After a great 2010 for Hugo Boss, its UK managing director hopes a plan of attack for 2011 focusing on retail operations and womenswear will maintain the momentum
Bernd Hake is talking about the trend for smarter clothing. He believes consumers are upgrading their clothes and buying smarter, investment pieces - then he looks down at his navy cardigan and jokes: “Maybe not in my collection today.”
That Hake is in a good mood is not surprising. Not only did Hugo Boss’s UK managing director climb 20 places in Drapers’ Top 100 power list last month (to reach number 54), but 2010 was also a record year for the premium brand, as UK and Republic of Ireland sales grew 7% to €83m (£70m).
The new year has also got off to a great start for Hugo Boss, which comprises five collections across men’s and women’s wear including Boss Black, its classic and modern business and everywear range; casualwear-focused Boss Orange; and golf-inspired Boss Green.
The price is right
However, Hake - who spent 13 years at Hugo Boss in Germany and Switzerland before moving to the UK, where he filled the vacancy left by Hans Schmitt when he was promoted to senior vice-president of Hugo Boss Europe and the Middle East [Schmitt has since joined fashion licensing and design giant Warnaco in August 2010] - puts the success down to Hugo Boss’s “consistent price message”.
“First of all, Hugo Boss is a German company and it tends to be very good in its operations,” he explains, paying credence to the cultural stereotype in his thick German accent.
“The whole supply chain from sourcing to sales is done in a very controlled way to keep costs down. We are able to achieve prices that are very competitive due to the fact we are market leaders in premium apparel, so we are able to achieve good prices with regards to sourcing and fabrics.”
Hake moved to the UK from Germany two years ago, but he evidently still thinks in German and occasionally slips out a word in his mother tongue.
“I see the prices for baumwolle… cotton are rising but we’re in a lucky situation as we bought the cotton eight months in advance [when prices were lower],” he explains.
All the same, prices are set to rise. However, Hake is cagey about the details. “There is no clarification as yet in terms of how much. The target is to keep opening price points the same, with middle and upper price brackets increased to suit market trends, but first and foremost to reflect the changes within the product.” For example, there will be more luxurious fabrics used across premium line Boss Selection, he says.
Hake is eager to reassure his stockists these will be at least partially mitigated by cost savings. “We have found opportunities on the supply side to run our operations more efficiently and effectively, which we will pass on to our customers.”
Perhaps more significant for Hugo Boss’s 250 stockists are the company’s UK retail plans. It plans to open five to 10 stores this year, adding to its existing UK portfolio of seven wholly owned shops and 25 franchise stores, 15 of which are run by menswear retailer Moss Bros. It is also likely to expand its etail offer by providing a click-and-collect service.
However, Hake is quick to bat away suggestions the company is moving away from its wholesale roots. “Wholesale still accounts for 70% of Hugo Boss’s UK business. This is a relationship that is very strong and we will not give it away.
“We would not go into [areas] where we heavily compete against our wholesale customers. However, when new opportunities evolve, such as [Westfield] Stratford [where Hugo Boss is planning to take a site later this year] or when we see further business opportunities then we will expand retail.”
Hake says the brand has an advantage in running its own UK retail stores, because it can test what works and use that to shape its wholesale offer.
Feel the love
But as Hugo Boss tries to strike the right balance between opening stores and keeping its wholesale customers happy, stockists’ love for Hugo Boss is loud and clear - sub-brands Boss Black and Boss Orange were the first and second best-selling menswear brands of the year in Drapers’ 2010 end-of-year Indicator polls, beating rivals Paul Smith and Armani.
While Hugo Boss is primarily driven by menswear, Hake’s priority for 2011 is to ramp up womenswear sales in an effort to increase the category’s contribution to UK turnover from 15% to between 25% and 30% within three years.
Hake says Hugo Boss decided to increase the focus on womenswear on the back of good sell-through at its retail stores and its department store stockists, including Selfridges. “It will again be a challenging year because of the political decisions to cut spending and increase VAT. However, brands need to focus on their heritage and what they’re good at. With Hugo Boss this is good quality with a good price. We are confident we will deliver another successful year.”
Rumours suggest Hake could be promoted to senior vice-president of Hugo Boss Europe and Middle East, vacant since Schmitt’s departure. However, Hake is quick to scotch these. “I very much enjoy working with the team at Hugo Boss including our client and business partners, not just in London but across the UK and Ireland. I’m here to stay for now.”
2009 Managing director UK, Hugo Boss
2007 Brand director, Boss Black and Boss Selection, Germany
2004 Global director Boss shoes and accessories, bodywear and hosiery, Switzerland
1998 Business development manager, Hugo Boss, Germany
1997 Brand consultant, Price Waterhouse, US
Which menswear brands do you think are doing well at the moment and why?
Paul Smith is a brand I really appreciate and it is doing very well. It seems Armani is coming back as it is changing its distribution, which will bring prices down. People are looking at its collection.
Who do you admire in the market?
Burberry has done a fantastic job as a brand over the past five years. My [personal] favourite brand is Paul Smith, though.
Why are you bringing in more online initiatives such as click-and-collect?
We want to make shopping as convenient for all our consumers as it can be. We can see that the younger generation is shopping more online. This is definitely something that we need to monitor and find a solution that is in line with our brand message.
Who is your mentor?
My mentor in the past was Bruno Salzer [former Hugo Boss chairman]. I also have a very good relationship with Mr Lahrs [Claus-Dietrich Lahrs, Hugo Boss chief executive and chairman]. These are definitely the two people who have helped me most. Mr Lahrs offered me the job in the UK. This was a really exciting offer and I am glad that I took the opportunity to come here.
How have you settled in London?
I’ve been over here with my family for more than two years. We love London life. There’s always plenty to do and there’s a wonderful vibe here. The three of us have settled in really well.