THE HUGO BOSS BRAND Analysis of Product /commercialization

strategy. Study of HUGO BOSS-Pending season.    

PRESENTATION OF THE BRAND/COMPANY.   “Considerable sales and profit increases underline the success of our strategy in the last years,” says Claus-Dietrich Lahrs, CEO of HUGO BOSS AG.

The HUGO BOSS Group is ONE of the market leaders in the premium and luxury segment of the global apparel market. The Group, which is based in Metzingen in Germany and employs a workforce of almost 12,500 people, generated annual sales of EUR 2.4 billion in fiscal year 2013 and is among the world's most profitable apparel manufacturers of the apparel market.

The Group focuses on developing and marketing high-end women's and men's fashion and accessories. With its brand world including the BOSS core brand, the lines BOSS Orange, BOSS Green and the progressive brand HUGO, HUGO BOSS targets different, clearly defined consumer groups. The brands cover an extensive product range consisting of classic-modern business wear, elegant evening wear and sportswear, shoes and leather accessories as well as licensed fragrances, eyewear, watches, children's fashion, home

textiles and mobile accessories.Intensive marketing activities and the sponsorship of sports

and cultural events enhance the worldwide recognition of HUGO BOSS and the image of its brands. The Company also shines at high profile fashion events in the world's fashion capitals, further emphasizing the appeal and acceptance of the Group's brands among key target groups and emotionally charging the HUGO BOSS brand world.

The HUGO BOSS products are predominantly manufactured by independent suppliers, which are mainly located in Eastern Europe and Asia. The Company sells its products in 127 countries around the world.

Today, consumers can purchase HUGO BOSS products at more than 7,100 points of sale. As a result of moving forward with the Group's own retail activities, the number of retail stores increased to 1,010. The Group currently has online stores in Germany, Great Britain, France, Spain, Italy, the Netherlands, Belgium, Austria, Switzerland, the United States and China.

In addition to HUGO BOSS AG, the Group consists of 54 consolidated subsidiaries that run local business operations. 34 subsidiaries are organized as distribution companies.

ANALYSIS OF THE EVOLUTION OF THE STRATEGIES OF THE BRAND/COMPANY.

Hugo Boss AG is Germany's largest manufacturer of men's and women's clothing and one of the world's leading design houses for men's fashion. The group consists of four major divisions: Hugo Boss AG (company headquarters); Switzerland-based Hugo Boss Industries (the group's second logistics and management center); Hugo Boss Textile Industry (the company's major production plant in Izmir, Turkey); and American subsidiary Hugo Boss USA.

The Hugo Boss line of products includes the three main men's business wear brands--Boss, Hugo, and Baldessarini--as well as the more casual Boss Sports and Boss Golf lines. The company also designs and licenses accessories and fragrances and launched its first line of women's business wear in the late 1990s.

Hugo Boss fashions are sold in more than 90 countries around the world through over 350 mono-brand franchise shops, as well as through upscale specialty stores and retail chains. About 65 percent of the company's sales derive from Europe; Germany is its biggest market and the United States it’s second biggest. The Italian textile group Marzotto owns a 50.7 percent share in Hugo Boss.

1923-45 In 1923, the year when post-World War I Germany was shaken

by high unemployment and hyperinflation, German master tailor

Hugo Boss set up shop in the small town of Metzingen, about 20 miles south of Stuttgart. Boss started out making protective suits for industrial workers and other work clothes for men. Other Boss specialties were raincoats and uniforms. Over the years the tailor's workshop grew into a small factory.

1967-92: MARKETING STRATEGIES.

Hugo Boss entered the German market in the second half of the 1960s, when men’s wear manufacturers were trying to price one another out of the market in order to get a bigger piece of a shrinking pie. Immediately they modernized their production plants and increased their capacities to satisfy the exploding demand during Germany's postwar economic boom.

However, the short recession of 1966 signaled the end of the German "economic miracle." Soon, Hugo Boss started making brown, blue, green, and black suits for men (competitive differentiation). The good-quality, sturdy fabric they used was also made in Metzingen, by textile maker Gaenslen & Voelter. Priced above average (price leader) and cut in a more youthful way than the suits of the German men's wear establishment of the time, its suits and jackets outperformed all their competitors' within just a decade.

