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PROJECT REPORT
EVALUATING THE STORE
OPERATIONS
AT
BOSS HUGO BOSS
NEW DELHI
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Contents
1. Acknowledgement 3
2. Executive summary 4
3. Introduction 7
4. Objectives 13
5. Boss Hugo Boss 15
6. Brands Offered By Hugo Boss 21
7. The Store Insight 24
Layout 25
Display & Visual Merchandise 28
Customer Care Executive 32
8. Supply Chain Activities 34
9. Inventory Management And Merchandising Activities 39
10. Fast Moving Vs Slow Moving Merchandise 43
11. The Customer Relationship Management 46
12. The Competition Analysis 56
13. Observations 59
14. The S.W.O.T Analysis 62
15. Recommendations 64
16. Questionnaire. 67
17. Bibliography 70
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ACKNOWLEDGEMENT
I take this opportunity to acknowledge the efforts of the many individual who helped me
in making this project possible. First and foremost, I would like to express my heartfelt
appreciation and gratitude to BINHENDI FASHIONS PVT LTD for allowing me to do
this project.
The satisfaction, which accompanies the successful completion of the project, is
incomplete without the mention of the names of those people who made it possible,
Completion of this project was only possible with the help of my guides and mentors. I
am indebted to Mr. VINEET RANA (STORE MANAGER) who had a great influence
on the way the project progressed.
I also want to thankMs JYOTI CHAUHAN, and MR SUMIT BANSAL (FASHION
CONSULTANTS) who spared their valuable time and has taken pains to make me
understand the practices followed in the BOSS HUGO BOSS STORE
I also thank my Faculty Guide for the project, Prof. Shalini Srivastava for her valuable
inputs from time to time as well as help me compile this entire report in its entirety.
I would also like to thank the Birla Institute of Management Technology, forproviding
me the opportunity to do a project with BOSS HUGO BOSS.
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Executive Summary
Introduction:
The dazzling array of luxury goods available today is clearly catering to the growing
number of Indians who are enjoying unprecedented level of affluence. Statistics show that
in 2001-2002 there were 20,000 families in India with annual income of more than Rs 1
crores .By 2005, that number has increased to 53,000 families and by 2010 ,India will
have an astounding 1,40,000 millionaires.
It is not just the big Indian cities like Delhi, Mumbai and Bangalore where the rich are
located. A small town like Nagpur had nine millionaires in 1995-1996. By 2001, that
figure increased to 425, with a growth rate of 91 percent.
Research Methodology:
To complete my project successfully I participated in the store activities. To collect the
primary data like the footfalls, daily sales, and the fast moving and the slow moving
merchandise, customer behavior and their satisfaction, etc.I followed four simple steps
Step no.1: I participated in the front end activities of the store, for 8 weeks I stayed back
in the store for an 8 hours shift which gave me an insight on how the store is being
operated on daily basis.
Step no.2: I interacted with the customers to understand their needs and expectations
from the brand Hugo Boss.
Step no.3: To compare the working of the Hugo Boss store with its competitors I
collected information by going to the Hugo Boss competitors as a customer to analyze
their way of working.
Step no.4: finally I devised a questionnaire for the fashion consultants working in the
Hugo Boss store to get a feedback from them on the store operations.
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Conclusion:
Based on my observations and discussions with the staff of the Delhi store I have
following recommendations to make:
The visual merchandising needs improvement, as a carelessly done visual
merchandise will effect the brand image
Sales promotions should not be flashed on the newspapers as it effect the luxury
brands image. It is very important to maintain the brand exclusivity which is its
strength
The supply of carry bags should be adequate
Product manuals should be given to each store so that everybody on the retail
floor should have the product knowledge. No one without any adequate product
knowledge should be allowed on the floor.
When new stock comes then its setting should be done by closing the store, for an
hour. So that inconvenience is not caused to the customers
The company should arrange for a separate dining room
Area where the suits are displayed should have more space.
Both the trial rooms should be kept functional.
The store has one tailor who does the alterations, if he could get a helper then
speedy services can be given to the customers resulting in customer satisfaction.
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Limitations:
The data used for comparing different luxury brands with Hugo Boss has been taken
from different articles.
Disinterest of the luxury retailers in answering questions.
Inability to use advanced research tools as the report is totally qualitative in nature
and is based on my observations in the store.
Finally the recommendations given by me are based on the data that was observed by
me during the period of 2 months.
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INTROD
UCTION
INTRODUCTIONLuxury, derived from the Latin word luxus, means indulgence of the senses, regardless of
cost. Luxury brands are brands whose ratio of functional utility to price is low while that
of intangible utility to price is high. Such brands share characteristics like consistent
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premium quality, a heritage of craftsmanship, a recognizable style or design, a limited
production run of any item to ensure exclusivity, an element of uniqueness and an ability
to keep coming up with new designs when the category is fashion-intensive.
Luxury Retail in India:
India, throughout history, has been a land of extremes and known for the indulgence of its
opulent classes. The good lifestyle, once experienced by a select club, is now getting
democratized. More than 1 million Luxury consumers. More numbers getting added
every day. The fastest growing auto market in the world. Doubling of market sizes in
many high-end categories of electronics, jewelry, clothing etc. over a year. A
phenomenon which is unmatched by any economic event anywhere else globally. A
market which is waiting to be plucked by Luxury products
Luxury brands are brands whose ratio of functional utility to price is low while that of
intangible utility to price is high."
The market for luxury brands in our country has expanded in recent times. With income
levels going up, customers prepared to buy such brands are growing in numbers.
According to an NCAER Household Income Survey, in 2001-02, there were 20,000
families in India with annual incomes of more than Rs 1 crore. By 2005, that number is
expected to increase to 53,000. By 2010, India will have some 1, 40,000 crorepatis. Retail
management company KSA Technopak estimates the market for luxury and high-end
clothing in India at Rs 1,000 crore and for accessories at another Rs 1,000 crore.
