While news of retail sales has never been more depressing, falling for the second consecutive month as it continues to decline in March, Burberry Group PLC reported a 14% increase in fourth-quarter revenues to 334 million pounds. In the six months ended March 31, revenues rose 21 percent to 663 million pounds and retail sales grew 36 percent to 285 million pounds.
What exactly is the formula of success for the British luxury powerhouse founded in 1856 by a 21 year old draper’s assistant Thomas Burberry?
Burberry: Of Gabardine and Warfare attire
Thomas Burberry always had a vision. In his days, motorcars were becoming important. He pioneered a whole series of clothes for cars and changed the way people dressed. He also patented Gabardine, a water resistant, hardwearing yet breathable fabric made from yarn which was waterproofed before weaving.
Burberry’s Equestrian Knight Logo for the Burberry Prorsum (which means “forwards”) was trademarked in 1907 and Thomas Burberry was commissioned by the War Office to adapt officers’ coat to suit the conditions of contemporary warfare. Yes, this was how the trench coat came about. These coats had the representative Burberry classic check as coat lining.
A rich history like this acts as a double edged sword. Brought over by Great Universal Stores (GUS) in 1955, the brand became dependent on tourists, licensees and the grey population as the check design became mite ubiquitous and headed towards oblivion.
Bravo resuscitation: Do a Burberry
Named by Forbes as one of the most powerful women in the world, Italian-American New Yorker Rose Marie Bravo turned a then stagnant, traditional Burberry into a global powerhouse when she took the helm in 1997. She was quick to capitalize on the authentic British history and globally recognized classic trench coat and operated with the core values of the brand. With the Asian Financial Crisis plaguing sales in the Southeast Asian cities, she brought back licences and invested in the Burberry store as the “ultimate brand environment” to reinstall the brand’s heritage and positioning in the luxury sector.
Although she confessed suffering a culture shock when she arrived at Burberry’s scruffy headquarters above the firm’s factory in the East End, a less than enchanting change from the plush Manhattan offices of Saks, she set to work quickly within the next few weeks. Engaging legendary fashion photographer Mario Testino for an image-changing shoot and made Kate Moss her new muse in spite of her drug taking allegations. Corporate wise, she hired some of the best creative, financial and marketing brains in the business. The sexy edge attracted the fashion Press and revenue and profits shot up by 18% and 30% respectively in 2002. The stellar result explains why industry insiders have coined the phrase “Do a Burberry” to mean revamping a stodgy luxury brand into a hip one.
Rose Marie’s encouragement for innovation and change is underscored by the autonomy she gave to then newly poached up-and-coming designer Christopher Bailey from Gucci Group. The modest designer attributed his accomplishment to the freedom Rose Marie had given him, not once questioning his decision to avoid plaid, the most recognized icon of the 148 year old brand.
Christopher Bailey: Design sensibility with business acumen
For such a colourful Curriculum Vitae, Burberry’s youthful designer Christopher Bailey is modest almost to a fault. Discovered by Donno Karen at a tender age of 20, he became right hand man to head designer Peter Speliopolous at Donna Karen for 30 months before returning to Europe to join Tom Ford’s team at Gucci. As Gucci grew to huge dimensions, he sought a new role and jumped at the creative director appointment in Burberry, only after approaching Ford.
Bailey’s unyielding principle behind every collection is to find inspiration from British traditions and culture while tweaking the influences with contemporary silhouettes, fabrics and finishes. The juxtapose of young modern fashion with tradition and history has been working for both the designer and the brand as share price has been ticking upwards, even amidst the grouchy performance of the retail industry.
His ability to distinguish what works for each target segment, as he heads the design teams for both the Burberry Prorsum and Burberry London lines, and cater to their transient tastes has propelled Burberry to become one of the 500 international businesses that play to the fantasies of the rich and beautiful cited by UBS.
Angela Ahrendts: More to come
Rose Marie Bravo kicked start the style diversification at Burberry, as more apparel, handbags, jewellery and shoes were added to the khaki trench coat.
A former executive vice president at Liz Claiborne with global brands like Ellen Tracy, Juicy Couture and DKNY Jeans in her cradle, Angela Ahrendts foremost role is to reorganizae the company around a honed brand image while improving execution and efficiencies. While Burberry has streamlined significantly from a “largely licensed business in the hands of distributors”, only recently had the brand been sharpened into a “global, high growth … luxury brand with a very British sensibility”. She aspires for Burberry to become a purer brand because in her words, “the purer our message, the more compelling it is to consumers”.
In the evolution into a purer brand, Burberry will again capitalize on its core: outerwear and the classic trademarked Burberry check. Bailey had caught on her direction and developed luxury variations of the heritage pattern (Mega Check, The Beat Check, Exploded Check), again injecting fresh modern tastes into the most recognized brand icon. 35 product categories, each with check all over them, were shut down because Ahrendts believed they devalued the icon.
Growth Challenges Ahead
The big picture remains challenging in the global economic downturn. Will the goal of investing in “under-penetrated” markets with new Burberry stores in Kuwait City and Indonesia steer Burberry away from the unfortunate fate of the collective luxury fashion houses? Or will the emerging markets, China and Middle East, continue to redeem the underperforming developed markets?
“We will continue to reforecast flexibly, dynamically adjust … and micromanage the business on a weekly basis before making plans going forward.” Ahrendts said.
Never wrong to proceed cautiously.