Traditionally, German suits for men were made out of stiff and heavy fabrics. At the turn of the decade, however, Hugo Boss introduced new lines of suits made out of high-quality; extremely

light Italian fabrics in fashionable colors and designs and by the 1970s, the company began to charge even higher prices for their attractive new product lines.

After the Boss suit had conquered Western Europe, the apparel maker made the crucial step across the Atlantic. While the unknown German label was met with skepticism when the first Boss suits hit the stores in the United States in 1976, its acceptance grew steadily.

Popularized by the testimonials of physically fit and handsome men such as star actor Sylvester Stallone, top athletes such as the five-time Wimbledon tennis champion Bjorn Borg, and the "swaggering, stubble-cheeked cops of television's Miami Vice in its signature palette of Baskin-Robbins pastels"--as described in Forbes by Joshua Levine--the Hugo Boss look represented the image of the successful professional with a hint of macho. For the youngsters who could not yet afford the broad-shouldered $400 to $500 Boss power suits, the company started making more casual wear such as sweaters and sports jackets in the mid-1980s (Market penetration)

In 1980, Hugo Boss passed the DM 100 million sales mark for the first time. Five years later the company went public, and concentrated on expanding geographically. At the peak of the company's success, in 1989, the Holy brothers sold a big chunk of the Hugo Boss shares to the Japanese Leyton House Group but remained actively involved in the firm's management. In 1991, the

Italian fashion giant Marzotto became Hugo Boss's new parent company (strategic acquisition).

1993-97: THE LITTMANN ERA

Struggling with shrinking profit margins due to the economic recession of 1992, the group hired peter Littman as new CEO of Hugo boss. He managed to put the company back on the growth track in record time. After renaming the company Hugo Boss to soften that "bossy" image, Littmann decided to launch two additional labels besides Boss under the umbrella brand Hugo Boss(product extension), enabling the company to take a more sophisticated marketing approach.

The first new label, Hugo, was aimed at younger professionals interested in trendy fashion who made their own decisions about what to wear--unlike their elder counterparts who reportedly more often than not let their wives make their fashion choices. Hugo suits went for about 10 percent less than the traditional Boss suit, which then cost between $500 and $800. The second novelty brand was named Baldessarini after the company's chief designer of many years.

The Italian appeal of the Austrian native's name was purposefully used to communicate the exclusivity of this new line of fashion, which was targeted at the financially independent top executive who could afford the luxury of a perfectly tailored $1,500 suit made from only the best Italian fabrics. The classical Boss suit

was renamed Boss Hugo Boss and the big shoulders of the 1980s were rounded off.

The three-label strategy was carried out very thoroughly by three separate teams for product development and sales to separate distribution outlets. To clearly distinguish the three new labels, men's fashion retailers had to limit themselves to only the one of them with the highest appeal to the store's core group of customers. In the following years, the range of labels was further diversified, including Boss Golf, Boss Sport, and Boss Black Label.

To further cut production costs, Littman moved abroad half of the manufacturing still done in Germany--mainly to Eastern Europe, where costs were between 70 and 90 percent lower--leaving the share of domestic production at one-fifth of the total. Littman’s bold strategy was doubtfully watched by industry insiders, competitors, and men's clothing retailers. Ultimately, it was a huge success. While total sales declined, profits jumped by 74 percent in 1994, and the year after the launch of the three-brand campaign.

Besides his three-label strategy, Littman focused on expanding the company's global reach. One of the new markets the company focused on was Southeast Asia, where a subsidiary was established in Hong Kong and a number of Hugo Boss stores were opened in urban centers such as Tokyo, Beijing, and Shanghai. By the end of 1996, about two thirds of Hugo Boss's sales originated outside of Germany. The United States accounted for about one-fifth of the total.