In the past, brands like Liz Claiborne and Pierre Cardin tested Indian waters but made a
hasty retreat following poor customer response. This led to a general perception that India
is still not ready for luxury brands. But now that impression is changing. Many leading
global luxury brand marketers have started taking Indian market seriously.
Luxury retailing:
Luxury goods retailing is a different ball game as the type of customers involved fall in a
different class altogether. These customers are influenced more by glamour and style and
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want to stand out in a crowd. They do not bat eyelid when they buy a Vuitton bag costing
Rs 50,000 or a Mont Blanc diamond-encrusted pen for Rs 50 lakh, Ermenegildo Zegna's
top-of the-line, custom-tailored suit costing Rs 6 lakh or a mid-range Louis Vuitton
briefcase priced Rs 1.27 lakh.
NO. of multi-millionaire families
2001-02 20,000
2005-06 53,000
2010 1,40,000
*No of households with annual income of more than Rs 1 crore between 2001-02 and
2005-06 the increase is two-half times estimated
As these figures suggest, luxury brands are prestige products characterised by high-
involvement decision-making that is strongly related to the person's self-concept. Sensory
gratification and social approval are the primary factors in selecting a prestige product.
Cutting prices or giving discounts can be detrimental in case of luxury brands. A higher
price implies a higher level of quality and also suggests a certain degree of prestige.
Similarly, distribution should be restricted. Status-sensitive consumers may reject a
particular product if the feeling of exclusivity goes away.
Managing luxury brands is as much an art as a science. The challenge is to create a
demand for something which is not really needed. After all, it looks crazy to spend Rs
50,000 on a handbag or Rs1,27,000 on a briefcase. Creativity plays a key role in creating
such a premium image. Many luxury brands achieve legitimacy and fashion authority as a
result of the creative talent of their design teams who respect the brand heritage and yet
continuously reinvent it.
Brand-building is a different ball game in case of luxury goods. Fashion shows, special
events, and other public relations efforts must be carefully coordinated to convey thedesired image. The magazines selected for advertising are often unconventional and
trend-setting. It is the kind of people who read them, not the numbers, which matter. The
movies in which the brand appears and the celebrities and pop icons who endorse the
brand must also be selected carefully.
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Merchandising activities in Luxury Market:
The product line decisions in case of luxury brands are somewhat tricky. First, to what
extent should companies include in their lines lower-priced accessory items to target a
broader market? A second and related issue is whether there should be line extensions
beyond the core category. Such a strategy may make operations more complex and drive
up costs. Moreover, transferring the brand's fashion authority from the core to another
category may not be as simple as it sounds. Despite these concerns, most successful
designer wear luxury brands combine a risky and perishable ready-to-wear offering with
sales of less fashion-intensive items, such as leather accessories. A Gucci store might
display its latest fashion accessories prominently but generate most of its sales from black
and brown handbags and conservative silk ties. Many luxury brands realize less than 25per cent of their sales from ready-to-wear products. The balance comes from fragrances,
leather accessories, and home furnishings.
No. of millionaire families
2001-02 40,000
2005-06 1,00,000
2010 2,50,000
* Figures are number of households with annual income between Rs 50 lakh and Rs 1
crore estimatedDistribution of the luxury products:
Channel management issues are again different for luxury brands. Here the focus is not
on expanding reach. Indeed, marginal and unfocused retailers must be dropped from time
to time to improve the strength of the brand franchise for those remaining. Investment in
flagship monobrand stores augments the brand's prestige and presents it as a lifestyle
concept.
Customer Relationship Management:
In the past, customer service for luxury brands meant making to order. Craftsmanship and
customization went hand-in-hand. Today exclusivity is provided not by customization but
by restricted supply. But selective distribution and limited assortments cause
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inconvenience to consumers. So many luxury brands are looking at new ways of
improving customer service.
Traditionally, luxury brand retailers have not paid much attention to computerizing
records of transactions with clients. Now they are realizing the importance of customer
relationship management for various reasons. Customers who buy an accessory today
may purchase higher-value items tomorrow. The tourist who buys a single item from one
store may buy items of the same brand in other stores around the world. Databases enable
retailers to know how important their customers are, no matter which store they may shop
in, around the world. Customer databases enable owners to contact their consumers with
invitations to collection previews, end-of-season sales and other events. Customer
databases also ensure that even when salespeople leave, their knowledge is not lost.
Conclusion:
Developing luxury brands involves heavy investment of time, effort and money. That
needs a different kind of mindset which is generally lacking in many Indian companies
who look for quick returns. That is why there are few Indian luxury brands. But for those
who are willing to take the plunge and wait patiently for the results to come, there is a pot
of gold waiting at the end of the rainbow.
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THE OBJECTIVE
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OBJECTIVES
This project is an attempt to do a conclusive research and analysis of the store operationsat Boss Hugo Boss store which could lead to charting out better future strategies for the
management to provide better customer satisfaction. In order to achieve this primary
objective, I moved ahead in four fold process.
I participated in the front end activities of the store, for 8 weeks I stayed back in
the store for an 8 hours shift which gave me an insight on how the store is being
operated on daily basis.
I interacted with the customers to understand their needs and expectations from
the brand Hugo Boss.
To compare the working of the Hugo Boss store with its competitors I collected
information by going to the Hugo Boss competitors as a customer to analyze their
way of working.
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BOSS HUGO BOSS
History:
Hugo Boss is a fashion house based in Germany, which specializes in high-end and
casuals menswear and womenwear. It is named after its founder Hugo boss.
Hugo boss established his company in Metzingen, Germany in 1923 only a few years
after the end of World War 1 while most of the country was in a state of economic ruin.
Boss died in 1948, and the company then languished in relative obscurity until the 1950s
when in 1953, Hugo Boss released its first suit design for mens wear Boss BLACK.
In 1993, 70 years after its founding, Hugo Boss launched its first fragrance and created a
division which has since grown to be an important part of the company. In 1987, Boss
Orange for men was launched described as sporty and casual separating itself from the
trendy Hugo brand and the sophisticated boss black brand. Boss green is a completely
sporty brand selling items designed for sport or sporty look.
