MIS Quarterly Executive

Volume 14 Issue 2 Article 3

5-28-2015

Hummel's Digital Transformation Toward Omnichannel Retailing:

Key Lessons Learned
Rina Hansen
[email protected]

Sia Siew Kien

[email protected]

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Recommended Citation
Hansen, Rina and Kien, Sia Siew (2015) "Hummel's Digital Transformation Toward Omnichannel Retailing:
Key Lessons Learned," MIS Quarterly Executive: Vol. 14 : Iss. 2 , Article 3.
Available at: https://aisel.aisnet.org/misqe/vol14/iss2/3

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Hummel’s Digital Transformation
Toward Omnichannel Retailing:
Key Lessons Learned
With the phenomenal growth of mobile and social media, many organizations are
realizing they need an online presence to reach out to digitally savvy customers. But
delivering a seamless customer experience across various online and offline channels
is increasingly challenging. This article describes how Hummel, a European sports
fashion company, overcame the challenges and successfully transitioned toward
omnichannel retailing. Based on this case, we provide insights to guide organizations
with similar ambitions, and the implications for their CIOs.1

Rina Hansen Siew Kien Sia

Copenhagen Business School; Nanyang Technological
Hummel (Denmark) University (Singapore)

The Need for an Omnichannel Retailing Strategy 1

The Internet, mobile devices and social media have revolutionized the retail customer
experience, enabling customers to research and shop anytime and anywhere. A study by
Deloitte2 reveals that customers are increasingly using multiple channels in their buying
behaviors. 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. Other customers do “showrooming”—i.e., using
the stores as showrooms before purchasing online (often at a lower price). Another study, by
Forrester,3 reveals the corresponding increase in customer expectations for multichannel
shopping. This study shows that 71% of customers expect to view in-store inventory online,
while 50% expect to buy online and pick up in-store. However, only a third of retailers offer
some basic “omnichannel” (an integrated multichannel approach to sales and marketing)
capabilities to integrate online and offline channels in engaging and serving customers.
Burberry, for example, strives to deliver a seamless customer experience across channels.
Complementing its offline presence, its digital innovation (e.g., Burberry.com) enabled the
company to achieve a “more consistent brand projection across all customer touch points,
leveraging its brand content to engage and connect consumers globally.”4 Indeed, Burberry
attributed its strong growth of 30% during the financial crisis largely to its omnichannel
1 Varun Grover is the accepting senior editor for this article.
2 See The omnichannel opportunity. Unlocking the power of the connected consumer, Deloitte, 2014, available at http://www2.
deloitte.com/uk/en/pages/consumer-business/articles/unlocking-the-power-of-the-connected-consumer.html; and Bughin, J.,
Manyika, J. and Miller, A. Building the Web 2.0 Enterprise, McKinsey Global Survey Results, McKinsey & Company, 2008,
available at http://www.fabiocipriani.com/wp-content/uploads/2008/08/web20.pdf.
3 Consumer Desire Vs. Retailer Capabilities: Minding the Omni-Channel Gap, Forrester Consulting, 2014, available at http://
www.accenture.com/SiteCollectionDocuments/Accenture-Customer-Desires-VS-Retailer-Capabilities.pdf.
4 Burberry Group Annual Report, 2012.

June 2015 (14:2) | MIS Quarterly Executive 51

Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

initiatives. Christopher Baily, Creative Director and the related challenges of implementing an
at Burberry, summed up the interplay of social omnichannel strategy.
media channels and retail channels at a fashion
show: “We are now just as much a media-content Hummel Background
company as we are a design company, because it is Hummel is one of the oldest sportswear
part of the overall brand experience.”5 brands in the world. The company was founded
Achieving success with an omnichannel in 1923 in Hamburg, Germany, by a young
strategy is a challenging endeavor that remains shoemaker. It endured numerous ups and downs
poorly understood. While current literature for over half a century and survived World War
recognizes the need to integrate across multiple II, when it was burned to the ground. When the
channels, there is limited knowledge on how company fell into crisis in the late 1990s, a Danish
such integration can be accomplished. Existing lawyer bought Hummel. Since then, under new
research tends to be biased toward issues such leadership, Hummel has enjoyed approximately
as channel cannibalization or optimization. The 20% year-on-year growth, and it is one of the
discussion is largely concerned with choosing fastest-growing sports fashion brands in the
the right mix of channels, not how companies industry.
can actually integrate across channels.6 Other Today, Hummel operates in the sports and
research identifies the need to rethink pricing and lifestyle apparel, footwear and accessories
product strategies in omnichannel retailing,7 but market and has an annual turnover of $240
in-depth understanding of the implementation million. The company designs approximately
challenges in pursuing an omnichannel strategy 1,100 product styles per year, which are
remains elusive. manufactured in a variety of countries, including
In the case study presented in this article, we Turkey, India, China and Vietnam. The company
examine the transformation journey of Hummel, is based in Aarhus, Denmark, where its 130
a European sport and sports fashion products employees include the global design and product
company, toward omnichannel retailing.8 (The development team. Just about all of its revenue
research methodology is described in the comes from wholesale business-to-business
Appendix.) Our objective is to illuminate the how (B2B) sales through its own operations,
distributors, agents and licensed partners (e.g.,
large sports retail chains, department stores and
5 Alexander, H. “Burberrys conquest of cyber space,” The Daily
Telegraph, September 8, 2010. boutiques) in over 40 countries. Hummel’s largest
6 See Bang, Y., Lee, D., Han, K., Hwang, M. and Ahn, J. “Channel markets are in Denmark and Germany, followed
capabilities, product characteristics, and the impacts of mobile by distribution markets in France and Turkey, and
channel introduction,” Journal of Management Information Systems
(30:2), 2013, pp. 101-126; Riggins, F. J. “A Multichannel Model of licensed markets in The Netherlands, Japan and
Separating Equilibrium in the Face of the Digital Divide,” Journal of Korea.
Management Information Systems (21:2), 2004, pp. 161-179; Keller,
K. L. “Brand Equity Management in a Multichannel, Multimedia Concerns with E-commerce
Retail Environment,” Journal of Interactive Marketing (24:2), 2010,
pp. 58-70; and Zhang, J., Farris, P. W., Irvin, J. W., Kushwaha, T., Following the e-commerce boom, Hummel
Steenburgh, T. J. and Weitz, B. A. “Crafting Integrated Multichannel began selling to online retailers in 2005. At the
Retailing Strategies,” Journal of Interactive Marketing (24:2), 2010, same time, the company’s traditional distributors
pp. 168-180.
7 Brynjolfsson, E., Hu, Y. J. and Rahman, M. S. “Competing in and licensed partners were also scrambling to
the Age of Omnichannel Retailing,” MIT Sloan Management Review create web storefronts to sell their offerings
(54:4), 2013, pp. 23-29. (including Hummel products) online. This
8 Given that Europe is the largest e-commerce region globally
(312 billion euro annually, which is approximately 15% of total retail
resulted in Hummel having a fragmented online
sales) and that the fashion apparel industry is the largest category of presence, with many different Hummel websites
products sold online, we believe the European e-commerce context (launched by partners and distributors in various
is of sufficient maturity for us to tease out the issues of implementing
an omnichannel strategy (source: Europa større end USA på
countries) and inconsistent brand expressions
e-handel, FDIH, 2013, available at http://www.fdih.dk/nyheder/2013/ online (Hummel logos, product packshots,9
maj/europa-stoerre-end-usa-paa-e-handel; and Quarterly retail
e-commerce sales 1st quarter 2013, U.S. Department of Commerce, 9 A still or moving image of a product, usually including its
2013, available at http://www2.census.gov/retail/releases/historical/ packaging and labeling, used to portray the product’s reputation in
ecomm/13q1.pdf. advertising or other media.

