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It’s been 20 years since American businesswoman Rose Marie Bravo was drafted in to save British stalwart Burberry — best known for its classic, durable trench coat — from a period of brand dilution after its signature check was adopted by so-called "chavs", a derogatory term for a subset of the country's working class, and pasted on cake tins, doilies and aprons. Bravo installed designer Christopher Bailey, who had worked under Tom Ford and Donna Karan, at the creative helm of the company in 2001, and named Angela Ahrendts, who Bailey knew from his time at Donna Karan, her successor in 2006.
Over the next eight years, Ahrendts and Bailey proved a power duo. Together, they cleaned up the business, buying back licences and transforming Burberry into a credible luxury brand, in part by limiting the use of the company’s check. During their tenure, Burberry became a new star of the global luxury industry. By 2011, the company was generating £1.5 billion in revenue — a 27 percent increase over the previous year — with a market capitalisation of £5.8 billion. That was twice the rate of growth of LVMH’s revenue and market value over the same period.
At the same time, the company gained recognition for its digital savvy. Its famous “Art of the Trench” initiative — which tapped into the internet-born street style phenomenon of the late aughts by enlisting Scott “The Sartorialist” Schuman, and a community of users, to capture images of people wearing Burberry trench coats — made the brand one of the first luxury firms to tap the power of social media and online community.
Season after season, Burberry used its runway shows to showcase its pioneering engagement with new technologies, from livestreaming to novel Twitter, Facebook, Instagram and Snapchat activations. The strategy was twofold, allowing the brand to experiment with promising new communications strategies while driving PR value by creating a “digital halo” for itself that harkened back to Thomas Burberry’s own spirit of innovation (the brand's namesake founder is credited with the invention of gabardine, used in the brand’s iconic trenchcoat). This added a new layer of excitement and energy to the business, which became a rival for fashion brands in France and Italy, even if they sniffed that Burberry wasn’t a real luxury brand.
But the formula eventually became stale, reflected in runway shows that seemed to follow a strict template: the same trenchcoats, the same venue in London’s Kensington Gardens, the same British indie music, the same models, the same front row, right down to the same confetti which fell from the rafters during each finale.
Then there was the product. Some observers argued that the programme of brand purification put in place by Burberry's leadership, though highly successful on one level, had turned into something of a creative straitjacket, limiting its ability to create new, desirable products. Others say the focus on digital innovation had become a distraction, if not a liability, as other brands ramped up their own digital efforts and Burberry's embrace of digital marketing offered diminishing returns.
In 2014, Ahrendts decamped to run Apple’s retail programme and in a move that surprised both the industry and the financial markets, Bailey was appointed to the dual role of chief creative officer and chief executive officer. It proved to be the wrong move. For one, the new role seemed to undermine Bailey's ability to focus on the product. Burberry’s revenue and profit growth waned under his watch. In the fiscal year ending March 2017, underlying revenue was down 2 percent, with operating profits down 21 percent.
Still, under Bailey, Burberry made some progress: transitioning to a new operating and creative model, beginning with the consolidation of its sprawling brand hierarchy in late 2015 and cutting costs. In a move that was rapidly followed by other major players including Tommy Hilfiger and Tom Ford, Bailey also embraced “see now, buy now.” On the creative side, he simultaneously changed his show venue and shifted the direction of his collections towards something more esoteric and less merchandised.
But these changes have yet to deliver the desired results. Enter Marco Gobetti, who officially took up the role of CEO at Burberry earlier this month. Gobbetti is an inspired — if unexpected — choice for chief executive of a business that has prided itself on digital innovation. Prior to joining Burberry, he led the phenomenal turnaround of Céline alongside designer wunderkind Phoebe Philo, turning the LVMH-owned business into one of the group’s top performing fashion brands. But interestingly, Céline chose to sit out the digital stampede led by Burberry that has seen major brands compete for fans, followers and likes as consumers spend more and more time online. Gobbetti also comes with deep experience in retail management, however, as well as an understanding of leather goods, an underleveraged category for Burberry.
To be sure, there is still huge global potential for Burberry, a brand that has near singular ownership of “British luxury.” Unlike, say, Dior and Chanel which have to share the idea of Parisian couture, or the many luxury brands in Milan who have to share the idea of “Made in Italy”, there is only one global British luxury brand at the scale of these continental competitors, and that is Burberry. But what must Gobbetti and Bailey do now to harness this potential?
Bailey, for his part, must focus his attention back on the creative side of the business, creating products that get consumers excited again. While digital savvy will now always be a key pillar of the Burberry business, and the company’s strides in this area position it well for today's media reality, this should not come at the cost of real product innovation. Digital marketing only works when it can be realised in products that people actually want to buy.