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transforms these ideas into prototypes supported by up-to-date CAD software. HUGO
BOSS production sites, like plant in Izmir, Turkey, where they quickly manufacture
models, which are then shown in the international showrooms as sales samples. Hugo
Boss quality assurance department monitors the entire production process, uniformly
applying high standards. It also ensures the ongoing specialist training of staff.
Infrastructure
Seamless provision of Hugo Boss products to retailers is assured by an efficient, globally
networked infrastructure. Trading partners receive seasonal collection components in
several delivery windows each year, allowing a prompt and flexible response to customer
needs. Moreover, in the case of individual re-orders, our partners can obtain delivery of
goods in stock within 24 hours in Germany and 48 hours within Europe.
Integrated IT systems support this process at all HUGO BOSS warehousing and sales
locations. Hugo Boss will continue to focus on the constant adaptation of their
technologies to ongoing market developments and internal corporate requirements in the
future.
Distribution policy
Despite the difficult economic situation, HUGO BOSS will continue to intensify the
transformation of its brands into international life-style brands with worldwide
recognition. Hugo Boss sales policy is based on two strategies: On the one hand,
distribution via so called monobrand shops serves to reinforce the brand experience and
create a global image. On the other hand, they rely on their long-term close cooperation
with strong trading partners which enables them to convey the fascination of their brands
to the final customer. The goal of distributing via up-market fashion retailers is to
contribute to joint synergy and focus more sharply on customer convenience.
As a result of this distribution policy, customers from 108 countries currently trust their
brands and products. Unique customer and market proximity is achieved by HUGO
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similar image transfer through sport sponsorship activities. HUGO BOSS is engaged in
dynamic sports that impressively convey the values of the BOSS core brand:
internationalism, perfection and success.
Activities in the world of sports as well as big fashion events in the worlds major cities
allow them to demonstrate their fashion expertise and permit their brands to be identified
with emotional experiences.
BOSS HUGO BOSS in India:
The Hugo Boss in India is through franchise route, Binhendi fashions PVT LTD.brought
Hugo Boss in India. With the first store in New Delhi at the oberoi hotel was opened in
the year 2004, and in the year 2005 the store had a sales turnover of Rs 10 crore. The
Mumbai store was the second Hugo Boss store in India and the sales turnover of the
Mumbai store was Rs 7 crore. The success of the Delhi and Mumbai stores led to the
opening up of the 3rd store in Bangalore.
Since Hugo Boss entry into the country, Hugo Boss has brought three premium lines to
the country: Boss Black, Boss Orange and Boss selection. All these collections areavailable in the Bangalore store.
The three stores in India and their locations are:
Boss Hugo Boss : The Oberoi Hotel, New Delhi
Boss Hugo Boss: The Grand Hayatt,Mumbai
Boss Hugo Boss : Leela Palace , Bangalore:
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Brands O ffered By Boss
Hugo Boss
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Brands Offered by BOSS HUGO BOSS
The brands which are offered by Hugo Boss are:
BOSS BLACK
BOSS ORANGE
BOSS SELECTION
BOSS GREEN
BOSS WOMAN
Among these arrays of brands the fastest moving brand is BOSS ORANGE and
BOSS BLACK.
The table on the next page gives a brief about each brand of BOSS and its origin, its
concept, and launch in India.
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Brand
Name
Boss
Black
Boss
Orange
Boss
Selection
Boss
Green
Boss
Woman
Born In 1953 1987 2001 1953 2005
Concept
Assurance is provided by BOSSBlack with acollection thatconsistently offers
the right outfit BOSSBlack, with a focuson youthful designand high-qualityworkmanship, linkssophisticatedelegance
Trends are set by
the sporty BOSSOrange line with itsmens collectionfor individualists
by making adistinct fashionstatement in thecasual market
Pure comfortcreated by alove of detailawaits the mostdemandingconnoisseur.BOSS
Selectioncombines thetraditionalstrengths of BOSS intailoring and fitwith the finestfabrics andexcellentquality.Superiorworkmanship,
which alsoentails somehandwork,creates clothingtargetedspecifically forthe top end ofthe market
Function isaddressed by theBOSS Greencollection for themodern, activeman. Technicallyoptimizedsportswear andsporty daily wear iscombined withfunctional fabrics
in stylish multi-functional clothingof the higheststandard for dynamic outdoorand the latest
leisure activities.
Versatility isthe keynoteof BOSSWomancollection.Thecosmopolitanand self-confidentBOSSWoman
customer canexpress hervery personalstyle with anoutfit of outstandingquality inperfect taste..
Indian 2004 2004 2006 2008 Not yet
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launch
THE STORE INSIGHTS
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THE STORE LAYOUT
The store design and layout tells a customer what the store is all about. It is a very strong
tool in the hands of the retailer for communicating and creating the image of the store in
the minds of the customers.
For a retailer store layout is:
The primary considerations that the retailer takes into account while choosing the look
for his store are his target audience, their needs, and buying habits and the merchandise
that he is going to sell. Creating a store image is like giving a personality to the store
For the consumer:
A store needs to be simple to navigate; it must appeal to his sensory perceptions and must
create a sense of belonging, a sense of relationship, a sense of security or assurance and a
sense of pleasure in the shopping experience
Finally it is the physical attribute of the store which affects the customers sensory
perceptions, and makes him relate to the store in a particular manner.
The store layout can be classified into
Grid
Race track
Free form.
Grid layout: It is most commonly used in a supermarkets and discount stores. It Is a
preferred layout in many retail stores that adopt self service.
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Race track layout: This layout is popularly found in department stores. The display is in
the form of the race track or a loop with a major aisle running through the store. It links
the various departments or the sections inside the store
Free form layout: In a freeform, merchandise is arranged in an asymmetrical manner. It
allows for free movement and is often used in retail outlets to encourage people to browse
and shop.