52 MIS Quarterly Executive | June 2015 (14:2) misqe.org | © 2015 University of Minnesota
 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

lifestyle images, videos, texts, etc.). Visitors would channel, Hummel built its omnichannel strategy
get a different online brand experience depending around its B2B network of distributors, licensed
on whether they visited a local Spanish, Japanese, partners, and online and offline retailers. Its
American or German website. primary focus was to strengthen and support
the B2B channel partners. Despite various
“I was shocked when I realized that there suggestions to grow its business-to-consumer
were 10-20-30 different brand expressions (B2C) e-commerce, Hummel repeatedly resisted
internationally. All of us should have been aggressive direct selling to end-customers:
telling the same story. I was embarrassed
that we hadn’t been more caring of our “Where we make our money is wholesale.
brand. We lacked the McDonald’s effect in I would rather invest in supporting our
Hummel.” (Chief Sales Officer, Hummel, distributors and partners than investing
2010) in our own e-commerce site. Wholesale is
where our return on investment is.” (CEO,
Hummel, 2011)
“I get tired from thinking of the many
different value propositions we have in the
different markets. Unaligned price policies, “What we are best at is wholesale. And
unaligned distribution policies and so on. online retailers fit right into our wholesale
The thing is, the consumer is not waiting model ... It is not a new business system,
for us to sort ourselves out. They expect it which has to be built. It is fundamentally
now!” (Chief Marketing Officer, Hummel, the same. We are really good at brand level,
2010) at product level, and we are a really, really
good supplier.” (CEO, Hummel, 2013)
This chaotic branding threatened to dilute
the Hummel brand and destroy the established In mid-2010, the CEO hired a Global Head of
heritage image that reinforced the company’s Digital who, reporting to the marketing function,
distinctive quality and character. As an example, was tasked with the responsibilities of pursuing
the online positioning of Hummel products by an omnichannel strategy for Hummel. Supported
Zalando, a large European online retailer (which by her team, the IT Department and e-commerce
was serviced by the Hummel’s German office), vendors, the Head of Digital led the digital
upset the French distributor of Hummel. The transformation, which had four key thrusts (see
French distributor had carefully developed a Figure 1):
premium positioning for Hummel products over 1. Aligning online branding globally
many years. The German office, however, sold
some products to volume retailers like Zalando, 2. Enhancing e-commerce support for B2B
which pushed Hummel products as mass-market partners
sales, causing much unhappiness to the French 3. Building the omnichannel customer
distributor. This was an example of the Internet community
making highly visible dumping practices by some
4. Complementing the physical store
distributors at discounted prices. The need to
experience.
align the Hummel brand across multiple channels
thus became more critical. The challenge Hummel
faced was how to make a successful transition to Aligning Online Branding Globally
embrace an omnichannel strategy that would best The first thrust of Hummel’s omnichannel
leverage its brand globally. strategy was to take control of the online brand
across all websites. At the 2010 International
Sales Conference, Hummel launched a “One Brand
Key Thrusts in Hummel’s
One Voice” mission to align the online branding
Omnichannel Strategy globally:
Acutely aware of the risk of upsetting the
company’s traditional wholesale B2B distribution “We need to gather all country websites on
one global web and e-commerce platform

June 2015 (14:2) | MIS Quarterly Executive 53

Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

Figure 1: Key Thrusts in Hummel’s Omnichannel Strategy

Building the Omnichannel
Aligning Online Branding Globally: Customer Community:
• Global Website • Integrated Global Campaign Calendar
• Global Facebook Page • Hummel “Happy Moments”
E-Commerce Concerns • Digital Communication Matrix • Sport Sponsorship Mobile Game
and Strategic Priorities • Digital Governance • Social Outreach Through Hummel Karma

2010 2011 2012 2013 2014

Head of Digital Enhancing E-commerce Complementing the Physical

Hired Support for B2B Partners: Store Experience:
• B2B E-commerce Platform • Shop-in-Shop
• B2C E-commerce Integration • Holograms and Virtual Walls
• Brand Button • Mobile Instagram Uploads
• Store Finder • Mono-brand Stores