1998-2001: THE BALDESSARINI ERA

During this era, optimizing production processes and logistics were key strategic goals. Baldessarini greatly expanded the company's network of outlets to get closer to the customer. Hugo Boss products were already sold in 92 countries around the world. In 1999 and 2000, 130 new Hugo Boss stores were opened, increasing the company's distribution outlets to 300. Hugo Boss's presence in the United States, the company's second biggest market after Germany, grossing about $100 million, consisted of thirteen freestanding Hugo Boss franchise stores and nine shops inside larger specialty stores. Within two years, 23 new stores were opened, not only in cultural centers on the east and west coasts but also in lower-profile locations such as Paramus, New Jersey, King of Prussia, Pennsylvania, and at the Mall of America in Bloomington, Minnesota. In April 2001, the company opened one of the country's biggest designer stores on New York's Fifth Avenue.

Dr. Bruno Salzer succeeded Werner Baldessarini in July 2001. He defined the company's major short-term tasks: to make Hugo Boss's lines for women--which had not been as successful as the company expected--profitable, to expand the company's production facilities and cut costs, and to add new stores to the Hugo Boss distribution network, especially in Scandinavia and Belgium. Looking out into the future beyond 2003, Salzer could see Hugo Boss growing through acquisitions if the company's own organic growth should slow down.

BEYOND THE MILLENIUM: 2001-Date

In this era of hyper competition, increasingly more companies pursue Competitive differentiation by creating brand extensions. Each brand extension Promises to be new, bigger or better, but in reality most of these brand Extensions fail to be unique and to exert a certain appeal to consumers. In these circumstances, competitive differentiation has become extremely important because it can create and sustain a strong competitive advantage. A meaningful positioning strategy creates competitive differentiation by providing consumers reasons to buy the brand.

The apparel industry is the quintessential example of a buyer-driven commodity chain marked by power asymmetries between the suppliers and global buyers of final apparel products (Gereffi & Memedovic, 2003). Global buyers determine what is to be produced, where, by whom, and at what price. In most cases, these lead firms outsource manufacturing to a global network of contract manufacturers in developing countries that offer the most competitive rates.

Lead firms include retailers and brand owners and are typically headquartered in the leading markets—Europe, Japan, and the United States. These firms tend to perform the most valuable activities in the apparel value chain—design, branding, and marketing of products— and in most cases, they outsource the manufacturing process to a global network of suppliers.

STRUCTURE OF THE BRAND – ORGANIZATION OF THE COLLECTIONS

The business activities of Hugo boss consists of various collections under two independent brands. The core boss brand and the trendy Hugo brand constitute two brand worlds, offering extraordinary fashion diversity with a consistently proven high level of quality.

The men’s wear collections is represented by the boss black, boss selection, boss orange and boss green lines and the Hugo-brand. These textile collections are rounded out by shoes and leather accessories. Licensed products such as fragrances, cosmetics, watches, and eyewear complete the Hugo-boss products range.

The success of the Hugo boss group is based upon the perfectly coordinated integration of its divisions. Having a global sales network with excellent market knowledge, automated logistics processes, outstanding product expertise, and top quality fashion make Hugo boss products an ideal business partner for its international customers. Intensive marketing activities and the sponsorship of sports and cultural events enhance the worldwide recognition of HUGO BOSS and the image of its brands. Hugo boss today can be found in 105 countries and at some 5900 point of sale.

FOCUS ON THE MEN RANGE:STRUCTURE OF THE RANGE-THE DIFERENT LINES-THE DIFFERENT KEY VAULTS

The brands cover an extensive product range consisting of classic-modern business wear, elegant evening wear and sportswear, shoes and leather accessories as well as licensed fragrances, eyewear, watches, children's fashion, home textiles and mobile accessories.

The product lines covered ranges from BOSS Orange, BOSS Green to the progressive brand HUGO. All products stand out through the use of premium materials, excellent workmanship and outstanding design. The Company reaches out to consumers with the brands BOSS and HUGO. The BOSS core brand is flanked by the brand lines BOSS Green and BOSS Orange. This setup allows HUGO BOSS to address the diverse attitudes and needs of different target groups. At the same time, this approach ensures a clear brand presence that the end consumer can easily understand.

RESPECT (OR NOT) OF THE CODES OF THE BRAND.  