At Hugo Boss Store the layout that is used is a free form layout.
The layout of the store is as such that it allows ample walking space inside the store. this
encourages people to move and browse around the store, taking in the merchandise that
has been stocked.
One of my observations in the store is that once the customers enters the store he/she
usually moves towards the right side of the store first and then to the middle and finally to
the left.
Store Layout at BOSS HUGO BOSS: New Delhi
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In conclusion:
There is no standardized rule about what kind of layout a particular type of a store should
adopt, a retailer may choose the same on the basis of the target customer that he chooses
to serve or the general image and look that he wishes to create for the store.
However the free form layout may not allow for the maximum utilization of retail space
available
Chief considerations that should be kept in mind before selecting the layout:
Selecting a layout which allows for the complete presentation of the merchandise
to the customer. a good layout encourages customer to move around the complete
store and at times , make unplanned purchase.
Striking the right balance between space used for displays and service areas so
that the return on the investment is maximized.
A store needs to provide for a seating arrangement for people, if they expect
people to spend hours in a store.
Finally, a store has to be designed keeping in mind the merchandise that the
retailer intends to sell in the store and its target audience.
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The Display and Visual merchandising:
Visual merchandising is no longer just a matter of making merchandise look attractive for
the customer. It is the actual selling of merchandise through a visual medium. Visual
merchandising is the way for the stores to say, This is who we are and what we stand
for.
Visual Merchandising at the Hugo Boss Store:
Color presentation:
Color is the biggest motivation for shopping. People buy color before they buy size, fit or
price. People also react to the colors around the garment being considered. Hugo Boss
introduces a whole new palette each season. Though the styling is similar, it is the new
color presentation that brings the shoppers into carefully color schemed and color
coordinated sales floor. Colors can immediately create a mood. The colors that are used
inside the store are Brown and Yellow. The walls of the store are off white in color
Significance of each color used at Boss Store:
Brown: the earth, hearth and the home; the family. Brown is warm and can sometimes
cast a glow. From the lightest off white and beige to the deepest charcoal brown, it is
relaxed, and in no way unnerving.
Yellow: it is sunshine and gold; happy, bright, cheerful, vital, fun filled and alive; it is
optimism, expectancy, relaxation and a wide open armed acceptance of the world
suggestive of change, challenge and innovation.
Off white: the blankest of the blank, but a strong support and able supporting player that
makes every other color, by comparison turn in bigger, bolder and brighter performances.
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Lighting at the Boss Store:
Color as color-means little unless it is considered in relation to the type of light in which
the color is seen. It is light that makes things visible. All colors depend on light. There is
natural daylight and artificial light, which can be incandescent, fluorescent, or high
intensity discharge lighting
A lighting plan for a store combines many elements and many types of lamps. Hidden
fluorescent tubes can illuminate a raised element in the ceiling or wash over the perimeter
walls. Incandescent lamps can pour down on areas over the merchandise while halogen
lamps can add sparkle and enrich the color of the products in the featured displays.
At Hugo Boss store the lighting that is used is incandescent lighting. This lighting is used
for warmth, for emphasis , for highlighting, as well as on the merchandise that thrives
under them.
Incandescent bulbs are set into ceiling fixtures to provide a warm and upscale ambient
light for the mens area. They also light up the merchandise set out on the tables along the
traffic aisle
Suggestions for using light effectively:
Avoid bright, white lights directly on a mannequins face, elbows, or shoes.
Use colored light to create the right setting for the merchandise.
It is more effective to light across a display rather than directly down on it. Direct
down lighting can create unpleasant and unattractive shadows.
The lighting in a window display should be checked at night. Many imperfections,
such as wrinkles, are more apparent under the artificial light.
Fixtures used at the Hugo Boss Store:
The fixtures that are used in the Hugo Boss Store are
1. Aisle tables
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2. Round racks
3. Back wall
4. Counter fixtures
Finally, In selecting a fixture to use on the selling floor, there are certain criteria or
expectations the display person may have with regard to making that selection the criteria
include
Appearance: How does the fixture look on the floor?
Construction: Is the unit flexible?
End use: Does the unit make full use of the valuable area of the selling
floor that the fixture will occupy?
Upkeep: Is the fixture serviceable, dependable, reliable, and safe?
Finishes: What the fixture is constructed of and how it is finished will not
only affect its floor life but its appearance on the floor.
Display at Hugo Boss:
The primary purposes of displays are to present and to promote. A display is at its best
when it simply shows a color, an item, a collection, or just an idea. At Hugo Boss the
display that is used is a mixture of line of goods display and related merchandise display.
A Line of Goods Display: Is one that shows only one type of merchandise, although they
may be in a variety of designs or colors.
Related Merchandise Display: In a related merchandise display, separates, accessories, or
other items that go together are displayed because they are meant to be used together,because they share an idea or a theme.
Display settings:
In presenting any display, there are some basic approaches that a retailer can take to set
the scene for the merchandise or the concept to be sold. These approaches include
following:
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Realistic setting
Environmental setting
Semi realistic setting
Fantasy setting Abstract setting
At Hugo Boss the display setting is realistic setting. It is essentially the depiction of a
room area, or otherwise recognizable locale, reinterpreted in the allotted display area. It is
the best controlled and most effective in a fully enclosed display.
CONCLUSION STORE INSIGHTS:
A good display depends on planning, coordination, and cooperation
A change of windows set for every 10 to 15 days but should never be longer than
a month.
The visual merchandiser should plan advance preparation time for big
promotional and sale events. These should be developed in cooperation with
retailers and the promotion and advertising staff for themes, concepts and
diection.
Customer Care Executive:
The customer care executives at Hugo Boss store are an important part of the daily store
operations. They play an important part in the retail selling process during my
observations that the cca have
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Adequate product knowledge.
Knowledge of the customer.
Approaching the customer.
Presenting the merchandise Overcoming the resistance
Suggestive selling
Closing the sale
Evaluation of employees should be done not only based on sales/ day but also other social
factors and personal attributes should be kept in mind.