Figure 2: Hummel’s Digital Communication Matrix

so that we don’t confuse the consumer, but in considering the customer-engagement plan
instead give them the best possible One for each platform. A digital communication
Brand One Voice experience.” (Global Head matrix (see Figure 2) was developed to guide the
of Digital, Hummel, 2010) tactical consideration of the purpose, content,
communication plan and technical integration
The move consolidated 22 local (national) requirements for each social media platform.
Hummel websites to just one global platform For example, Instagram was primarily
with localized sites. Local needs were taken intended for brand and product communication
into consideration in developing the global (e.g., to support product launches and
platform. These included a localized view of campaigns), to generate traffic to Hummel’s
product categories and collections, an upload website, to acquire new fans/customers and to
of locally licensed products, as well as more forge customer loyalty. It was not intended as a
content-focused functions such as local news channel to service or interact with customers,
on the homepage. Similarly, Hummel also for direct sales to customers or to crowd-source
rationalized its Facebook presence from around innovative ideas. In terms of technical integration,
25 different Facebook pages with inconsistent the images uploaded to Instagram were fed
brand expressions (e.g., logos, tone of voice, etc.) to Hummel’s global website. The customers’
to a global Facebook page with local pages, for responses to the social media platforms were
local Hummel personnel to engage with their continuously reviewed and formed the basis
customers through social media. for determining their relevance to Hummel’s
In addition, while Hummel wanted to be omnichannel strategy—e.g., whether or not a
present on all relevant social media platforms platform should be supported in the generation of
(mainly to secure the Hummel profile so that it daily content.
would not be abused by others), it was careful

54 MIS Quarterly Executive | June 2015 (14:2) misqe.org | © 2015 University of Minnesota
 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

To further align online branding globally, “We need to have the central structure in
Hummel prepared a Digital Manual that place first, make it really cool, so that people
comprehensively listed the set of required would be thinking: I would give my left arm
standards and guidelines for online branding. It to be part of that. That would put us in a
described the core values of Hummel, the target better bargaining position when we need to
customer segments and the guidelines for using negotiate with the country partners.” (CEO,
Hummel’s brand imagery and brand expression Hummel, 2011)
online. For the first time, the Digital Manual
allowed Hummel to apply consistent branding
Enhancing E-commerce
standards, which enabled it to align logos, use
of brand name and profile pictures, etc. across Support for B2B Partners
all online and offline platforms. For example, The second thrust of Hummel’s omnichannel
all Hummel HQ social media sites were named strategy focused on enhancing the digital support
Hummel International and those of the countries for its B2B partners. The Digital Department
were named Hummel Germany, Hummel Turkey, worked closely with the IT department to
etc., and the stores were named Hummel store improve the B2B e-commerce platform, which
Berlin, Hummel store Paris, etc. Even the look had been integrated with Hummel’s existing
and feel of profiles, cover photos, newsletters Navision ERP system. Hummel’s channel partners
and websites were aligned, as well as the tone of were able to access its B2B website for direct
voice, for the different Hummel target groups and purchase of products. Furthermore, to make it
the overall brand message. easier for B2B partners to market its products,
The Digital Manual also provided guidance Hummel also developed a mini-version of its own
on how partners should sell Hummel products website, which could be embedded as an “iframe”
across channels such as their own websites, (named the Hummel Brand Button) on online
third-party retailers and market spaces, as well retailers’ websites. Clicking on a “more Hummel
as policies for AdWords, affiliates retargeting info” button on the product pages would open the
and so on. Because of the dynamic changes in iframe, which contained Hummel’s own product
social media and e-commerce, the manual was descriptions, images, video, size guides and
regularly updated and re-issued every six months. brand history, as well as customer star ratings,
As distributor and license partner contracts came comments and user-generated product images.
up for renewal, specific provisions for compliance Previously, all such materials had to be physically
with the Digital Manual were incorporated into sent to the respective online retailers, which
the new contracts. was costly and ineffective. The online retailers
commented that the iframe:
“The digital guidelines mean that [our]
thoughts, dreams and future have been “… helped strengthen the brand by
structured. And that is important for a showcasing the products in the correct
company in rapid development. We can’t Hummel way and helped increase
encourage action if there is no structure, conversion rates, as the consumer got all
especially not for the online area. It’s a little the product info and experience they needed
easier to live with half a solution offline, as without having to leave the retailer’s site.”
you can talk your way to a full solution. You (email from House of Kids, 2011)
can’t do that online; it’s too transparent!” Besides the online support, Hummel also
(Chief Sales Officer, Hummel, 2011) consciously directed potential customers on
While the contractual compliance provisions its websites to the B2B partners’ physical
were important for aligning the Hummel brand retail stores. The “Store Finder” menu option
globally, the company believed the softer on Hummel’s various local websites was
enforcement approach was to produce high optimized to display the nearest store that
quality and easy-to-use resources to entice carried the specific products. To offer a more
partners to adopt Hummel HQ materials instead complete customer experience, Hummel
of their own: also built up its B2C e-commerce to augment