Like all global industries, the apparel value chain relies on international standards to coordinate the activities of suppliers. By the turn of the century, most lead firms had implemented private standards and codes of conduct based on cost, quality, timeliness, and corporate responsibility in terms of labor and environmental standards (Bartley, 2005; Gereffi et al., 2001). Factory performance is measured regularly, and delivery, quality, and price are tracked over time.

HUGO BOSS AG and the companies of the Group operate in different countries and regions, and, accordingly, different legal environments. At HUGO BOSS, corporate compliance in the sense of measures designed to ensure compliance of the Group and its companies with laws and regulations issued by public authorities, internal corporate guidelines and codes of conduct that the Group is committed to observing, is a key task of management. This includes antitrust and anti-corruption regulations.

HUGO BOSS AG expects legally unobjectionable conduct from all employees in their daily work. A compliance department that reports directly to the chief financial officer as chief compliance officer supports the Managing Board’s monitoring of an effective compliance management. The central compliance office and compliance officers in the Group companies ensurethat the compliance program is implemented throughout the Group and that it has been continually enhanced since its introduction. The Audit Committee is regularly informed about the compliance office’s activities. To ensure the legally unobjectionable conduct of employees and to establish a correspondingbasis, HUGO BOSS has summarized principles of conduct applicable throughout the Group in a code of conduct and more in-depth corporate guidelines.

The code of conduct and the corporate guidelines mainly focus on rules on conduct in competition, on avoiding conflicts of interest, on the appropriate handling of company information, on ensuring fair and respectful working conditions and on anti-corruption. HUGO BOSS does not tolerate

conscious misconduct and persistent infringements of the code of conduct.Employees are continually familiarized with the rules of the code of conduct and the corporate guidelines and thus sensitized to the observance of compliance rules.

To this end, HUGO BOSS holds classroom training and has also set up a worldwide e-learning program that the employees concerned have to complete regularly. The e-learning program is being rolled out to all subsidiaries of HUGO BOSS. Employees can can obtain advice on issues concerning the correct conduct of employees from their supervisors and the compliance officer. As a supplementary reporting channel, HUGO BOSS also established a global ombudsman system. Employees, but also third parties (suppliers, customers), can confidentially notify an ombudsman if there are indications of fraud, infringements of antitrust law or breaches of compliance guidelines. If desired, it also possible to remain anonymous.

COHERENCE (OR NOT) OF THE DIFFERENT LINES TOGETHER.

The BOSS core brand, the lines BOSS Orange, BOSS Green and the progressive brand HUGO, HUGO BOSS targets different, clearly defined consumer groups. The brands cover an extensive

product range consisting of classic-modern business wear, elegant evening wear and sportswear, shoes and leather accessories as well as licensed fragrances, eyewear, watches, children's fashion, home textiles and mobile accessories.

BOSS BRAND HUGO is the fashion spearhead within the HUGO BOSS

brand world. Offering contemporary design trends for business and le i su re , the brand stands for progressive looks and an edgy, urban attitude. The women’s and men ’ s collections consistently set self-confident, stylish accents; shoes, accessories and l i censed fragrances round out the ranges. The BOSS core brand epitomizes authentic, understated luxury.

The men's collection offers modern, refined business- and eveningwear along with sophisticated casual looks and premium sportswear for after work. The unique fits, high-quality materials and exquisite styles help to bring out a man's personality- and give him the confidence that he is perfectly dressed for every occasion.

Shoes and accessories round out the range, supplemented by watches, eyewear and fragrances produced under license.

BRAND LINESBOSS BLACK is the premium line for business, leisure and

events and forms the heart of the Boss brand. High-end accessories and sophisticated licensed products such as watches, eyewear and fragrances round off the range.

BOSS SELECTION is the company's high-end menswear line. Sophisticated design, exclusive materials and traditional tailoring characterize this high-class collection. Watches, accessories and luxury shoes complement the classic suits and outfits. Boss Selection clothing is manufactured in Germany and Italy.

BOSS ORANGE is the company's primary line for casuals and leisurewear for men and women. Bags, shoes, as well as eyewear, watches and fragrances manufactured under license complete the brand’s product range. , BOSS Orange sends an easy-going message. The laid-back lifestyle fashions appeal to men and women who set stock in individuality and cultivate mobility and spontaneity as parts of their personal mindset. Shoes and accessor ies join licensed watches, eyewear and fragrances to perfect the uncomplicated, modern look.

