Hugo Boss to double business in India

Wednesday, 27 October 2004, 07:00 Hrs
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NEW DELHI: Fashion major Hugo Boss has seen 30 percent higher growth than expected from its India business which is prompting the company to double the number of stores in the country, its chairman has said.

"The sales and growth has been very exciting," Bruno Salzer, chairman and CEO of Hugo Boss told IANS in an interview on his first visit to India.

The company now has one store each in New Delhi and Mumbai and is planning to add two more in Mumbai and Bangalore by spring 2005.

"The new stores are going to be bigger than the current ones. They would be about 200 sq metres, our current stores are about 140 sq metres."

The two Hugo Boss stores are in the Oberoi hotels and the new one in Mumbai would be at the Grand Hyatt Hotel. No location has been selected for the Bangalore hotel yet.

Last year Hugo Boss' net sales amounted to about $1.2 billion with a growth forecast of 8-10 percent for the current year.

Asia Pacific, including Australia, contributes about eight percent of global sales and for the last two years this region has seen double-digit year-on-year growth.

The company is celebrating its first anniversary in India Wednesday night with a showing of its fall/winter 2004 collection in the capital.

The company is restricting its growth to luxury hotels because it says India still doesn't have the kind of malls where the high-end brand can be placed. "Indian malls are still at a nascent stage," said Salzer.

The problem is about ambience. According to the company's marketing strategy, the brand can only be placed alongside other big names like LVMH. In the Oberoi in New Delhi, Hugo Boss has as its neighbours - LVMH and Bulgari.

"We cannot have a shop beside Adidas and Raymonds. It wouldn't suit our branding strategy," said T. N. Pratap, chief executive of Dubai-based BinHendi, which is Hugo Boss' franchise partner in the region.

"It is also about environment. We cannot draw the right customers in the middle of a busy market, no matter how well the mall is organized from inside.

"The only place where we can draw the kind of business traveller Hugo Boss targets is in luxury hotels."

That's why, said Salzer, the company is looking to move into the big metros first and then target the smaller cities. "The smaller cities might have the aspiration demand and the money, but the infrastructure is not right.

"The way ahead is for five, six top brands to move into a certain area at the same time so that the right space is created and they are adjacent to one another for the right branding."

The ending of the quota system in December won't affect Hugo Boss as the company is not looking to set up a production hub here.

"We have a big production unit in Turkey which at the moment is cost-wise competitive to anything we might set up here," said Salzer.

"But we are looking very closely at the market and since India has a huge ancient textile tradition, lots of things might change."

The German giant is also not looking to advertise in India in a big way because Indians travelling abroad had already created enough brand recognition for its company.

"Even when we were in the process of entering India, we realized there were already a great number of Hugo Boss customers in the country. In our London stores, for instance, 20 percent of the customers are Indians."

Its USP in India is providing the latest lines at the same prices at which Hugo Boss is sold around the world.

"The customers don't need to wait to go to London to buy Boss. It's all available in here," said Pratap.

Source: IANS
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