June 2015 (14:2) | MIS Quarterly Executive 55

Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

the customer experience for its smaller B2B the campaign and product. The result was a
partners. Customers who were unable to get consistent and coherent customer experience
specific Hummel products from the physical across both the online and offline channels. These
stores of these channel partners could place an coordinated marketing efforts proved to be highly
order through B2C e-commerce within these successful. The ROIs of global campaign launches
shops (e.g., through the use of iPads—for more were shown to be 10 times better than before.
information, see “Complementing the Physical In addition, the unique characteristics (the
Store Experience” below). “DNA”) of Hummel as a sportswear brand (retro,
Building up B2C e-commerce, however, team spirit, playfulness) were continuously
required significant efforts to integrate Hummel’s reinforced by showcasing real Hummel people
global e-commerce website to its back-end in action. This was done, for example, through
ERP system. For example, the exchange of data global competitions such as Hummel “Happy
between the two systems (such as product details Moments,” where customers would share their
from the ERP system and order details from favorite Hummel Moments on Instagram and
B2C e-commerce) had to be carefully managed. Facebook, with them being broadcast in real time
Formalizing the data exchange format, exception to webpages or virtual walls at the company’s HQ
handling and change-notification processes took a (see Figure 3). These recurrent themes were the
while to stabilize. threads that weaved through all channels.
Another thread that weaved across the
Building the Omnichannel different channels was Hummel’s coordinated
Customer Community approach for sports sponsorships. The company
Recognizing that an omnichannel strategy sponsored various national football and handball
would change the way the channels worked teams, local teams and individual sports stars.
together, Hummel’s next thrust was to By connecting customers to these sponsored
revamp its usual channel-specific customer teams and stars, Hummel generated a significant
engagement approach by weaving it into a increase in customer traffic across channels. For
more coordinated enterprise-wide marketing example, whenever Hummel had promotional
program. This program took the form of a events, competitions and celebrations, the
carefully crafted annual campaign calendar, sponsored teams or stars would also share such
which was agreed with and signed off on by information on their own social media channels
Hummel’s sales and marketing departments (stipulated as a requirement in the sponsorship
in all countries. Specific themes and contents contracts). “Sports star power” helped to amplify
for each week of the year were developed and customers’ enthusiasm for Hummel.
customized for each individual channel. When The company even created mobile apps to
a new product was launched in retail through complement the sponsorships. The Hummel
either B2B or B2C physical and digital stores, Football Game app, for example, gathered its
it would be announced on in-store point-of- most prominent teams in one virtual locker room
sale material and in newsletters, banners and so that fans, customers and even B2B retailers
blogs. Simultaneously, the launch would also could interact and play with the teams. The app
be advertised on local Google sites, Facebook featured disparate sports fields, such as the
pages, Instagram, YouTube, Twitter, etc., as well sunny stadium of Valladolid (home of a Spanish
as in print magazines with a link or QR code football club), the “edgy”10 field of the German
(Quick Response, a type of matrix barcode) to the St. Pauli football club and the dusty Afghanistan
website. The front page of the website would fully desert, where players could play and score to
describe the campaign and provide links to more win trophies on each field. If a player won a
in-depth articles, which again had social media bronze trophy on all fields, Hummel would—
feeds that linked back to the products. in the name of the player—send a football to an
In this way, Hummel’s customers would underprivileged child in Sierra Leone. This act
experience a consistently aligned campaign in of philanthropy was part of another Hummel
all channels and be led from channel to channel,
depending on how they wished to engage with 10 St. Pauli is known for being “edgy”—skulls as logo, working
class heroes, anti-commercial, etc.

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 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

Figure 3: Real Hummel People in Action (Instagram Feeds)

engagement initiative called “Hummel Karma.” Complementing the Physical

The Karma cause was an integral part in the Store Experience
development of Hummel’s partnerships. Each The final thrust in Hummel’s omnichannel
sports sponsorship was expected to have a strategy was to focus on digital-in-store
Karma cause that would support a social cause innovation to complement the physical store
by helping the less fortunate in their community experience for customers. One such innovation
through various projects, thus helping to “change was a shop-in-shop e-commerce platform where
the world through sport.” B2B partners could offer all Hummel products
By weaving these threads across the multiple for sale in their physical stores without actually
channels, Hummel progressively deepened carrying the stock. Designed and maintained by
the relationships with its end-customers. Hummel, the shop-in-shop could readily be set
From simply being attracted to its websites, up within a day on desktops, iPads or mobile
customers became strong Hummel advocates devices in the stores. The iPad e-commerce app,
(e.g., by uploading hashtagged pictures across for example, offered additional styles, colors and
channels, sharing on blogs or customer forums, sizes from Hummel’s own warehouse because
participating in community projects and so on). the stores’ selection was typically limited by the
physical size of the store. Items ordered would
then be delivered to the customers’ homes
directly or offered for in-store pickup.

June 2015 (14:2) | MIS Quarterly Executive 57

Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

In addition, other digital-in-store innovation Figure 4: Hummel’s Virtual Wall,

experiments were lifelike holograms of the latest
Hologram and Digital Screens
fashion offerings (e.g., sneakers), virtual walls
with life-size models showcasing the season’s
products on the catwalk and RFID scanners that
would bring the products to life on a screen (see
Figure 4). Hummel also used QR codes on point-
of-sale material and the products’ wash labels to
provide easy and quick access to more product
information and entertainment.
The most engaging in-store tool was
perhaps the customer’s own mobile phone.
Customers could upload pictures of themselves
or of products via the Instagram hashtag
#hummelsport and a style number, which would
then be fed to an in-store live screen and also
to Hummel’s global website. In this way, user-
generated photos of Hummel products could be
showcased almost instantaneously across its
various digital channels.
Over time, Hummel also began to realize
that relying just on online channels and the
retail stores of B2B partners (which often Changes to the Technology
carried a range of brands besides Hummel) was Infrastructure
not sufficient. There was a need for specialty To support the omnichannel strategy,
positioning in the offline channels as well to Hummel’s IT system had to be enhanced.
strengthen Hummel’s brand image. A few such Beyond the tighter integration required between
specialty Hummel mono-brand stores had been Hummel’s websites and the back-end ERP system
set up in major European cities as part of the for its B2B and B2C e-commerce, there were also
company’s brand-building initiatives. issues related to the IT infrastructure, which
“The focus on channels has changed needed to support a new set of “rich” product
dramatically for Hummel. Now we are not data. Examples included the uploaded packshots,
just focused on our offline key accounts, our images and photos, campaign and catwalk videos,
bricks and mortar customers. Now we also 3-D animation, size guides and even qualitative
recognize the need for and the importance texts such as sales descriptions, customer ratings
of a Hummel mono-brand store—both and comments. These were often the resources
online and offline—as part of being an used for digital marketing and were generated
attractive brand.” (Chief Marketing Officer, by designers, marketing personnel or consumers
Hummel, 2012) themselves.
A new Product Image Management (PIM)
system was built as a data hub that could import
Acquiring New Capabilities product data not only from the ERP system (e.g.,
style name, style number, color, size, price and
for Omnichannel Retailing stock level) but also from various other social
As the various omnichannel initiatives were media platforms such as YouTube and Instagram.
planned and rolled out, significant efforts The PIM system could also export data to the
were needed to enhance Hummel’s technology other platforms through QR codes (data for a
infrastructure and to revamp its organizational mobile product information site, to which the
practices. specific QR code linked) and the Hummel Brand
Button (data for the product-specific iframe on
retailers’ websites). Data could also be exported

