attract an international crowd. One of the surprise success stores for Hugo Boss in Africa has actually been in Luanda. When the first Angolan duty free store opened a few years back, it was the most profitable. Two of the biggest Hugo Boss clients in South Africa are The Power of Trading (Pty) Ltd and S. Surtee Esquire (Pty) Ltd who operate Boss Black and Hugo shops.

An expansion into Russia and China has also taken advantage of a growing trend in people wanting to dress up again. From 2003 people started dressing very casually and recently the trend has been to dress smart, not only for work but for private functions too. With fluctuating trends a fashion house needs to think much the same as stock brokers with a portfolio of shares, a spread of shares across range of different products ensures you will always have some winners. A variety of products also allows one to quickly tap into where the trends lie.

Hugo Boss is an honest product. If you buy the brand it makes you look and feel good. This is the key to fashion, much like any good venture – having great ideas which can be turned into a successful business.

Many people are under the illusion that fashion is so glamorous and must be the best job in the world. They think we wake up to Champagne instead of coffee every morning, but anyone in the industry will tell you otherwise. There’s plenty of emotion in turning an idea into a successful product which in turn can generate a huge amount of turnover. In addition to that the next challenge in fashion is around sustainable business practice, with consumers asking questions around where the raw material comes from or who is making it.

A more interesting question might be around how a fashion label becomes involved in Formula One, golf and sailing, when its not strictly a sports apparel company. In 1995, incoming CEO Dr Bruno Sälzer, a big sports fan, looked at key sports which would best suit the Hugo Boss brand. This included boxing greats, the Klitschko brothers, who projected an educated and engaging image, far beyond the usual raw aggression found among other boxing legends. Their personalities, athletic prowess and their show of strength where the perfect qualities for the clothing brand.

When it came to sponsoring Formula One it was all about the image of speed. The branding of cars, race suits and helmets was all in pursuit of attracting men to the Hugo Boss brand. Many brands have now adopted sport as an advertising platform, but for Hugo Boss it’s always been more about the individual sportsmen than the sport itself. The right person needs to be aligned to the brand and in the case of Formula One someone like Mika Häkkinen also needed to attend Hugo Boss events too, including the Christmas party. This was less about being paid thousands of Euro’s to do so but because they were made to feel part of the brand. It’s more about fostering a feeling of family within the company – true to the brands original, family-owned beginnings.

 

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This win-win situation with celebrities is where South Africa might learn a few lessons. Here minor celebrities demand large amounts of money in advance just to show up. Celebrity sponsorship here needs to develop beyond the money to a mutually beneficial one – one in which the money will automatically flow if managed correctly.

Other brands have caught on to the value of associating themselves with sporting events, sometimes in bizarre and wonderful ways. For the Soccer World Cup in 2010 Louis Vuitton unveiled a leather-bound carry case for the FIFA trophy to ensure that it travelled to South Africa in style. The travel case was handed over by supermodel Naomi Campbell and was covered in the trademark Louis Vuitton logo.

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Luxury brands are now firmly tapped into sports teams and personalities, as a way of reaching huge numbers of sports fans around the world, who’ll hopefully translate their passion for the sport into an affinity for the fashion brand.

The association of sports with fashion labels was one of the first ways luxury brands made themselves accessible to ordinary people. This ‘democratisation’ of fashion has now been developed in other ways too and making designer brands available to the masses is another way luxury brands have broadened their reach. Well-known luxury designers who produce
an affordable range for a chain store have now become commonplace.

A recent partnership, for example, between Sony Pictures, producers of the hit film The Girl with the Dragon Tattoo, and Swedish retail store H&M, saw renowned stylist Trish Summerville designing a range of outfits for the store based on her styling of the main movie’s character, Lisbeth Salander.

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A big concern for many fashion retail stores over the last few years has been the threat of online sales. In this battle between ‘man and machine’ how will this change the way we shop?  Retail on the ground, in brick and mortar stores, shouldn’t be going anywhere soon. People are still seeking a three dimensional experience and human interaction is still so important. You might compare this to art exhibitions when the internet first started. People were asking why it was necessary to view artwork on a wall when you could easily do it online. There was also a concern that people wouldn’t meet anymore because the internet would cater for all our needs.

With everything becoming increasingly electronic  and impersonal the chances for stores and boutiques  to capitalise on this is huge. The secret is to give shoppers something they won’t get online, such as telling customers how beautiful they look or an opinion on what colour suits them best. It costs money to do this and what we’re seeing now is the fragmentation of large retail stores, where individual brands have their own space and own attendants who are passionate about that brand. This creates variety for the department store, a highly focused area for your brand and the collective foot traffic of customers drawn to many brands under one roof.

Shop assistants need to try harder, not going for the ‘cold sell’ but rather aiming to change the consumers life by touching them emotionally in a way that makes them feel better. Not anyone can sell. A key element for stores is to be aware that they are up against innovative sales techniques online in the form of exciting websites with beautiful pictures and  enticing sales messages. If a shopper in a store isn’t made to feel as excited, they’ll simply choose the convenient online option. Whether you choose to be online or on the main street ensure that you do it well.

Overall, fashion buyers should be taking more risks now, buying things people don’t have yet. Exciting combinations of luminous colours combined with more staid, business grey would be an example.

Fashion is becoming increasingly important to people, not in a glitzy way, but more as a way of  reflecting their personality.

 

Annette Pringle is cofounder of The Fashion Agent, a leading wholesale fashion agency which supports South African designers and manufacturers. She is former Fashion Brand Manager of Hugo Boss Woman.

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