BOSS GREEN is the company's line of sporty menswear. BOSS Green is the active sportswear line from HUGO BOSS that transcends the boundary between modern leisure outfits and performance golf apparel. Linking fashion,

lifestyle and function, the collection delivers distinctive, dynamic looks in impactful colors. Boss Green combines golf, fashion and lifestyle into a single look. Dynamic colors underline the brand‘s look, targeting both trend-conscious younger clientele and the classic sporting man who likes playing a round of golf.

HUGO offers both men's and women's clothing. The company describes the line as having an "unconventional and avant-garde fashion”. The progressive Hugo brand is aimed at trendsetters. The avant-garde women’s and men’s collections are completed by shoes and accessories together with license products such as eyewear, watches and fragrances.

HUGO RED is the fashion spearhead within the HUGO BOSS brand world. Offering contemporary design trends for business and le i su re , the brand stands for

progressive looks and an edgy, urban attitude. The women’s and men ’ s collections consistently set self-confident, stylish accents; shoes, accessories and l i censed fragrances round out the ranges.

Intensive marketing activities and the sponsorship of sports and cultural events enhance the worldwide recognition of HUGO BOSS and the image of its brands. The Company also shines at high profile fashion events in the world's fashion capitals, further emphasizing the appeal and acceptance of the Group's brands among key target groups and emotionally charging the HUGO BOSS brand world. 

COHERENCE (OR NOT) OF THE PRODUCT /LINES WITH THEIR RESPECTIVE TARGETS AND POSITIONING

The HUGO BOSS Group is one of the market leaders in the premium and luxury segment of the global apparel market. The Group focuses on the development and marketing of premium fashion and accessories for men and women. With its brand world, HUGO BOSS caters for clearly defined target groups. The brands cover a comprehensive product range encompassing classic to modern apparel, elegant evening wear and sportswear, shoes, leather accessories as well as licensed fragrances, eyewear, watches, children’s fashion, home textiles and mobile accessories.

HUGO BOSS leverages targeted marketing measures to raise the appeal of its brands. Apart from above-the-line marketing instruments such as print and out-of-home media, the relevant target groups are increasingly reached using digital channels. In light of the expansion of the Group’s own retail business, the importance of point-of-sale marketing is also mounting. Sports sponsorship campaigns focus on premium sports such as Formula 1, golf or sailing that ideally convey brand values such as dynamism, perfection and precision. In its art sponsorship activities, the Group underscores the common ground that art and fashion share with respect to design, aesthetics and creativity.

The Company emphasizes these attributes further with high-profile fashion events in the world’s fashion capitals that raise the desirability and acceptance of the Group’s brands among key target

groups, while adding emotional appeal to the HUGO BOSS brand world.

HUGO BOSS has launched a series of growth initiatives to achieve these goals. The BOSS core brand is to be significantly upgraded, with the aim of gaining a 20% share of sales in the luxury segment. BOSS will reinforce its range of high-quality clothing and sportswear and hone the focus of its brand communications. This refined positioning will mean that the core brand will in future be offered solely in a mono-brand environment, primarily through the Group's own stores.               

COHERENCE (OR NOT) OF THE PRODUCT /LINES WITH THE ENVIRONMENT.   

Environmental and climate protection is given high priority at HUGO BOSS. Against this backdrop, the environmental footprint is to be reduced over the entire value chain – from sourcing of raw materials through to the development and manufacturing of products and on to transportation and retail. HUGO BOSS pursues the aim of significantly reducing its specific CO2 emissions (Scope 1 and 2 Greenhouse Gas Protocol) in relation to sales by 2020. The Group is taking a wide range of measures to this end. For example, the administrative buildings of HUGO BOSS AG already obtain 84 percent of their energy from renewable sources.

Hugo Boss Ticino (Switzerland) has been supplied with electricity stemming completely from renewable sources already since 2010. Energy management to ISO 50001 introduced for HUGO BOSS’ administrative buildings in 2012 was successfully re-audited

in 2013. HUGO BOSS has set itself the objective of continually improving building efficiency. The Group aims to attain recognized sustainability certificates for all newly built operating properties. An important milestone in this respect was reached in 2013.

