1. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 1/18 Delivering a seamless customer experience across various online and offline channels is challenging. This article describes how Hummel, a European sports fashion company, overcame the challenges and successfully transitioned toward omnichannel retailing.

2. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 2/18 Agenda  Omnichannel Retailing Strategy  Hummel Background  Key Thrusts in Hummel’s Strategy  Acquiring New Capabilities  Reaping the Benefits  Omnichannel: Lessons Learned

3. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 3/18 The Need for an Omnichannel Retailing Strategy 1/2  The Internet, mobile devices and social media have revolutionized the retail customer experience  More than 20% of customers follow brands on social media, 75% browse and research online before they go into a physical store and 56% use their mobile for shopping- related searches, often while they are in a store.  71% of customers expect to view in-store inventory online, while 50% expect to buy online and pick up in-store  Only a third of retailers offer “omnichannel” (an integrated multichannel approach to sales and marketing) capabilities to integrate online and offline channels.

4. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 4/18 The Need for an Omnichannel Retailing Strategy 2/2  Achieving success with an omnichannel strategy is a challenging endeavor that remains poorly understood.  This paper examines the transformation journey of Hummel, a European sport and sports fashion products company, toward omnichannel retailing.

5. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 5/18 Agenda  Omnichannel Retailing Strategy  Hummel Background  Key Thrusts in Hummel’s Strategy  Acquiring New Capabilities  Reaping the Benefits  Omnichannel: Lessons Learned

6. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 6/18 Hummel Background  Hummel is one of the oldest sportswear brands in the world.  The company was founded in 1923 in Hamburg, Germany, by a young shoemaker.  It endured numerous ups and downs  Since 1990s, under new leadership, Hummel has enjoyed approximately 20% year-on-year growth, and it is one of the fastest- growing sports fashion brands in the industry.  Today, Hummel operates in the sports and lifestyle apparel, footwear and accessories market and has an annual turnover of $240 million.  The company designs approximately 1,100 product styles per year  Just about all of its revenue comes from wholesale business-to- business (B2B) sales through its own operations, distributors, agents and licensed partners (e.g., large sports retail chains, department stores and boutiques) in over 40 countries.

7. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 7/18 Concerns with E-commerce  Following the e-commerce boom, Hummel began selling to online retailers in 2005.  At the same time, the company’s traditional distributors and licensed partners were also scrambling to create web storefronts to sell their offerings (including Hummel products) online.  This resulted in Hummel having a fragmented online presence, with many different Hummel websites (launched by partners and distributors in various countries) and inconsistent brand expressions online.  “I was shocked when I realized that there were 10-20-30 different brand expressions internationally…We lacked the McDonald’s effect in Hummel.” (CSO, Hummel, 2010)

8. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 8/18 Agenda  Omnichannel Retailing Strategy  Hummel Background  Key Thrusts in Hummel’s Strategy  Acquiring New Capabilities  Reaping the Benefits  Omnichannel: Lessons Learned

9. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 9/18 Key Thrusts in Hummel’s Strategy 1/2

10. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 10/18 Hummel’s Digital Communication Matrix  A digital communication matrix was developed to guide the tactical consideration of the purpose, content, communication plan and technical integration requirements for each social media platform.

11. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 11/18  Enhancing E-commerce Support for B2B Partners  “iframe helped strengthen the brand by showcasing the products in the correct Hummel way and helped increase conversion rates, as the consumer got all the product info and experience they needed without having to leave the retailer’s site.”  Building the Omnichannel Customer Community  Real Hummel People in Action  Complementing the Physical Store Experience Key Thrusts in Hummel’s Strategy 2/2

12. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 12/18 Agenda  Omnichannel Retailing Strategy  Hummel Background  Key Thrusts in Hummel’s Strategy  Acquiring New Capabilities  Reaping the Benefits  Omnichannel: Lessons Learned

13. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 13/18 Hummel’s Emerging Omnichannel Technology Infrastructure Interface management: A- Close coordination among IT Department, Digital and Vendor B - Digital Manual and country contracts C - Close coordination between Digital and Vendor

14. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 14/18 Agenda  Omnichannel Retailing Strategy  Hummel Background  Key Thrusts in Hummel’s Strategy  Acquiring New Capabilities  Reaping the Benefits  Omnichannel: Lessons Learned

15. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 15/18 Reaping the Benefits  “If we hadn’t taken control of Hummel’s online presence and made some guidelines now, I think it would have been impossible to implement brand control a few years from now. I have this inner picture: that all the contacts, shops, distributors, etc. would have taken control themselves... But now we are slowly gaining the control— taking it back from them. And that is super important, and this is just the start. That’s why I have given it so much attention at CEO level.” (CEO, Hummel, 2011)

16. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 16/18 Reaping the Benefits  “Progress with Hummel’s omnichannel strategy was seen in the increase in total sales from $170 million in 2010 to $240 million in 2013. In particular, sales through online channels grew from 5% of total turnover in 2010 to 21% in 2013 (11% from the B2B e-commerce platform and 10% from online retailers).  At the same time, there was greater awareness of the Hummel brand.  The Hummel community grew from 13,000 people in 2010 to 1.5 million in 2014.  The number of website visitors increased from 216,000 in 2010 to 1.25 million in 2014.  the total number of people reached across all digital channels increased to 15 million per week in 2014.

17. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 17/18 Agenda  Omnichannel Retailing Strategy  Hummel Background  Key Thrusts in Hummel’s Strategy  Acquiring New Capabilities  Reaping the Benefits  Omnichannel: Lessons Learned

18. Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned Hansen & Sia - June 2015 Page 18/18 Lessons learned  Embrace Your Channel Partners in the Omnichannel Strategy  Recognize that a Successful Omnichannel Strategy Requires Deep Change  Leverage the Strategic Role of Chief Digital Officer  Evolve the Role of CIO in Enabling an Omnichannel Strategy