Personal Essay: Burberry Mingda Dong (Mario)
Angela Ahrendts needed to turn the Burberry Brand around. Because in 2006, luxury was one of the fastest-growing sectors in the world, but at that time, Burberry was becoming ubiquitous and ubiquity means you are not luxury anymore.
When Angela Ahrendts became the CEO of Burberry, she was facing problems including but not limited to the following: 1. No consistency including the design and price. 23 licensees around the world, each doing something different. Nothing wrong with any of those products individually, but together they added up to just a lot of stuff, something for everybody. It was being ubiquity. For example, in Hong Kong, the design team was producing polo shirts and two women shirts with famous Burberry check but not a single coat. In America, the design team was making outerwear but the price was half in UK. In addition, as a British brand, the classic raincoats was made in USA. 2. Missing the historical core. Burberry began with its coats but in 2006, outerwear only represented 20% of global brand business. Instead of the coats, polo shirts and other stuff represented a lot. 3. Retail operation is not good. Burberry is a luxury brand so the target audience should be elite buyers. Burberry should find the right place to reach the right consumers to support luxury brand. But when the markets was identified, there was no stores in the market where the tow of the competitors had ones. 4. Salespeople accustomed to selling cheap items. They knew coats were more expensive and made more profit but they were not appreciate and communicate with customers why the trench coat was a good option.
She needed to turn Burberry around by solving the problems. So she began to setup the goal as developing Burberry into a great global luxury brand and she re-targeted the disposable income of the world’s most elite buyers as target group.
In order to achieve the brand goal, Angela Ahrendts made following strategies which really helped Burberry: 1. Keeping products consistency. Angela Ahrendts believed that great global brands did not have people all over the world designing and producing all kinds of stuff. She integrated design team and had one global design director. She hired Christopher Bailey as the global design director. Every product went through his office to ensure the brand consistency. She also closed some factory and shut down some design team to keep Burberry consistence, powerful and relevant. 2. Sticking to the core. After the competitor benchmarking, Angela Ahrendts found that Burberry was the only iconic luxury company that was not capitalizing on its historical core. She defined the trench coats, where Burberry started, as the core and the heritage of the brand. Emphasizing and growing the core luxury products, innovating them and keeping them at the heart of everything. 3. Optimizing the management process. The Company used to like a department store. Angela Ahrendts shifted the corporate structure to reflect this new, purer point of view. Just like global design director, functional expertise was hired, including a head of corporate resources, a head of planning and a chief supply chain officer, so that everything could be consistence and integrated. Every resource could be used effectively. 4. Reaching target market. Angela Ahrendts decided to focus on markets where the competitors already had a presence, signaling the right kind of consumers to support a luxury brand. 5. Training salespeople. Establishing strong sales and service program to encourage salespeople to focus on selling outerwear. Videos were created and iPads were provided to the stores, so that the sales assistants were equipped to show the hand-rolled and hand-stitched collars to best effects. 6. Digital marketing. After marketing research, Angela Ahrendts found that she should focus on the luxury customers of the future: millennials, which was ignored by competitors. In order to reach them, Angela Ahrendts decided to go to digital marketing. A few regional websites were redesigned and everything went to on platform. It showcase every facet of the brand.
Up to 2013, the strategies have been working well. From inside perspective, employee pride has been made. In 2006, even the top managers did not wear Burberry for the strategic planning meeting. Now, everyone wear Burberry to work and has a package vision at home. From revenue perspective, at the end of 2012, the revenue had doubled over the previous five years, to $ 3 billion and $600 million. In addition, most of the revenue came from the outerwear so the ‘sticking to core’ strategy was pretty successful. From the social perspective, even though Burberry closed some factories and shut down some design time, it still doubled the head count at Castleford and almost tripled global workforce to nearly 10,000, adding more than 1,000 jobs in the UK. Moreover, Burberry got lots of rewards such as the fourth fastest-growing brand globally in 2011 and the fastest-growing luxury brand on Interbrand’s index in 2012.
Burberry has got successful transformation in the past few years. In 2014, Burberry can be continually growing though the speed of growing might slowdown. Burberry still has potential in the future because of a sustainable competitive advantage has been created by Angela Ahrendts, which is to focus on the millennials, the luxury customers of the future. But Burberry may face new challenge in the future after the transformation. In order to make an objective assessment or forecast, not only past achievement or revenue is needed, but also other marketing metrics such as market share and something else.