Process in which a CCA entertains the customer:
Allow him to scan himself so that he feels comfortable with the display
Then as per what he is looking for.
He tries to understand the customer
Product awareness training manuals should be specially made for employees so that they
can brace themselves with these fashionable brands.
These manuals would be an added advantage for the employees to understand that how a
product will get sold.
It teaches about- color, fabric, size, weight, styling, after sales services, etc.
For suit section the CCA responsible should be dressed up in the latest suit or the one
which is not moving out. This technique would really give high results
Finally, Today's retailers face a number of challenges in delivering customer delight and
maintaining customer loyalty. Having well-trained and knowledgeable employees using
the right systems and processes can help give the cutting edge, one needs.
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Supply Chain Activities:
Supply Chain Activities:
This part of my project aims at studying the Supply Chain Management aspects of Boss
Hugo boss. The reason of studying SCM was to get an insight of actual SCM and
inventory management practices.
The interaction with store manager and few employees of Hugo Boss forms the basis of
this report. The various aspects studied are:
Supply Chain Management partners
Drivers of SCM
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Scheduling of production
Lead time of supply of materials
Inventory levels maintained
Introduction:
A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into intermediate
and finished products and the distribution of these products to the customers.
For any store, in all probability, has atleast a hundred suppliers. Some of these could be
manufacturers, some of them agents and others distributors. The challenges of managing
a continuous supply of goods from all these different entitities is the challenge of
managing the supply chain.
Objectives of an efficient supply chain:
The objectives of the efficient supply chain management are to ensure that the right
product reaches the right place at the right time and importantly, for the right price and
profit for the retailer. It ensures a smooth and efficient flow from raw materials to
finished goods in the hands of the consumers.
A Model of Simple Supply Chain:
SUPPLIERSMANUFACTURERSDISTRIBUTIONCENTRERETAILER
CONSUMER
In a most simplistic supply chain the raw materials is procured from the suppliers then the
raw material is sent for manufacturing and then finally the finished product is sent to the
distribution centre from there it reaches the retail outlet and finally to the end consumer.
In getting goods to reach to the consumer the retailer spends a lot of money at each step.
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An effective supply chain would be the one in which the cost involved in making goods
available to the consumer is minim
Supply Chain Model at Boss Hugo Boss Store:
The whole process of the making goods available to the consumers takes 8 MONTHS.
HUGO BOSS OFFICE (HONG KONG)
Cost incurred by the boss Hugo boss
BIN HENDI (DUBAI)
4% of the entire inventory
INDIA
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Outsourced to clearance agent Rs25000
DELHI MUMBAI BANGLORE
AIRPORT AIRPORT AIRPORT
No warehousing cost
BOSS HUGO BOSS STORES
CONSUMERS
The Supply Chain Management Process:
As stated earlier that the whole supply chain takes 8 months to make the goods available
to the consumers. The supply chain for the Hugo Boss starts in the month of August
where the store manager will order the inventory by going to Hong Kong and ordering the
merchandise according to the demand of the fashion product.
Advantages of the Supply chain management:
Reduction in the holding cost
Reliable and consistent delivery performance
Minimum product damage
Quick response
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The outsourcings of the logistics are also an added advantage to Binhendi fashion
ltd:
Cost saving
Focus on core business
Proper utilization of funds
The warehouse that the Hugo Boss has following function:
Material storage function
Material handling function
Information handling function.
Inventory &Merchandising
Management
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Inventory & Merchandising :
In this part of my project I plan to study the inventory management practices at Boss
Hugo Boss. The objective of studying inventory management is that it is directly related
to the level of customer satisfaction. Hence finding of the inventory management at the
Boss store will help in improving customer satisfaction.Inventory is stock or store of goods. Inventory are held in order to manage and hide from
the customer the fact that manufacture delay is longer than delivery delay, and also to
ease the effect of imperfections in the manufacturing process that lower production
efficiencies if production capacity stands idle for lack of materials.
The form of inventory management at Hugo Boss Store:
At Hugo Boss the form of inventory management is finished product inventory. In this
form the retailer procures finished products from the manufacturer and according to the
demand among the target market.
A function of an effective inventory management systemat Boss Hugo Boss is:
To meet anticipated customer demand
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To smooth production req. (seasonal demands)
To buffer operational problems
To protect against stockouts
To take advantage of order cycles( economic lot sizes)
To hedge against price increases
To take advantage of quantity discounts
Objective of the inventory management at Boss Hugo Boss is:
To increase level of customer service, i.e. to have the right goods at the right place
in the right amount at the right time
Minimize the cost of ordering and carrying inventory
For an efficient inventory management following criteria should be met:
A system to keep track of the inventory on hand and on order
A reliable forecast of demand with possible forecast error
Knowledge of lead times
Reasonable estimates of inventory holding costs, order costs and storage costs
At Hugo Boss the inventory is managed in the following ways:
The system used to keep track is of the inventory is TALLY
The forecasting is done by the store manager and his team
The lead time that exist is of 8 months
The estimates of holding cost and order cost is maintained by the store
manager.
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Finally every month end the company has a system of retail audit where
the inventory in the story is manually counted and tallied with the actual
figures with the auditor
Inventory system at Hugo Boss is perpetual inventory system where the no of each
sku is counted manually and then finally tallied with the records that the auditor keep
with him.
Lead Time at Hugo Boss: 8 months.
A lead time is the:
Time interval between ordering and receiving the order
Greater the lead time variability, greater is the need for additional stock to reduce
risk of shortage
Safety Stock:
Safety stock is a business term used to describe a level of stock that is maintained below
the reorder level to protect an organization against stock outs during replenishment
periods
The safety stock is kept for 2 months at Hugo Boss.
Safety stock is usually used as a buffer to protect organizations from stock outs caused
by inaccurate planning or poor schedule adherence by suppliers, as such its cost (in
both material and management) is often seen as a drain on financial resources which
results in reduction initiatives.