58 MIS Quarterly Executive | June 2015 (14:2) misqe.org | © 2015 University of Minnesota
 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

to the virtual wall in stores and to the B2C tried to keep up with evolving customer needs
e-commerce system (e.g., the rich product data, and technological advancements.
which the ERP system did not contain, such as Figure 5 shows Hummel’s emerging IT and
videos, size guides and ratings). data infrastructure and the various interfaces that
In addition, feeds and updates to and from the Digital Department managed in collaboration
the various channels had to be integrated into with the IT department, B2B partners and
the IT infrastructure. Instagram pictures, for vendors. While the integration between
example, were imported into the website once Hummel’s e-commerce websites and the back-end
every hour, and the local Facebook page was ERP system was largely managed in collaboration
embedded into the local website front page. with the IT department, the Digital Department
The names of the players who completed all had to take ownership of the digital channels
the fields in the Football Game app were also and the new set of “rich” product data. With the
imported into the dedicated page on the website. help of the IT vendors, the Digital Department
Similarly, data from Facebook was imported became responsible for the PIM system, content
into the Football Game app, and player data management system and related social media
from the app was exported to the newsletter integration. Being the data owner meant that the
database. This database was also connected to the Digital Department had to ensure the integrity of
Hummel websites—making it possible to collect such information as it was exported to be shared
newsletter sign-ups from many platforms and with other digital channels.
store them in one central place.
However, the technical capabilities required Changes to Organizational Practices
(social media integration, rich product data Organizationally, the omnichannel strategy
management, digital-in-store innovations) were required the implementation of new and changed
not readily available in-house. Hummel therefore business practices. For example, Hummel used
decided to acquire these capabilities from to have a large marketing team engaged in a
external e-commerce vendors. Hummel chose a laborious and resource-intensive process of
main vendor that would also manage Hummel’s preparing traditional marketing catalogues. This
projects with other vendors when necessary. group was downsized. Instead, a photo studio
In addition, a consultant who had an overall with an in-house photographer was set up at
business understanding of Hummel as well as Hummel’s HQ to shoot the required packshots
technical and systems know-how was hired from and upload all styles to the PIM system. In
the e-commerce vendor. The consultant worked addition, the design of marketing campaigns
in-house at Hummel two to three days a week was adapted to be more product-focused instead
to help with the development and integration of lifestyle- and outfit-focused. Being product-
of systems from third-party vendors, such as focused reduced the risk of uploading a campaign
payment systems and newsletter systems. He picture to the websites and not having the
also acted as a broker between Hummel’s IT complete items available for customer purchase.
department and the external IT developers. Some of the organizational changes also
The decision to rely on external e-commerce involved cross-departmental processes.
vendors proved to be highly effective. First, it was Hummel’s development of the B2C e-commerce
a very scalable approach because it enabled the platform, for example, required downstream
rapid ramp-up of Hummel’s digital capabilities changes to logistics (e.g., individual piecemeal
during the early years, but as the development delivery rather than wholesale bulk delivery,
stabilized, the deployment efforts could be product return processes) and finance practices
gradually scaled down. The arrangement also (e.g., linking to external payment service
offered flexibility because Hummel learned that it providers). Procedures for cross-functional
was not possible to source all digital capabilities online and offline processes (e.g., online purchase
to support its omnichannel strategy from a and payment, in-store pick-up, home delivery,
single e-commerce vendor. Other vendors had item exchange and refund processes) had to
to be engaged to fill in gaps in expertise (e.g., be carefully coordinated with logistics, finance,
holograms, mobile apps, newsletters) as Hummel stores, etc.

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Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

Figure 5: Hummel’s Emerging Omnichannel Technology Infrastructure

“We have once and for all ‘killed’ the old was reoriented with an added metric to assess
silo policy about the web only being a the omnichannel focus (labelled internally as
marketing tool—the company’s business “360-degree service focus”). Job descriptions
card. However, there is still a lack of will were amended to reflect this focus, and it was
and capacity, cross-departmental, to incorporated into employee training as a new
get the entire business adapted for the competency.
full potential.” (Chief Marketing Officer,
Hummel, 2011) “It [the omnichannel model] is a necessity.
We have to master this, and we have to
For example, while Hummel had integrated educate our organization in thinking
the online and offline channels sufficiently to commercially about more channels. One of
enable customers to pick up or return their online the key competences [in the job description]
purchases in Hummel stores, they still could for our new Key Account Manager is an
not accede to customers’ requests to exchange omnichannel focus. We now have a criterion
items or get their money refunded in-store. More for omnichannel focus, understanding and
work remained to be done to coordinate across experience. We have never had that before.”
stores and to standardize the different back-end (Chief Marketing Officer, Hummel, 2012)
payment systems used in physical stores and
online channels.
While there was no change in Hummel’s
remuneration system, its performance evaluation

60 MIS Quarterly Executive | June 2015 (14:2) misqe.org | © 2015 University of Minnesota
 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

