Markle puts sparkle back as Hugo Boss plays catch-up
When Meghan Markle graced the English town of Chichester with a royal visit last month, her forest-green outfit lit up Instagram. Within minutes, the €521 lambskin pencil skirt from Hugo Boss sold out online.
The Duchess of Sussex's choice of wardrobe was a coup for the German company, better known for wrapping businessmen in grey suits and sensible shirts.
The episode revealed several key things, according to Hugo Boss chief executive Mark Langer: consumers are finding inspiration online, they want instant gratification, and Hugo Boss is still behind the curve when it comes to addressing those two points.
"We took some inspiration from companies that are faster than us," Mr Langer said in an interview in London. As brands from Dior to Burberry woo younger shoppers with flash sales and social media hype, the staid German label needs to harness some of their techniques to compete.
That's why Hugo Boss is experimenting with vegan sneakers made from pineapple fibres or capsule collections that include bomber jackets and sweaters which are made in Germany.
Even the mainstay suit is getting a makeover: there's now a machine washable version; the once-frumpy double-breasted model is coming back; and the company even reissued the white number that Michael Jackson wore on the cover of the 1982 album 'Thriller' - albeit with slimmed-down lapels more in tune with current tastes. There's also no tiger-cub option.
Speed is key to getting consumers hooked on the new trends. The company took inspiration from fast-fashion pioneer Zara, Mr Langer said, even though the Spanish company operates at a much lower price point and could lap Hugo Boss several times with its lightning-fast turnaround.
But the German brand has cut the time to design and develop new collections from eight months to six weeks, using digital tools and skipping fabric-and-thread prototypes.
The next step will be to accelerate manufacturing, Mr Langer said. "We have to recognise our industry has changed," he added.
The company is still recovering from an ill-advised push beyond office wear and into higher-end luxury products that overstretched the Hugo Boss brand several years ago.
Mr Langer has streamlined its stable of sub-brands, pushed e-commerce and scaled back some of the company's bigger but underperforming stores.
He has also shifted ad spending away from magazines and toward online.
One brand that has survived is the Hugo label, which targets a younger clientele with more casual wear.
Among the collections are tops featuring the logo printed in reverse. The company is experimenting with letting buyers choose their own wording as it seeks to lift the share of customised products.
The Meghan Markle episode was also important for Boss in another way, in that it helped position the company away from a predominantly male audience and appeal more to female consumers.
Mr Langer said the female line is an "integral part" of the company, and that Hugo Boss wants to be the number one 'wear-to-work' brand for professional women.
It's all part of an aspiration to lift the company's sales growth from 4pc this year to as much as 7pc annually through 2022.
The new targets are "ambitious" and ahead of projected industry growth, according to RBC analyst Piral Dadhan.
Indeed, Mr Langer's pitch to the investment community at a presentation in London last week was greeted with some scepticism.
The company's shares, which have lost 11pc this year and trade at about half their 2015 peak, were little changed despite praise from analysts.
Mr Langer, who took over in 2016, said he was not surprised as investors will first want to see whether the strategy works.
"Now it's down to execution," the CEO said. "We have to deliver." (Bloomberg)