If there's ever an opportunity to gain insight into the vast and ever evolving world of fashion, we take it.
We got the chance interview Izzat Traboulsi, a few weeks ago, Founder and CEO of T2 Trading, as well as Partner & Managing Director of FTC, about the highly mediatized and successful relaunch of the Hugo Boss store in Cairo's City Stars Mall on September 27th of last year.
First, here's a little background to fill you in. Hugo Boss as a brand is managed by T2, based in Lebanon; the company was founded by Izzat Traboulsi with his brother, Omar Traboulsi, and has been around since 2013. T2 acts as the only official retailer of Hugo Boss in Lebanon and Egypt.
Izzat Traboulsi started his career at FTC, which is the luxury brand’s agent for the Middle East and was founded by his father in the 1980s. At the age of 24, he was in charge of the sales of Hugo Boss in the entire region and at 28 he became the CEO. After starting T2, Hugo Boss has seen a growth of around 50% at its first store in Lebanon, which was opened in early 2014. So far, T2 has opened 4 stores in Lebanon and one in Egypt.
Taking into account his franchising expertise, and the fact that the majority of top retailers in fashion are born and raised on clever and opportune franchising deals, we thought to ask him a couple of questions regarding this particular sector of business in fashion using Hugo Boss as a prime case study example.
We spoke about Cairo, the fashion industry here at the moment, future predictions compared with the current economic situation, and the market today as it compares to the region. Below you'll find the full interview.
How do you decide which cities are contenders for expanding your franchises at T2?
"Since we distributed the brand into the entire Middle East, we had good feedback from all the markets. We know the potential and the gap of each one of them. I had a clear idea about Hugo Boss’ performance as well, which gave me a better perspective.
In addition to the above, we study the potential future of the city as well as if it was sufficiently tapped or not."
What made BOSS close in Cairo? and what made T2 decide to bring BOSS back to Cairo?
"We in fact did not close it down, but switched the business model: We changed it from a franchised partner model to a direct franchise one.
Since Cairo is an important market for the future, we wanted to control the brand here. So we agreed with the local franchise partner to take over the brand for us, to run the business under a new model. Cairo is a big market and it has a lot of potential. Since we used to distribute the brand, we had an eye on its turnover and yield. It was quite satisfactory to do the move. Sales were not tremendously high, but we saw some potential for growth by controlling the brand."
Why at this particular point in time was this move seen as strategic?
"It was just an opportunity. In life, one should grab the opportunity when it is there, otherwise we would have lost it. Opportunities wont wait for us.
We wanted to shoot two birds with one stone: Enhancing the brand image and increasing its sales; and that is exactly what happened. Today our store is compared to the ones in London, Paris, New York … as it has all the components of a real flagship store. We changed the shop concept, the offering, the visual merchandising, the service and after service.
Saying that, we have a solid base now to expand in the future."
Why City Stars as the retail store location?
"We had a presence there and sales were good in that mall. So it was only logical to start there. Today the only mall in Egypt that has a high premium to luxury offering and where the business is quite satisfactory is City Stars. The only other mall that has luxury stores as well is First Mall, but unfortunately it is quiet there. So for the moment we covered the Heliopolis area, which is an important one, and looking into the Downtown and 6th of October areas when the opportunity rises."
How do you view the fashion/retail scene in Cairo?
"We saw a change within the new generation especially. They are more on point with the latest trends and collections. They are opting for more fashion-forward pieces, but we should not forget the older crowd who always wants to feel young at heart in this market. No matter how old they grow, they still want to be dressed fashionably and feel cool and young. That is a very positive aspect of this market. Of course we are talking about a small niche of people, but in general, if we want to take into consideration the population, then there is a gap. Last, I see that the men are more on point than the women in this market which helps our brand too.
In terms of retail scene, Cairo still has to improve a lot on that. We saw some good changes during the last couple of years but they still have a lot to cover. Lots of concepts are missing. On the other hand, they need to improve a lot of their services, after services and product offerings. That is what differentiates Hugo Boss in Cairo from the others; we have a clear upper hand on that."
From a franchising and investment perspective, how is Cairo's market viewed?
"The market is quite volatile due to the economical and political difficulties. Last year was very uncertain, and it is very difficult to work within grey situations: investors need more black & white. The market is good, but today the situation is not clear enough and that is not easy. The recent political decisions against international brands are not helping as well. Last but not least, the lack of support from the government to the international investor is not helping. I think, that they should help them with the structure, logistics, registrations, imports rules & regulations … all that contributes to a negative market view unless it is a very strong and well-established brand like ours.
As for us, we are quite satisfied with the current sales and that is a strong indication. If we are doing well these days, that means we have big potential in the future. Hugo Boss is a brand that offers upper premium products, as well as some luxury ones. People acknowledge our excellent price versus quality ratio in the high premium sector, which is a well-known value that we have."
When looking to open a franchise of a brand in another country, what is the number one deciding factor or most important point you look at.
"We look at the stability of the country itself: economical and political. It is very important to have a good stable ground where the facilities are quite developed.
We look at the GDP per capita of the market and how many people could be potential clients of ours.We look at the desirability of the brand itself within that market.
Those are the important factors that one should have before moving into any market."
Hugo Boss is the world’s leading men’s wear brand. The collections available at this store are identical to those that can be found at any flagship store around the world; including BOSS Menswear, BOSS Green Menswear, formalwear, sportswear and accessories sections.
The store concept embodies BOSS’s crisp elegant style. Its newly designed interior features clean, angular aesthetics, making it a perfect showcase for the brand’s collections and philosophy, which are grounded in tailoring and elegance.
BOSS's relaunch was strategic and well thought out, there's a lot to be said for this decision including T2's acute awareness of calculated risk. A vital point made by Traboulsi was that although Cairo is not the strongest market at the moment, it is in fact a market with great potential. Taking opportunities when they come and not waiting for them to pass you by has great pay off. Finally, play on your brand's strengths and make sure to cater to the correct market. In short, be at the right place at the right time. To many more #RadTalks with inspirational people.