Zimmerli of Switzerland is a small Swiss brand that offers the highest quality underwear for men and women in the luxury segment. It has a loyal customer base including celebrities from all over the world.
The case describes the dilemmas Zimmerli’s CEO Marcel Hossli faced in January 2018, when deciding on Zimmerli’s future strategy and how the company should continue to innovate to sustain brand desirability in a disrupted environment.
In 2012, Zimmerli had decided to rely less on B2B distribution through wholesalers and to follow a multichannel strategy with direct sales channels (B2C). Since then, it has opened 15 mono-brand boutiques in Europe and Asia, as well as an e-commerce platform. As a result, Zimmerli grew 8% between 2011 and 2017.
However, physical stores were expensive and impacted Zimmerli’s net margin (0%-5%). Zimmerli faced the challenge of rejuvenating its customer base, without losing its traditional, older customers.
In the past, Zimmerli had not invested much in advertising. Although it had a presence in various social media channels, it had few followers and not much user-generated content.
Could Zimmerli attract new customers and gather data about their preferences on underwear through digital channels? So far, it had focused on product innovation by offering the highest quality products “Made in Switzerland.” This USP came at a high cost and restricted further growth, due to production capacity constraints and a decline in suitable suppliers. Another challenge was Zimmerli’s strategy of making investments out of cash flow only.
The case stimulates discussion on how luxury brands can innovate along the customer journey using digital technologies. Zimmerli’s strengths, its gaps, and its strategic options going forward can be explored using frameworks such as STEEP, Unique Competing Space (UCS) and the New Customer Journey.
- Explore and make sense of factors disrupting the desirability of luxury brands;
- From a strategy perspective, articulate what brand desirability is and diagnose a luxury firm’s ability to respond to the new KSFs;
- Evaluate the opportunities luxury brands have to innovate along the changing customer journey in the digital age;
- Discuss and creatively approach the strategic dilemmas associated with disruption for luxury brands.