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Various methods exist to reduce safety stock, these includes better use of technology,
increased collaboration with suppliers, and more accurate forecasting In a lean supply
environment lead times are reduced which can help minimize safety stock levels
reducing the likelihood and impact of stock outs
The safety stock is required because demand may fluctuate at any point of time.
In conclusion:
The inventory management of the Hugo Boss Store is effective and is meeting the
requirement of the customer; however the target market that the store is catering to
wants a new stock every month if management could cater to this requirement then It
will lead to more customer satisfaction which is only possible by reducing the lead time
and effective logistics.
Fast Moving vs
Slow Moving Products:
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Casual wear is not very high priced hence price conscious as well as brand
conscious customer buy it
As denim and t shirts are displayed together hence it results in cross selling.
Even for gifting purposes customers prefer to buy t shirts or shirts
Display of the casual wear on the right side results in impulse buying as once the
customer enters the store the first side he moves is towards the right as observed
Finally the sale of the good is closed due to efficient sales staff as they are able to
identify the customers needs and are able to up sell and cross sell the products.
The reasons for the slow moving products:
Out of fashion products are ordered
Colors and sizes ordered are odd that people dont like it.
Display of the slow moving products in corners
High prices of suits
Visual merchandising effects the sales of the product as the presentation should be
such that it shows that the products value
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Customer Relationship Management:
There are three or more aspects of CRM, each of which can be implemented in isolation:
1. Operational CRM: The automation or support of customer processes involving
sales or service representatives
2. Collaborative CRM: Direct communication with customers not involving sales or
service representatives (self service)
3. Analytical CRM: The analysis of customer data for a broad range of purposes
Operational CRM
Operational CRM provides support to "front office" business processes / teams, including
sales, marketing and service. Each interaction with a customer is generally added to a
customer's contact history, and staff can retrieve and update information on customers
from the database as necessary.
Data gathered on customers can be used to determine how a customer is handled. Data
may include profitability, contact history and products purchased. Staff members are able
to access this data when servicing customers or making a sales pitch.
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Collaborative CRM
Collaborative CRM covers the direct interaction with customers. This can include a
variety of channels, such as the Internet, whether through a website or e-mail, or
automated telephone systems. It can generally be equated with self service. One of the
latest trends in collaborative CRM isbehavioral emarketing which is focused on building
an ongoing relationship with customers through online mediums (emails, RSS Feeds,
XML, Vlogs, Blogs, etc.).
The objectives of Collaborative CRM can be broad, including cost reduction and service
improvements.
Analytical CRM
Analytical CRM analyzes customer data for a variety of purposes, including:
design and execution of targeted marketing campaigns to optimize marketing
effectiveness
design and execution of specific customer campaigns, including customeracquisition, cross-selling, up-selling, retention
analysis of customer behavior to aid product and service decision making (e.g.
pricing, new product development, etc)
management decisions, e.g. financial forecasting and customer profitability
analysis
prediction of the probability of customer defection (churn).
Analytical CRMgenerally makes heavy use ofPredictive analytics.
Technology considerations
The technology requirements of a CRM strategy can be very complex and far reaching.
The basic building blocks include:
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A database to store customer information. This can be a CRM specific database or
an enterprise data warehouse.
Operational CRM requires customer agent support software.
Collaborative CRM requires customer interaction systems, eg an interactive
website, automated phone systems etc.
Analytical CRM requires statistical analysis software, as well as software that
manages any specific marketing campaigns.
Support CRM systems require interactive chat software to provide live help and
support to web site visitors.
Privacy and Data Security
The data gathered as part of CRM must respect customer privacy and data security.
Customers want the reassurance that their data will not be shared with third parties
without their consent or accessed illegally by anyone.
Customers also want to benefit when their information is used by companies. For
instance, an increase in unsolicited telemarketing calls is generally resented by customers
while a small number of relevant offers is generally appreciated.
Customer relationship management software
Customer relationship management software is comprised of both business management
and automation of the front-office divisions of an organization. CRM software is
essentially meant to address the needs of Marketing, Sales and Distribution, and
Customer Service and Support divisions within an organization and to allow the three to
share data on prospects, customers, partners, competitors and employees. The purpose of
CRM software is to manage the customer through the entire lifecycle, i.e. from prospect
to qualified opportunity to order.
CRM software automates many of the needs of Marketing, Sales and Support users, such
as Telephony, or the ability to conduct phone calls and manage call data, and tools to
capture, share and manage automated alerts on lead data as it passes through the sales
pipeline. CRM software provides a standard framework for pushing leads through a sales
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pipeline and managing it amongst many stakeholders in real time, in order to provide
better customer relations and grow revenues by creating more sales, and losing fewer
customers
Sales force management systems are information systems used in marketing and
management that automate some sales and sales force management functions. They are
frequently combined with a marketing information system, in which case they are often
called customer relationship management systems.
Sales Force Automation Systems (SFA), typically a part of a companys customer
relationship management system, is a system that automatically records all the stages in a
sales process. SFA includes a contact management system which tracks all contact that
has been made with a given customer, the purpose of the contact, and any follow up that
might be required. This ensures that sales efforts wont be duplicated eliminating the risk
of irritating customers. SFA also includes a sales lead tracking system, which lists
potential customers through paid phone lists, or customers of related products. Other
elements of a SFA system can include, sales forecasting, order management andproduct
knowledge. More developed SFA systems have features where customers can actually
model the product to meet their required needs through online product building systems.
This is becoming more and more popular in the automobile industry, where patrons cancustomize various features such as color and interior features such as leather vs.
upholstered seats.
An integral part of any SFA system is company wide integration among different
departments. If SFA systems arent adopted and properly integrated to all departments,
there might be a lack of communication which could result in different departments
contacting the same customer for the same purpose. In order to mitigate this risk, SFA
must be fully integrated in all departments that deal with customer service management.