Figure 6: Hummel’s Dashboard of its Online Brand Indicators

Reaping the Benefits of such as Google analytics on hummel.net, B2C

and B2B e-commerce sales, Store Finder clicks,
Omnichannel Transformation Facebook, Instagram, YouTube, Football Game
Progress with Hummel’s omnichannel strategy app downloads, etc. (see Figure 6).
was seen in the increase in total sales from The analytics on these screens injected
$170 million in 2010 to $240 million in 2013. In new excitement into Hummel, because they
particular, sales through online channels grew heightened the visibility of the performances of
from 5% of total turnover in 2010 to 21% in different digital platforms. Hummel employees
2013 (11% from the B2B e-commerce platform seemed to have internalized the omnichannel
and 10% from online retailers). Moreover, sales mindset and took great pride in sharing and
profitability also improved, because of the lower showcasing Hummel’s DNA to others (e.g., as
discount online retailers received compared to displayed by real customer photos of Hummel’s
the large retail chains. Rapid growth of online products in action).
sales was expected to continue over the next five Furthermore, the successful transition also
years. meant that Hummel had developed a strategic
At the same time, there was greater awareness set of e-commerce capabilities. With its digital
of the Hummel brand. The Hummel community infrastructure (B2B platform, integration to back-
grew from 13,000 people in 2010 to 1.5 million in end ERP, PIM, Brand Button), Hummel could
2014. The number of website visitors increased readily connect to new distributors, retailers and
from 216,000 in 2010 to 1.25 million in 2014, end-customers with one click, at a speed never
and the total number of people reached across all experienced before. If the industry landscape
digital channels increased to 15 million per week were to shift in the future, along with a prospect
in 2014. Comprehensive tracking of these brand to substantially grow the B2C business, Hummel
indicators was prominently displayed on three would be ready to seize such opportunities
large screens at Hummel’s HQ. For example, the (e.g., by rapidly replicating and extending its
screens displayed Hummel’s Dashboard, which existing B2C system and processes). Hummel
aggregated real-time data from various sources could now take control of its digital presence

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Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

and, more importantly, its relationship with between online and offline channels.11 While
end-customers—a strategic leverage that would such integration concerns remain important,
significantly enhance its competitive position in organizations operating in the B2B context face
the market. greater challenges. There is an additional channel
dimension that they need to worry about—the
“If we hadn’t taken control of Hummel’s tension between the B2B and B2C channels.
online presence and made some guidelines The Hummel case illustrates a version of the
now, I think it would have been impossible omnichannel strategy for B2B players. It shows
to implement brand control a few years how Hummel embraced its channel partners
from now. I have this inner picture: that in its omnichannel strategy and consciously
all the contacts, shops, distributors, etc. avoided channel conflicts. Hummel’s strategic
would have taken control themselves ... But priority was to boost B2B sales, and to achieve
now we are slowly gaining the control— this, it actively recruited more online retailers and
taking it back from them. And that is super actively facilitated the B2B platform. In contrast,
important, and this is just the start. That’s Hummel used B2C e-commerce not to grow sales,
why I have given it so much attention at but to build its brand, even extending its B2C
CEO level.” (CEO, Hummel, 2011) operations into the offline space by developing
the mono-brand stores as a means of reinforcing
its brand image. The strategy here was to take
Lessons Learned From control of branding and relationships with end-
Implementing an customers—a powerful asset that would enhance
Omnichannel Strategy its competitiveness.
Hummel intentionally let the brand objective
From the digital transformation journey of
take precedence over B2C e-commerce. The
Hummel, we have derived the following four key
CEO’s intention was to develop capabilities in
learning points for organizations with similar
B2C e-commerce, but not to aggressively grow
omnichannel aspirations.
B2C sales. In fact, Hummel even supported its
1. Embrace Your Channel Partners B2B partners in building the Hummel brand
in the Omnichannel Strategy and in directing leads from its online traffic to
The pursuit of omnichannel retailing requires the network of B2B stores. Even the shop-in-
an organization to continuously clarify its shop (B2C) e-commerce facilities in the physical
omnichannel focus (e.g., among various online stores of B2B partners, which enabled customers
channels, between online and offline channels, to order directly from Hummel and have their
between B2B and B2C channels) and the related goods home-delivered by Hummel, was intended
strategic priorities (e.g., branding vs. sales). to augment the operations of the B2B partners.
Hummel’s success was partly attributable to the These partners would get a cut of the sales if
clarity of its omnichannel strategy. Such clarity customers ordered the goods from the stores.
was critical, because it helped Hummel to steer This type of profit-sharing arrangement was
clear of potentially devastating channel-conflict essential to the success of Hummel’s omnichannel
issues. The clarity also helped the company strategy because it encouraged the channel
to determine the types of functionalities that partners to work together in delivering a
were built into each channel and the extent of seamless customer experience.
cross-channel integration needed to deliver the By embracing and supporting its channel
omnichannel customer experience. partners and integrating the various online
Hummel’s omnichannel journey is particularly and offline channels, Hummel implemented a
pertinent to organizations operating in the particular flavor of omnichannel strategy that had
B2B context. Existing research often discusses a strong B2B emphasis but still built brand loyalty
omnichannel strategies in the context of B2C with its end-customers. An omnichannel strategy
in terms of integration across online channels with less of a B2B focus would look very different.
(e.g., global and local websites, Facebook,
Instagram, mobile/iPad apps) and integration 11 Brynjolfsson, E., Hu, Y. J. and Rahman, M. S., op. cit., 2013.

