You know times are tough when high-end brands rein-in their store opening plans and start talking up their web strategies instead. The latest to do so? Hugo Boss.
Because the Chinese and US markets will remain challenging next year, the only locations to get shiny new stores will be top global ones. Meanwhile, the digital business, which is more profitable, will be expanded faster than physical stores.It makes good business sense. The luxury sector lags its middle- and mass-market peers in maximising digital, even though the high-spending customer is just as digitally focused as those more driven by price.
Hugo Boss, which boasts Jason Wu as its womenswear designer, will still open stores (about 10-15 a year rather than the 20 it has averaged in the last half-decade) but expects tepid sales growth next year as tough times in China and the strong dollar hurt turnover into two of its key markets.
This places even more of a focus on a good digital strategy. CEO Claus-Dietrich Lahrs said the second-tier regional hubs that luxury has spread into over the past decade “will lose interest for our industry long-term,” as e-commerce becomes more prominent.
Hugo Boss’s e-sales are currently growing at double-digit rates and Lahrs expects this to continue.
To achieve it, the company will continue to make major investments in its online ops with e-commerce logistics going in-house next year and the entire business being better integrated. Yes, luxury is finally realising that omnichannel is key.
That will mean simple-but-attractive features like collect (and return) in-store, something mass-market retailers have found beneficial for some time. At the moment, Hugo Boss offers several delivery options but ‘express’ costs just shy of £20 and takes one-to-two days. I’ll be watching this one with interest.