Advantages to sales people
Proponents claim that sales force automation systems can improve the productivity of
sales personnel. Here are some examples:
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Rather than write-out sales orders, reports, activity reports, and/or call sheets,
sales people can fill-in prepared e-forms. This saves time.
Rather than printing out reports and taking them to the sales manager, sales people
can use the company intranet to transmit the information. This saves time.
Rather than waiting for paper based product inventory data, sales prospect lists,
and sales support information, they will have access to the information when they
need it. This could be useful in the field when answering prospects questions and
objections.
The additional tools could help improve sales staff morale if they reduce the
amount of record keeping and/or increase the rate of closing. This could
contribute to a virtuous spiral of beneficial and cumulative effects.
These sales force systems can be used as an effective and efficient training device.
They provide sales staff with product information and sales technique training
without them having to waste time at seminars.
Better communication and co-operation between sales personnel facilitates
successful team selling.
More and better qualified sales leads could be automatically generated by the
software.
This technology increases the sales persons ratio of selling time to non-sellingtime. Non-selling time includes activities like report writing, travel time, internal
meetings, training, and seminars.
Advantages to the sales manager
Sales force automation systems can also affect sales management. Here are some
examples:
The sales manager, rather than gathering all the call sheets from various sales
people and tabulating the results, will have the results automatically presented in
easy to understand tables, charts, or graphs. This saves time for the manager.
Activity reports, information requests, orders booked, and other sales information
will be sent to the sales manager more frequently, allowing him/her to respond
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more directly with advice, product in-stock verifications, and price discount
authorizations. This gives management more hands-on control of the sales process
if they wish to use it.
The sales manager can configure the system so as to automatically analyze the
information using sophisticated statistical techniques, and present the results in a
user-friendly way. This gives the sales manager information that is more useful
in :
Providing current and useful sales support materials to their sales staff
Providing marketing research data : demographic, psychographic, behavioural,
product acceptance, product problems, detecting trends
Providing market research data : industry dynamics, new competitors, new
products from competitors, new promotional campaigns from competitors, macro-
environmental scanning, detecting trends
Co-ordinate with other parts of the firm, particularly marketing, production, and
finance
Identifying your most profitable customers, and your problem customers
Tracking the productivity of their sales force by combining a number of
performance measures such as : revenue per sales person, revenue per territory,
margin by , margin by customer segment, margin by customer, number of callsper day, time spent per contact, revenue per call, cost per call, entertainment cost
per call, ratio of orders to calls, revenue as a percentage of sales quota, number of
new customers per period, number of lost customers per period, cost of customer
acquisition as a percentage of expected lifetime value of customer, percentage of
goods returned, number of customer complaints, and number of overdue accounts.
More complex models like the PAIRS model (by Parasuraman and Day) and the
Call Plan model (by Lodish) can also be used.
Advantages to the marketing manager
It is also claimed to be useful for the marketing manager. It gives the marketing manager
information that is useful in:
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Understanding the economic structure of your industry
Identifying segments within your market
Identifying your target market
Identifying your best customers
Doing marketing research to develop profiles (demographic, psychographic, and
behavioral) of your core customers
Understanding your competitors and their products
Developing new products
Establishing environmental scanning mechanisms to detect opportunities and
threats
Understanding your company's strengths and weaknesses
Auditing your customers' experience of your brand in full
Developing marketing strategies for each of your products using the marketing
mix variables of price, product, distribution, and promotion
Coordinating the sales function with other parts of the promotional mix (such as
advertising, sales promotion, public relations, and publicity)
Creating a sustainable competitive advantage
Understanding where you want your brands to be in the future, and providing an
empirical basis for writing marketing plans on a regular basis to help you get there Providing input into feedback systems to help you monitor and adjust the process
Strategic advantages
Sales force automation systems can also create competitive advantage. Here are some
examples:
As mentioned above, productivity will increase. Sales staff will use their time
more efficiently and more effectively. The sales manager will also become more
efficient and more effective.(see above) This increased productivity can create a
competitive advantage in three ways: it can reduce costs, it can increase sales
revenue, and it can increase market share.
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Field sales staff will send their information more frequently. Typically
information will be sent to management after every sales call (rather than once a
week). This provides management with current information, information that they
will be able to use while it is still valuable. Management response time will be
greatly reduced. The company will become more alert and more agile.
These systems could increase customer satisfaction if they are used with wisdom.
If the information obtained and analyzed with the system is used to create a
product that matches or exceeds customer expectations, and the sales staff use the
system to service customers more expertly and diligently, then customers should
be satisfied with the company. This will provide a competitive advantage because
customer satisfaction leads to increased customer loyalty, reduced customer
acquisition costs, reduced price elasticity of demand, and increased profit margins.
Disadvantages
Detractors claim that sales force management systems are:
difficult to work with
require additional work inputting data
dehumanize a process that should be personal
require continuous maintenance, information updating, and system upgrading
costly difficult to integrate with othermanagement information systems
Encouraging use
For all the reasons stated above many organizations have found it difficult to persuade
sales people to enter data into the system. For this reason many have questioned the value
of the investment. Recent developments have embedded sales process systems that give
something back to the seller within the CRM screens. Because these systems help the
sales person plan and structure their selling in the most effective way they give a reason
to use the CRM
The purpose ofCustomer Reference Management is to improve and enhance the level
of "advocacy" a set of customers displays related to a vendor's products & services.
Specifically, a vendor's objective is to gain referrals and positive "word of mouth" from
this advocacy.
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Methods employed include participation in a written case study, speaking on a telephone
call with a potential customer or the media, or engaging in an event or seminar to share
the story of a product or services success.
Ultimately, a professionally desisgned customer reference management program should
result in the following:
Improving the effectiveness of the sales process
Your relationship with your customers will grow
You should not have to keep asking your customer to give you a references. This
is known as reference customer burnout.