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 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

2. Recognize that a Successful and helping our existing business. And I have
Omnichannel Strategy Requires gained a better understanding of how many
Deep Change12 consumers use the Internet for information
Organizations should be clear that an and inspiration. There are actually a lot of
omnichannel strategy is not just about adding consumers that end up buying the goods in
e-commerce and social media platforms. Deep the shops because they had a great brand
organizational change to break the entrenched experience online.” (Chief Sales Officer,
silo mindset is critical for success. How did Hummel, 2011)
Hummel successfully tackle this formidable
Understanding the complementary interplay
challenge?
between the online and offline channels was
First, the commitment of Hummel’s CEO to the
crucial to “mastering the omnichannel game.”
pursuit of the omnichannel strategy was clearly
But changing people’s silo mindsets in their
evident. Going omnichannel had consistently
respective channels remained a formidable
been one of the top priorities in Hummel’s
challenge.
strategic plans for the previous few years. His
strategic hiring of the Head of Digital (discussed “Getting all the channels to harmonize was
further below) was instrumental in driving the a very slow, gentle and sensitive journey ...
omnichannel agenda. His clarity of the strategic where we had to take cannibalization and
focus set the tone in the organization and was channel conflict into serious consideration,
critical in aligning employees’ behaviors at every and had to understand that it would take
level. years before Hummel’s e-commerce shop
At the same time, there were substantial could be driven as an independent shop. I
efforts in persistent communication and lost two talented employees because they
persuasion. Hummel recognized that going just didn’t understand it—they wanted
omnichannel was not a one-time digital to drive an e-commerce shop and see
transformation. The company actively promoted turnover and profit from that one channel
omnichannel stories through various means, they were responsible for. They had neither
including: the understanding nor patience for the
●● Celebrating quick wins (e.g., Facebook interplay of all channels on a global scale.”
growth, Hummel Football Game app (Head of Digital, Hummel, 2014)
downloads reaching certain thresholds)
But through the various initiatives introduced,
●● Helping to excite (e.g., through the highly Hummel had clearly set in motion the
visible onscreen flashing of “Hummel’s real transformation journey.
people in action”)
●● Regularly reporting benefits (e.g., process “We have enabled motivation and
savings, referrals from the Store Finder) to knowledge in the entire organization of the
senior management through the Board of importance of the digital launches that we
Directors reports. are doing, pushing toward omnichannel
… we now have an organization that is
For example, given his concern with possible motivated to do it. And in many ways are
cannibalization, the chief sales officer was initially prepared to do it.” (CEO, Hummel, 2014)
very hesitant to embrace the new digital channel,
but after much “education” and demonstration of
the related benefits, he noted: 3. Leverage the Strategic
Role of Chief Digital Officer
“I have probably been a bit old school in The success of Hummel’s omnichannel
relation to what I called ‘compete with strategy hinged in particular on the strategic
our existing business.’ I have maybe moved hiring of the Head of Digital and the
toward calling it [omnichannel] supporting establishment of the Digital Department.
12 Hammer, M. “Deep Change,” Harvard Business Review (82:4), The department was instrumental in driving
2004, pp. 84-93.

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Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

many initiatives on the ground to deliver As the digital agenda becomes more embedded
an omnichannel customer experience (e.g., in the business—i.e., when executives make
consolidating online branding, coordinating digital part of their ordinary jobs—the CDO
the campaign calendar, bridging online-offline role may become less relevant and gradually
processes). Organizations embarking on an disappear. In the case of Hummel, three years
omnichannel strategy should consider leveraging after the establishment of the Digital Department,
the strategic role of a chief digital officer (CDO) to there was already a plan to merge the online
provide the necessary focus in driving the digital and offline marketing functions under the Head
agenda toward omnichannel. of Digital to make the company “more aligned,
The Digital Department is different from an agile and lean.” This time, however, the merged
IT department. Unlike IT, the Digital Department marketing function would operate with a “digital
is an outgrowth from the business, particularly first” mentality.
pertinent to those organizations that are, or will
be, heavily impacted by IT. It is not IT driving “Effectively, there will not be a Digital
the business’s digital agenda, but the business Department anymore. It was a
driving the digital agenda. The CDO helps the transformative department, which is now
CEO to infuse digital strategy into all areas of integrated into the business. There will not
the business. In the case of Hummel, the Digital be a traditional marketing department any
Department was part of the marketing function longer either. It will be a new marketing
because marketing was most impacted by the department that is “digital first” in all its
advent of digital media. The Head of Digital, who marketing communication, photoshooting,
was hired from the fashion industry, reported to campaigns and branding.” (Head of Digital,
the chief marketing officer but also worked very Hummel, 2014)
closely with the CEO.
This observation highlights how IT had been
Despite reporting to marketing, the Digital
assimilated into the core business functions
Department worked collaboratively with all
of Hummel. It is consistent with the notion
business units (IT, logistics, sales, finance, product
of “digital business strategy” expounded by
development, etc.) to lay the digital foundation for
Bharadwaj et al.,13 who argue that organizations
omnichannel retailing.
should rethink the role of IT strategy—from
“The Digital Department is very much an a functional-level strategy, aligned but always
integrative function in the company. There subordinate to business strategy, to one that
is actually not a single department in the reflects a fusion between IT strategy and business
company that we are not working with, or strategy. Hummel’s transformation journey
that is not influenced by our work. Each of suggests that to be truly omnichannel, a fusion
the department’s employees functions as between these strategies is required.
a coordinator across many departments,
“It is simply a transformation of the entire
tying together the new and old functions in
organization. Not only thinking and working
Hummel.” (Head of Digital, Hummel, 2014)
with [Digital], but actually knowing what
The highly integrative nature of the Digital this whole digital thing is and how can we
Department’s work was also evident in the work it into every single part of the strategy
composition of its operating budget. Besides that we have now. There is none of that that
its own budget (e.g., for developing PIM, Brand would work without a digital strategy at
Button, webpages and social media), it also had the same time.” (CEO, Hummel, 2014)
budget allocations from other departments
From Hummel’s experience, it seems that
such as sales (e.g., for AdWords, key account
the creation of the strategic role of CDO and the
support), marketing (e.g., for creating packshots
Digital Department is a way toward achieving
and lifestyle images for websites, newsletters,
campaigns), countries (e.g., for local translation
13 Bharadwaj, A., El Sawy, O. A., Pavlou, P. A. and Venkatraman,
of product descriptions) and IT (e.g., for B2C-ERP N. “Digital Business Strategy: Toward a Next Generation of
integration, web hosting). Insights,” MIS Quarterly (37:2), 2013, pp. 471-482.

