International business final project on Burberry
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Transcript of International business final project on Burberry
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History
Founded in 1856 by Thomas Burberry in Basingstoke, England
Innovative in fabric and outwear design
1895 Burberry develops a coat for British officers during the Boer War: early trench
1914 Epaulettes and „D“ rings are added: Birth of the trench coat
1955 Burberry was awarded a Royal Warrant by Queen Elizabeth II
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Heritage
Outerwear core with adventure/exploration history
Iconic products Burberry was originally synonymous with quality and
durability Was part of regulation uniform for soldiers during WW I Received royal warrant by British royal family
(Burberry check) world’s most recognized and widely copied tartan pattern
Past: classic, rogue outerwear brand. Future: next generation,
Fashionable youth. “Burberry chic”
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Corporate Identity
1920 The Burberry Check, registered as a trademark, was introduced as a lining to the trench coat.
Itwas later used for a broad variety of accessories and clothes and became more symbolic as the actual logo
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BRAND & CULTURE:
Quintessential British fashion with outerwear core
-One of the oldest & most respected British labels
-Leading luxury brand with global business found in 26 stores worldwide
-Iconic trench coat, trademark check and Prorsum knight heritage logo
-Brand leader in digital communication (social media, burberry.com, fashion shows)
-Personalized customer care offering consumers a superior shopping experience
-Social Responsibility (Burberry Foundation)
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USP
Authentic British heritage Rooted in integrity of outerwear Broad consumer appeal Across genders and generations Global reach
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Consistent execution of key strategies
LEVERAGE THE FRANCHISE Outerwear around half of apparel sales Significant opportunity in menswear; grow tailoring Unlock the potential in licensing Directly operating fragrance and beauty
• Greater brand control
• Under-penetrated; significant opportunity Digital marketing critical for reach and engagement Innovation in social media: nearly 15m Facebook fans
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INTENSIFY NON-APPAREL
Innovation in large leather goods, half of non-apparel
Significant opportunity in men’s accessories, especially in male-focused Emerging Markets
Continued opportunity in soft and shoes
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ACCELERATE RETAIL-LED GROWTH RETAIL-LED GROWTH Investing in flagship markets, biased
to Larger store formats Focus on driving retail productivity
through Monthly floor sets and
replenishment Building customer centricity with
investment in customer insight
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INVEST IN UNDER-PENETRATED MARKETS
Move from franchise to direct control over time; Increase investment
in retail and infrastructure Drive productivity in China; evolve store network Develop new high potential markets including Middle East, Central/Latin America and India Continued opportunity in US wholesale; 9% of group
retail/wholesale revenue
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PURSUE OPERATIONAL EXCELLENCE
Support business growth in logistics Drive efficiency through existing supply chain infrastructure Improve assortment planning and reduce inventory growth
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DIVERSIFIED BUSINESS MODEL
By channel By region By product
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STRONG FOUNDATION FOR SUSTAINED PROFITABLE GROWTH
BY CHANNEL
Retail expansion: c. 12-14% new space in FY 2013
BY REGION
Drive growth in core regions,
especially flagship markets
Emerging Markets growth
and evolution
BY PRODUCT
Accessories
Women
Men
Children's
Beauty
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Image problems and its buildup strategies
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Image Problems Burberry became mainstream culture, threatened to lose its luxury
image
Check became ubiquitous
Kate Moss: not upmarket
Became popular with British football casual cult, associated with chavs and hooligans
Pubs started to ban people dressed in Burberry
No respect to the brand image
Sold in retail environments inconsistent with its quality proposition
Brand loses its exclusivity
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The 90s: First Repositioning
1997 To over come retail problems, Burberry repositioned itself through new design, merchandising and marketing strategy
Strong focus on the Burberry Check
Broader product line , focus on younger target group
Kate Moss as new testimonial for instant accessiblity
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Second repositioning:2000 era
Recapturing the luxury market
Baseball Caps removed from sale
Reduced visibility of the Burberry Check
2001: 20%
2004: <5%
Kate Moss got replaced by Rachel Weisz (Upper Class, sophisticated, elegant)
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A new era: (Digital age)
New Creative Director: Christopher Bailey
Focus on sub brand/catwalk label Burberry Prorsum
2009 Return to LFW for the 25th anniversary of the British Fashion Council: celebration of Britishness, pushing London as fashion hotspot
New testimonial, Emma Watson is appealing to young , but upscale target group
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Marketing strategy:
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COMPETITIVE ADVANTAGE• -Performance based advertising
• -Cost effective for international banner and text ad campaigns
• -Text and image ads supported
• -Placement is automated, more relevant to users
• -Ads are placed on a wide range of sites not just search engines
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TARGET MARKET
-Burberry maintains a broad appeal across dual gender audience, 20s to 50s
-People with a medium to high standard of living
-Accessible “functional” luxury
-Cross-generational: -Mature audience seeks classic appearance-Youth audience seeks innovative/contemporary design
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STRENGTHS & WEAKNESSESExisting Strengths-Strong/proven management team
-Licensing growth. High incremental return on incremental capital
-Well-established luxury brand with classic heritage products
-Powerful celebrity endorsements
-Iconic products, logo, check print
-Accessible “functional” luxury
-Progressive digital communication (website, fashion shows, social media)
Existing Weaknesses-Low vertical integration reduces capture of margin and value from manufacturing
-Apparel segment has increased fashion risk but accounts for majority of profits
-Internal brand awareness confusion (Burberry London, Burberry Brit, Burberry Prorsum, etc.)