Allows any size organization to communicate their customers references across
the entire organization
You should be able to measure the effectiveness of a customer reference program
One benefit of the internet is that potential customers can listen and/or view customer
references onlin
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COMPETITORS
ANALYSIS:
The Competitors Analysis
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The five top purchases of the affluent consumer that visiting Hugo Boss:
Jewellery
Clothing
Digital accessories
Time wear
Cosmetics and skincare
CATCHING UP
Spending on luxury goods
(per annum per affluent household)
India $8,900
WHERE'S THE MARKET for Boss Hugo Boss:
The new generation affluent
CEOs and other senior professionals
in their thirties and early forties
Entrepreneurs in new businesses
Returning "prodigal children"
Franchisees, and small and medium
retailersINCREASING NUMBERS
The luxury space in India
1.6 million households; this number is likely to cross 3 million by 2010
Each household earns around Rs 45 lakh (about $100,000) per year
The spend is about Rs 4 Lacs ($9,000) per year on luxury/very premium goods and
services
The number of households is grow-ing at 14 per cent per year
Today Hugo Boss, and especially the core brand Boss, is a big lifestyle brand. They are
the top brand globally. Boss is present in 106 countries where they sell their fashion in the
high end menswear segment. BOSS is clearly No 1 with a global market share of 13
per cent. On the second rung are Armani and Zegna in the high end with a market share
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of 8 per cent and then there are a lot of smaller companies like Canali, Kenzo, etc. In
women wear they have competitors like Armani, Max Mara and Gucci, and in shoes
and leather accessories we have competition again from Gucci and Ferragamo.
Boss Hugo Boss enjoys the first move advantage. It has very few direct competitors.
In the direct competitors brands like
Dunhill
Valintino
Paulsereli
Aigner
Canali
Zegna
Armani
In indirect competition brands like:
Luivitton
Mont blanc
Bvlgari
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OBSERVATIONS
Observations:
Key observations on the customer:
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According to my observations customers demanded more for the denim jeans, t shirts,
polo. It is very important that the customers find their sizes also. If possible then atleast
the hand bags should be made available throughout the year.
If we follow the movement of the customer upon entering the store they first browsed
through the boss orange collection and then to the boss black collection. The movement
was from casual to formals.
D eman d in terms of the Produ ctline at Hu g
2
3
6
4
5
3
1
Access
Shirts
Denim
T-Shirt
Suits
Shoes
Trousers
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The S.W.O.T Analysis:
The S.W.O.T Analysis:
The strength, weakness, opportunity and threat analysis of the Hugo Boss store is
The strength:
Location: the location of the store at Oberois is strength for the company as the
kind of clients visiting the hotel is all luxury loving and are well aware of the
brand Hugo Boss.
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No direct competitors: there are no direct competitors for Hugo boss in Delhi. It
is a market leader in mens wear segment.
Highly courteous staff: is an added advantage as customers always leave the store
with a smiling face.
Exclusive merchandise: the store offers exclusive merchandise which is not
available anywhere in Delhi.
The weakness:
The target group that the store caters to is around 2000 people in Delhi.
Specialized services are offered to100 or even less people.
The visual merchandise does not serve the purpose of attracting new customers.
The merchandise is selling more due to the brand name rather than the Visual
merchandise.
Inefficient supply chain, which ultimatley hinders the revenue or the store
The opportunity:
With the retail boom the company can open couple of stores in Delhi.
Company can bring boss women in India and hence increase the target market.
Increasing income levels
The threat:
Opening up of new luxury brands in mens segment
Changing demographic
Indian consumer becoming more and more price conscious, they need value for
money.
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Recommendations:
Recommendations:
Based on my observations and discussions with the staff of the Delhi store I have
following:
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The visual merchandising needs improvement, as a carelessly done visual merchandise
will effect the brand image
Sales promotions should not be flashed on the newspapers as it hurts the luxury
brands image. It is very important to maintain the brands exclusivity which is its
strength
The supply of hand bags should be adequate
Product manuals should be given to each store so that everybody on the retail
floor should have the product knowledge. No one without any adequate product
knowledge should be allowed on the floor.
When new stock comes then its setting should be done by closing the store, for an
hour. So that inconvenience is not caused to the customers
The company should arrange for a separate dining area for the staff to eat as thw
smell of the food comes in the front area and it gives a bad impression.
Area where the suits are displayed should have more space.
Both the try rooms should be kept functional.
The store has one tailor who does the alterations, if he could get a helper then
speedy services can be given to the customers resulting in customer satisfaction.
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Questionnaire
'Feed back from fashion consultants
What is the most important thing for a CCA?
A. Product knowledge
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B. Service orientation
C. Consumer behaviour understanding
D. Awareness of Latest trends
(A) (B) (C) (D)
20% 80% - -
Do you think training makes any difference?
A. Yes
B. No
(A) (B)
60% 40%
What parameters should be used to evaluate the performance?
A. Sales/ day
B. Sales/ sq ft.
C. Social factors including sales/ day
(A) (B) (C)
20% - 80%
BIMTECH, PGDRMM, 65
-
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Should a minimum level of qualification be there for CCA's?
A. Yes
B. No
(A) (B)
80% 20%
Are you satisfied with the incremental procedure?
A. Yes
B. No
(A) (B)
100% -
Is briefing useful or is just a formality?
A. Yes
B. No
(A) (B)
70% 30%
BIMTECH, PGDRMM, 66
-
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Should personal targets be designed for one's own assessment?
A. Yes
B. No
(A) (B)
- 100%
Bibliography:
BOOKS:
Swapna Pradhan, Retailing Management, second edition, published by Tata
Mc Graw-Hill Publishing Company Limited.
Martin M. Pegler, Visual Merchandising & Display, fourth edition, published
by Fairchild publications (New York).
Levy Weitz, Retailing Management, fifth edition, published by Tata Mc
Graw-Hill Publishing Company Limited.
WEBSITE:
www.wikepedia.com
www.bosshugoboss.com
http://www.wikepedia.com/http://www.bosshugoboss.com/http://www.wikepedia.com/http://www.bosshugoboss.com/
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