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Digital transformation of the business model

Digitization of the business model increases customer value and improves efficiency

Digitizing the business model offers HUGO BOSS attractive possibilities for increasing customer value and for improving efficiency. In doing so, the Group is building on its strong IT and logistics platform. The potential for digitizing the business model is to be harnessed along the entire value chain wherever this is economically viable.

Digitization along the value chain (graphic)

Growing digitization of the product development process

The Company is increasingly developing its products digitally. In this connection, the use of digital prototypes is shortening development times. The high degree of detail provided by 3D virtualization permits a realistic depiction of colors and contours. The development of shirts, ties and knitwear of the HUGO brand is already completely digitized. The Company plans to use this technology for other product groups as well. Research and Development

Digital transformation of production

In the production process, the Company is focusing on implementing the digital transformation at its largest production plant in Turkey. On the road towards the “smart factory”, key milestones have already been passed with the digital networking of all production machinery, employees, processes and products. This already allows the real-time tracking of various production data. In connection with sourcing activities, the digital exchange of product specifications with suppliers makes it possible to reduce lead times and ensures uniform product standards. Sourcing and Production

Strong logistics platform ensures smooth distribution process

To achieve efficient utilization of its distribution and logistics capacities, HUGO BOSS relies on a uniform modern IT platform and high-level automation at its own distribution hubs. In addition to three distribution hubs located in the immediate vicinity of its head office in Metzingen for hanging garments, flat-packed goods and its European online business, the logistics facility in Midway, Georgia, United States was linked up to the Group-wide ERP system last year. These modern warehouses achieve high speeds and quality in supplying own retail stores for ready-to-sell articles in particular.

System-based inventory planning ensures orientation to customer demand

In addition, digital systems optimize inventory planning in the own retail business. This gives the Company a fully integrated view of the inventory flow and allows it to directly align inventory planning with customer demand. The range is optimized on the basis of the capacity of individual stores, the characteristics of the specific locations and the individual product life cycles. In the next few years, the focus will be on achieving additional flexibility in the inventory flow so that goods can be reallocated across different regions and channels even at short notice to enhance availability to customers.

HUGO BOSS developing its own digital showroom

HUGO BOSS is also advancing digitalization in its wholesale business. Selected wholesale partners were able last year to order the HUGO Pre-Fall 2018 collection for the first time via a digital showroom specially developed by HUGO BOSS. This offers customers a flexible and convenient 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. The Company is convinced that, moving forward, digital showrooms will substantially simplify the wholesale selling process. Consequently, this technology is to be introduced on a comprehensive basis for both Group brands in the medium term.

Greater use of digital elements in the Group’s own retail business

The use of digital elements is also becoming increasingly more important in the Group’s own retail stores. In particular, 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. In addition to the use of tablets, HUGO BOSS will be implementing large touch screens, among other things, in its customer service, allowing missing sizes and products available in other stores to be ordered. Lastly, digital channels also extend the aftersales services on offer. In addition to the changes to the existing business model, the Group is also examining new business ideas to assess their ability to contribute to future growth.

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