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Embracing Social Media:
Burberry has a sophisticated digital strategy Youtube channel Facebook fanpage Twitter Account
Engaging younger customers with the brand
Giving them a unique insight/background information
Using the opportunity of feedback
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Before• Dependent on
licensing and distribution arrangements
• Limited set of products
• Brand image of being staid and boring
• Just another clothing brand
After• Distribution strategy
was overhauled
• Product line was revamped
• Seen as being young yet classy
• One of the leading luxury brands of the world
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Current strategies
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Changing the way things are done
New Goal:• To transform Burberry from a tired outerwear
manufacturer to a luxury lifestyle brand that was inspirational, stylish and innovative
Hiring the best talent• Top management team made up of A-list industry
talent• People who had worked on shop floors and in
fitting rooms• People who knew
– What customers wanted– What price points people wanted– Where the gaps were
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Repostioning the Brand
Surveyed the market and identified gaps
Goal was to attract younger customers while retaining core customer base
Contemporary logo and packaging were introduced
Didn’t want to be cutting edge nor just classic
Key differentiator from other brands was its functionality
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Changes on the ground
• Updating the Product Line• Slashing the number of product stock
keeping units (SKU’s) from 100,000 to 24,000• Eliminated outdated designs and had a
consistent look about products• Almost a 1000 new styles each season
across women swear menswear and accessories but stayed true to its heritage
• With non-licensed products Burberry exercised control over EVERYTHING (design, sourcing, manufacturing, distribution)
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Changes on the ground (contd.)
• Curbed inconsistencies in price, design and quality across markets
• Tighter control over distribution• Opening up of flag ship stores
– Display full product range– Showcase the vision– Testing ground for new concepts and
designs
• Create consistent brand image to avoid risk of brand credibility
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Expanding Brand Porfolio
Lower end• Low price labels to appeal to younger, fashion
conscious customers• E.g.: Thomas Burberry and Burberry Blue and BlackUpper end (Burberry Prorsum)• Limited distribution, not meant to be a brand for
millions of people• Ultra luxury and appeared on runways with the
fashion greats• Opportunity to showcase new brand image and get
editorial press for its collections• Way to tell people something new was happening at
Burberry
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BURBERRY’S COMPETITION
In competition with Burberry there are a lot of companies like Coach or Gucci.
But in the three years since Burberry’s floatation on the London Stock Exchange in 2002, the Company has enjoyed exceptional growth, with revenues growing over 40% and operating profits increasing in excess of 80%. Looking to the future, Burberry is committed to build upon this momentum in order to continue to generate shareholder value over the long term.
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The Next Five Years
• The Burberry brand has successfully been turned around
• Expansion into product categories such as perfumes, children swear and footwear
• Popularity of brand among non-target customers needs to be tapped
• The distinctive Burberry “check” appears in over 60-70% of all sales, more restrained use is required
• Pervasiveness of the “check” needs to be done in a more strategic way (not too much nor too little)
• Sustaining the brand positioning• Broken brand has been fixed but biggest challenge
now is to continue to grow the brand without risking customer burnout
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China:
The integration of the company’s China operation was finalized and enhanced merchandising, marketing and store service.
Intensified marketing focus extended reach and relevance. Burberry achieved a leading luxury position on Chinese
social media platforms, launched a simplified Chinese version of burberry.com and was named the brand with the second-highest ‘digital IQ’ in China by the influential L2 think tank.
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Japan:
Sold in Japan and made locally High quality apparel but lower
positioning and price points than the International Line.
Weaker accessories due to licenses held buy small manufacturers.
•Blue and Black Labels.
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USA:
In the United States, over 30 new women’s, men’s, accessories and children’s shop-in-shops were opened in key department stores.
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India and Middle East
In India, Burberry is still new but they focuses but they focuses on formation of a new subsidiary with a local partner in Saudi Arabia.
From that subsidiary partner ,they are also have a presence in Middle East.
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Thank you