The German Sustainable Building Council (DGNB) awarded the new administrative building in Metzingen with its “Gold” certificate as one of the three most sustainable new office and administrative buildings in Germany. HUGO BOSS seeks to obtain “Gold” certification for the new flat-packed goods distribution center in Filderstadt as well. Furthemore, the Group has taken measures to reduce the volume of CO2 emissions from logistics and distribution processes (Scope 3). Changes in global transport routes have already brought about a significant reduction in this context. Similarly, the environmental compatibility of the packaging used was subject to critical analysis. As a consequence, the Company will switch over to using a type of environmentally friendly recycled paper (post consumer recycled) for all paper carrier bags of the BOSS core brand in 2014, which means they meet the strictest ecological standards.

In recent years, interest in fashionable clothing has grown considerably, particularly among younger men. More and more men are paying increasing attention to fashionable appearance as a means of expressing their personality or standing out from the crowd. Clothing is also increasingly considered an important determinant of how an individual’s competence in the workplace is perceived by others. HUGO BOSS’ brand commitment to offer fashionable and stylish clothing of outstanding quality addresses

these needs very effectively, so that the Group sees excellent opportunities to benefit from the growing fashion sense of men worldwide.

The rapid technological progress seen in last 15 years, and particularly the quantum leap in the importance of the Internet, has radically changed the shopping habits and lifestyles of consumers. HUGO BOSS sees this change as an opportunity. With the expansion and continuous improvement of its online stores, the Group addresses the expectations of consumers with respect to product presentation, selection and service. Close integrationof the online offering with bricks-and-mortar retail also affords good opportunities to offer comfortable and efficient shopping solutions to its core target group – men and women who are successful in their professions and private lives and who are on tight schedules.

At the same time, the Group uses digital media to strengthen perception of its brands and charge them emotionally.The Group addresses its customers’ growing need for individuality both in its brand strategy and in its distribution strategy. By building up and regionally extending it’s Made to Measure offering, the Group can offer to a growing number of interested consumers the option of wearing individually modified and tailored products with which they can stand out from the crowd. The exclusivity of this offering is also conveyed in the shopping experience, with dedicated sales floor space specially designed for this purpose.

The Company also sees good opportunities for forging stronger ties between consumers and HUGO BOSS and encouraging the brand loyalty of customers by reaching out to them individually as

part of systematic customer relationship management in the form of telephone calls, personal mail-shots or newsletters.   The importance of the HUGO BOSS own retail business will continue to grow, with the contribution made to sales by this channel to increase to at least 75% by 2020. Alongside additions to the store network, including the take-over of further franchise activities and shop-in-shops from wholesale partners, the Group will be taking comprehensive control of its own online activities and integrating them with its in-store activities in the future. This will enhance customers' shopping experience and spur growth in the Group's own online and offline retail activities.    

COHERENCE (OR NOT) OF THE DIFFERENT RANGES OF PRICES INSIDE THE TOTAL MEN RANGE.   

LUXURY: $ 1,395 – $ 4,000 PREMIUM: $ 795 – $ 1,595

Brand Collection User momentPrice

Differentiation: Jersey -

Polo

Price Differentiation: Trousers

Sportswear elegance

Casual friday–Luxury weekend

$ 85–$ 275

$ 145–$ 255

Contemporary urban sportswear

Daywear–Downtime–Party

$ 70–$ 155 $ 115–$ 195

Sporty lifestyle – Performance

$ 85–$ 185 $ 145–$ 225LUXURY $ 1,395 – $

4,000$ 1,395 – $4,000

PREMIUM $ 795 – $1,595

$ 795 – $1,595

Apart from the good financial performance, implementation of important strategic measures shaped the past year. For instance, we streamlined and sharpened our brand portfolio by integrating the previously independent luxury business in the BOSS core brand. Looking back, this was clearly the right decision.

