Introduction• Burberry is a global luxury brand with a distinctive British heritage, core outerwear base and one of the most recognized icons in the world. Burberry designs, sources and markets apparel and accessories, selling through a diversified network of retail, digital commerce, wholesale and licensing channels worldwide. The business is managed by channel, region and product, supported by corporate functions.
Case Study Synopsis• Founded in 1856 by Thomas Burberry • British used trench in WWI• Trademark - (a camel, black, red, and white plaid design) • Used in lining of signature trench coats• Original designs and quality • Celebrities, royalty, politicians, etc.• Symbol luxury and durability
Case Study Synopsis• In 1955, Great Universal Stores Plc. bought Burberry • licensed the brand in Japan through Mitsui and Sanyo• Global recognition through licensing and distribution agreements.• 1997 new CEO Rose Marie Bravo • Cosmetic - logo and brand name • Update product line - consistency • Reposition - keep consumers and attract younger customers.
Case Study Synopsis • 2003- Primary Collections • Womenswear, Menswear, Accessories • 3,162 wholesale doors worldwide • 434 department stores • 2,728 specialty stores
Case Synopsis• Biggest challenge • Create a consistent brand image • Risk losing brand and credibility• Prorsum - luxury line• Advertising Campaign : 2 phases • Stella Tenant • Kate Moss
Case Synopsis• Challenges • Counterfeits • Popular among urban and hip-hop musicians. • Sustainability • Brand positioning• Burberry = healthy• Manage popularity = long-term growth
Within the Burberry offering, there is a product hierarchydefining components - each with unique branding and adistinctive identity.
Prorsum• Most fashion forward collection• Centered around runway shows each year• Latin word for “moves forward”• Inspires the other lines• Hand-tailored
Burberry London (International) Line• Core collection• High-end positioning• Key to the turnaround of the Burberry brand• Strong womenswear and accessories segments• Main markets are currently in Europe and US• Products mainly sourced in Europe and UK• Thomas Burberry Spain & Portugal
Burberry London (Japan) Line• 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
Burberry Brit• Customer wears on weekend• Casual wear• Uses innovative and more contemporary versions of the check.
AnswersLondon Brit ProrsumProrsum London Brit
Burberry Brand• Defined by: • Authentic British heritage • Unique democratic positioning within the luxury arena. • Founding principles of quality, function and modern classic style, rooted in the integrity of its outerwear. • Globally recognized icon portfolio: the trench coat, trademark check and Prorsum horse logo.
Burberry Business• Defined by: 1 Design, marketing and retail-led strategies 2 Digital focus and integration 3 Channel diversity: retail, digital commerce, wholesale and licensing 4 Multi-category competency: non-apparel, womenswear, menswear and children’s wear. 5 Global reach and balance: across core regions and emerging markets
Culture• The culture is distinguished by: 1 Core values: to protect, explore and inspire 2 Democratic and meritocratic ethos 3 Collaboration and connectedness 4 Contributing to its communities, including through the Burberry Foundation.
Burberry sells its products to the end consumer throughboth the retail (including digital commerce) andwholesale channels. For 2009/10, retail accounted for58% of revenue and wholesale 34%.
Channels : Retail• 131 mainline stores• 262 concessions within department stores• 47 outlets• Digital commerce in 27 countries
Channels : Wholesale• Includes sales to prestige department stores and specialty retailers worldwide.• Sales to its franchisees who operate 97 Burberry stores, mainly in Emerging Markets.
Europe including Spain accounted for 44% of sales, Americas 27% and Asia Pacific24%. Emerging Markets, which spans across all regions and includes China, India,Russia, Eastern Europe and the Middle East, contributed 10% to retail andwholesale revenue. 1 Americas: includes US, Canada, Central and South America 2 Asia Pacific: includes China
Outerwear, which is the core of the apparel offer at over half of sales, is the category inwhich Burberry is top-of-mind among consumers.Burberry continues to grow outerwear by continued product innovation.Another key strategy is to grow non-apparel where revenue increased by 10% underlyingin 2009/10.Burberry is planning further growth in all areas of the business over the next few years.
Channels: Licensing• Selective licensing agreements in Japan and globally, leveraging the local and technical expertise of its license partners.• Royalty income primarily received from Burberry’s licensees in Japan.• Its global licensees • fragrance • eyewear • timepieces • small menswear • European children’s wear
Social & Environmental Achievements 2010-2011 Increased the number of factories with worker hotlines by 54% to a total of 33.1 Joined the Ethical Trading Initiative – the first luxury brand to do so.2 Launched a Sustainability Digital Film to employees globally to raise awareness of corporate sustainability initiatives.3 Committed to increase the proportion of the Group’s UK electricity purchased from combined heat and power sources from 29% to 100% to drive demand for renewables in the UK.4 The Burberry Foundation distributed over 2,500 iconic trench coats to partner charities in London, New York City, Hong Kong and Seoul, all working with disadvantaged youth.
Kate Moss Scandal• Burberry distanced itself from Moss in September 2005, days after The Daily Mirror published pictures of her allegedly snorting cocaine.• The company dropped plans for Moss to appear in its fall 2005 campaign, and posters featuring the model were removed from its flagship store.• Burberry stressed in November that it had not severed ties with the model.• A year later she got back with Burberry.
Geographical Mix• Under Retail• Low transactional exposure • Outsourcing of productional activities • Allows production in various countries and currencies. • Yen - Japan license
Vertical Integration• Under Retail• Recent acquisitions of licensees in Spain• Distributors in Korea and the Asia Pacific• Combined with ambitious retail extension• Not very integrated• Deliberately has limited production capabilities.
Business Mix• In the middle of luxury and retail.• Consists almost entirely of apparel and accessories.• Burberry’s business mix seems comparable to that of H&M, Hugo Boss and Inditex but also to that of Gucci and Hermès.
Pricing Power• Burberry sells premium products in a high-quality distribution network. • This positioning is synonymous with higher prices and higher distribution costs.• The company has much lower transactional exchange exposure than luxury goods companies • Therefore does not need to make up as much revenue in times of adverse exchange-rate movements.• Burberry has in the past increased fees due by its Japanese licensees, Sanyo Shokai and Mitsui & Co.
Design & Quality• High on Luxury goods category• Christopher Bailey worked at Donna Karan and Gucci.• Core heritage products• A high fashion range - Prorsum• high end product line - London
Management• Under Retail• CEO- Rose Marie Bravo • Retail and Wholesale background • President of Sak’s Fifth Avenue in US • Chairman and CEO of Macy’s speciality division.• Angela Ahrendts - CEO July 2006• Executive Vice President - Liz Claireborne • President of Donna Karan International
CEO Video:Angela Ahrendts
Strengths• Strong proven management team• Licensing growth delivers high return on capital• Heritage products• Flexibility in product sourcing• Lower transactional exchange exposure
Weaknesses• Low vertical integration reduces capture of margin and value from manufacturing.• Low gearing into Japanese upside.• Apparel segment - increased risk still accounts for most of company profits.
Opportunities• Retail network expansion• Widening of wholesale distribution• Extension of apparel offering• Further development accessories (Spain & Japan)• Increased distribution of Burberry London (Japan)
Threats• Conflicting interests of GUS and external Burberry shareholders.• Reliance on 3rd parties in Japan• Counterfeiting• Control over licensees and wholesale accounts• Company is mono-brand and trademark is core.
Conclusion• Explore opportunities• Demographic Studies• Know their threats• Relied on Licensing ---> Repositioning• New image -----> Success• Compete with some of the best luxury brands.• Sustainability