64 MIS Quarterly Executive | June 2015 (14:2) misqe.org | © 2015 University of Minnesota
 Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

a real fusion between IT strategy and business comments from Hummel’s Head of Digital
strategy. indicate the required competency:

4. Evolve the Role of CIO in Enabling “IT people are techies that speak with the
an Omnichannel Strategy systems. The Digital people are semi-techies
At Hummel, the roles of the Digital that speak to systems, partners, customers
Department and the traditional IT Department and all internal departments. Digital
are differentiated in that the former focuses on people have to have a strong sense for
the front-end IT that the customers see (e.g., web transformation, for commercial activities
shops, social media), while the IT Department and for marketing activities, as well as for
is responsible for back-end IT (e.g., ERP, EDI). data and systems. IT people just need to
Hummel’s new Head of Digital was an external make the systems work. They rarely come
hire, but that does not have to be the case. If out of the dark to speak to customers or
Hummel’s IT manager had been more actively even to internal sales or marketing people.
engaged with the business, rather than narrowly They simply don’t speak the same language.
focusing only on support functions, he could One recent illustration of this was when the
have taken a greater role in leading the digital Key Account Managers were asked to list
transformation. all of their IT requirements (mostly for EDI
order transfers); they did not know how to,
“Traditionally, most companies are set up because they did not speak IT language. The
with IT reporting to the CFO, meaning they IT manager could not proactively help the
measure IT on support and cost savings. sales people, as he does not speak [the] sales
That is what the CFO sees, and that is what and customer language. So I had to raise my
goes down to the IT department. So we are hand and say that Digital could help as we
not seeing the world with the same eyes speak both languages and deal with both
as the CEO who is more customer-focused sides of the table on a daily basis. It was like
… That is the problem when IT reports an ‘oh, this is what we do’ epiphany!” (Head
to the CFO. That creates a conflict when of Digital, Hummel, 2014)
innovation costs money, and the CFO wants
to save money.” (CIO, Hummel, 2014) The failure to extend the influence of IT
into business will inevitably see CIOs being
To continue to be relevant in a digital pushed to the back end, to become custodians of
transformation, the role of the CIO needs to infrastructure technology, with an increased risk
evolve. Of course, CIOs must update their of being sidelined as the traditional role of system
technical competencies in managing more provision grows smaller.14
front-end, customer-facing IT systems. But they
must also learn to extend their boundaries of Concluding Comments
influence, to begin driving the digital agenda
In summary, as the advancement of digital
in their businesses, possibly even becoming
channels raises customer expectations for
CDOs ultimately—particularly because many
businesses to engage with them wherever,
organizations cannot afford to create a separate
whenever and however, the motivation for a
CDO position. In some businesses, the CIO’s
well-executed omnichannel strategy will become
reporting line may even change to a more
ever more compelling. Hummel’s transformation
front-end business function, such as the chief
experience provides insights into how
marketing officer. In others, the CIOs may step
organizations, particularly B2B players, can steer
up to assume the role of chief innovation officer,
proactively facilitating business innovation
14 See also Don’t Let A Chief Digital Officer Steal The Best Part
through digital technologies. Of Your Job, Forbes, April 2014, available at http://www.forbes.com/
Acquiring expertise in business and marketing sites/danwoods/2014/04/14/dont-let-a-chief-digital-officer-steal-
domains is critical to the new role of CIOs in the-best-part-of-your-job/; and Bullish on digital: McKinsey Global
Survey results, McKinsey and Company, August 2013, available at
businesses with omnichannel strategies. These http://www.mckinsey.com/insights/business_technology/bullish_on_
digital_mckinsey_global_survey_results.

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Hummel’s Digital Transformation Toward Omnichannel Retailing: Key Lessons Learned

themselves forward as they learn to embrace the About the Authors

interests of channel partners, recognize the deep
organizational changes required, leverage the Rina Hansen
strategic role of the CDO and evolve the new CIO Rina Hansen ([email protected]) is an Industrial
role to enable their pursuit of a new and exciting Ph.D. fellow at Copenhagen Business School’s
omnichannel reality. Department of IT Management and is employed
as Global Head of Digital at the Danish sports
fashion brand Hummel. She holds a B.A. in
Appendix: Research Methodology Fashion Business Management and an M.A.
in Strategic Marketing with dissertations on
For this research, we conducted an exploratory e-commerce and multichannel strategy in the
case analysis of Hummel, investigating the fashion industry. Her research focuses on how
“how” question of their successful transition e-commerce, social media and multichannel
to an omnichannel brick and click company. strategy can strengthen a fashion brand. She
One of the authors conducted action research has previously worked for fashion brands like
at the company from 2010 to 2014 while Burberry, Anne Klein and MCM, and continues
holding the role of Global Head of Digital. In this to consult in a variety of fashion companies on
role, she interacted with all HQ departments e-commerce and omnichannel strategy.
as well as local CEOs and Digital Managers.
During her tenure, she conducted 150 Siew Kien Sia
unstructured interviews and intervened in— Sia Siew Kien ([email protected]) is Director
and transformed—the company. In particular, of the Information Management Research
she interacted with the CEO, chief marketing Center (IMARC) and Associate Professor of
officer and chief sales officer, and conducted Information Systems at the Nanyang Business
structured interviews with them over the four- School, Nanyang Technological University,
year period. In addition to the interviews, Singapore. His main research interests are in
internal and external meeting minutes, emails, process redesign, enterprise systems, enterprise
company documents and personal reflections integration, complex organization design and the
were included in the analysis. Study findings development of digital capabilities. He has over
were validated through follow-up sessions with 20 years of research and consulting experience
the CEO, chief marketing officer and chief sales in private- and public-sector organizations and
officer, and with the entire marketing, retail and has published widely in international journals
Digital departments. These sessions focused on such as Communications of the ACM, Decision
obtaining feedback on results and validating the Sciences, Journal of the AIS, Journal of MIS and MIS
conclusions and lessons learned from multiple Quarterly.
points of views.

66 MIS Quarterly Executive | June 2015 (14:2) misqe.org | © 2015 University of Minnesota