The move has allowed us to upgrade our complete offering, and it shows: within just a short period the luxury business accounted for a larger share of sales. Expanding our offering in the higher price brackets as well as focusing on the BOSS brand has placed us in a strong position to effectively present our product range in larger stores as well. Our new stores in Berlin, Hong Kong, New York and Tokyo are an impressive testament to this.

THE PLACE OF THE MEN RANGE IN A COMPETITIVE OFFER - THE ANALYSIS OF THE PRICES COMPARED TO THE COMPETITION PRICES.

HUGO BOSS enjoys strong consumer perception around the world. Especially in menswear, consumers place high trust in us and our products. Our collections deliver on the promise of impeccable quality, superb craftsmanship and modern designs season after season. Our industrial scale and flawless operational processes give us a lead over many others in the industry, allowing us to offer a price-value-relationship that is second to none.

Over the past few years, HUGO BOSS has trimmed and increased the flexibility of critical business processes to enable it to respond faster to market developments and the changing needs of its customers. Drawing on the experience gained in the interim, the measures taken and, in turn, the Company’s retail competences are being optimized further. Initiatives to emphasize the spring and fall collections as part of the four-collection cycle cater specifically to the needs of the American and Asian markets.

Earlier deliveries also help improve the availability of new collections at the start of the season and, in turn, the full-price sell-through rate. In addition, brand and creative management are to receive support in the development of the next collection through better analyses of the results of the reference season. Finally, follow-up measures were taken to couple up production and sourcing activities more closely to actual demand.

Hugo Boss competes primarily with other firms in the so-called "affordable luxury" market, shying away from the ultra-high-end luxury market. The luxury apparel industry is highly fragmented, and many of the leading companies are privately owned, making a competitive analysis somewhat difficult. Additionally, the goods in this industry are not as easily substitutable as in some others; brand loyalty and consumer preferences play a significant role in determining demand for Hugo Boss's products and its sales figures. Most closely related apparel competitors include:

Burberry Group PLC manufactures luxury clothing and accessories for both men and women. The company's line of suits competes with Hugo Boss's BOSS Black line.

LVMH Moet Hennessy is a luxury holding company whose apparel brands include Louis Vuitton, Marc Jacobs, Fendi, and Thomas Pink.

Link Theory Holdings Co., LTD produces the Theory apparel brand, which has a comparable price range and target demographc.

Christian Dior SA manufactures a luxury lineup that includes both men's and women's apparel and accessories

Adolfo Dominguez SA is a Spanish designer whose clothing and accessories are sold throughout Europe and in parts of Asia and the U.S. Most closely related accessories and leather goods competitors include:

Coach makes a line of luxury accessories and small leather goods for men and women

Etienne Aigner AG is a German firm specializing in leather goods and (primarily women's) accessories

Table 1. Lead Firm and Brand Types with Regional ExamplesSource: Gereffi & Frederick, 2010.

Lead Firm Type Type of Brand Description

Examples

United States EU-27

Retailers: MassMerchants

Private Label: The retailer owns or licenses the final product brand, but in almost all cases, the retailer does not own manufacturing.

Department/discount stores that carry private label, exclusive, or licensed brands that are only available in the retailers’ stores in addition to other brands.

Walmart, Target, Sears, Macy’s, JC Penney, Kohl’s, and Dillard’s

Asda (Walmart), Tesco, C&A, and M&S

Retailers: SpecialtyApparel

Retailer develops proprietary label brands that commonly include the stores’ name.

The Gap, The Limited Brands, American Eagle, and Abercrombie & Fitch,

H&M, Benetton, Mango, New Look, and NEXT

Brand Marketer National Brand: The manufacturer is also the brand owner and goods are distributed through multiple retail outlets.

Firm owns the brand name but not manufacturing, “manufacturers without factories.” Products are sold at a variety of retail outlets.

Nike, Levi Strauss, Polo, and Liz Claiborne

Ben Sherman, Hugo Boss, Diesel, and Gucci

Brand Manufacturer

Firm owns brand name andmanufacturing; typically coordinate supply of intermediate inputs (CMT) to their production networks often in countrieswith reciprocal trade agreements

VF, Hanesbrands, Fruit of the Loom, and Gildan

Inditex (Zara)