The first indication that Burberry may be turning a creative bend came in June when Bailey unveiled a surprise collaboration with Russian designer Gosha Rubchinskiy, whose Eastern Bloc/skater-inflected designs lean right into the “chav” stigma. Bailey now appears able to see beyond the rigid boundaries he once set for himself.
To drive revenue growth, Burberry could also take the “go big or go home” attitude to its “see now, buy now” initiative, amping up the media side of the approach and creating a splash that genuinely takes over fashion week. If Burberry is going to continue to show in-season, it could look to Tommy Hilfiger, which has taken its fashion shows on the road: it took over Santa Monica Pier in Los Angeles and is soon to be treading on Burberry’s own turf in London this September.
The complementary skills and experience of Bailey and Gobbetti should give confidence to Burberry’s investors. Now they need to focus on getting the job done.
THE NEWS IN BRIEF
BUSINESS AND THE ECONOMY
H&M scraps monthly sales figures. The retail giant will instead begin holding capital market days and publishing sales figures less frequently. "A month is far too short a period over which to assess how sales are developing," H&M said in a statement. "Instead sales development should be viewed over a longer period of time, such as over a season or a quarter." Shares in the Swedish company have dropped 17 percent this year, causing investors to call for greater transparency in outlook and strategy.
Adidas sues Forever 21 over stripe design. The sportswear giant is taking the fast fashion retailer to federal court over its use of stripes on a pair of sneakers. This is the latest in a series of legal disputes between the two companies, which began in March and resulted in Forever 21 launching a counter-suit which was later retracted. Adidas claims the design on the offending shoes causes “consumer confusion and deceive[s] the public regarding their source, sponsorship, or affiliation.”
Max and Lubov Azria launch objection to BCBG Max Azria bankruptcy plan. The couple, who sold a majority stake in their company to Guggenheim Partners for $135 million in 2015, claim the plan requires broad releases of personal financial claims totalling over $360,000. Mr Azria, who founded BCBG in 1989, and Mrs Azria, who was its creative director, together own 20 percent of of the company. They are in continuing negotiations regarding lease payments on property that they own and Mrs Azria’s severance package. The company began closing stores in April after filing for bankruptcy protection in March.
Reebok mocks Trump over Brigitte Macron remark. In a Twitter post that was shared over 50,000 times, the company took aim at a comment the US president made during a trip to Paris. Trump told the French first lady that she was “in such good shape… beautiful.” Reebok’s tweet states that the only instance such a remark would be appropriate would be if “you just found a forgotten action figure from your youth, unscathed after decades, in your parents’ basement.” The footwear giant’s light-hearted post is an example of consumer brands shaking off a perceived reluctance towards political commentary.
Abercrombie & Fitch investor calls for stock buy-back after failed sale. SLS Management LLC, who owned 0.84 percent of the brand’s shares as of March 31, said Abercrombie was not being "aggressive enough" in efforts to turn itself around amid falling sales. Abercrombie was said to be in discussions with both American Eagle Outfitters and Express about a potential acquisition, but last week ended talks, causing shares to fall by 17 percent. Abercrombie is one of a number of US mall brands that is running out of time to adapt to a new retail landscape dominated by price-conscious shoppers and fast fashion’s smarter supply chains.
Puma boosts earnings forecast. Revenue for 2017 will rise by 12 percent to 14 percent, the company said in an unscheduled statement Monday, predicting a new operating profit range of between €205 million ($235 million) and €215 million, up from €185 million to €200 million. This was the second forecast increase in three months from the German sportswear maker, as it unexpectedly reported a jump in quarterly sales and profit. The company is in its fourth year of a turnaround, balancing sportswear and street styles with the help of celebrities including Usain Bolt and Rihanna.
Stella McCartney unveils Autumn/Winter 2017 campaign shot in a landfill. The British designer, who has long been an outspoken advocate of sustainable fashion, collaborated with artist Urs Fischer and photographer Harley Weir in a bid to highlight the problem of waste and reckless consumption. Fronted by Brigit Kos, Iana Godnia and Huan Zhou, the campaign showcases the designer’s Autumn/Winter 2017 collection against the backdrop of a landfill site in Scotland. The images were revealed days before McCartney announced a new partnership with Bold Threads, a San Francisco biotechnology company creating the next generation of eco-friendly materials.
Sébastien Meyer and Arnaud Vaillant are exiting Courrèges. The design duo’s Autumn/Winter 2017 collection was their last for the house. The decision was mutual, according to a statement released by Courrèges. Meyer and Vaillant were hired to head up the creative direction of the brand in 2015. Their successor has not yet been named.
Philip Green poaches new Topshop/Topman CEO from Burberry. Paul Price, who held the role of chief merchandising officer at Burberry for a decade, will helm the fashion chains as it looks to expand overseas, joining September 4. Price’s appointment comes days after Green — whose reputation was damaged after he was blamed by British lawmakers last year for the demise of the BHS department store — appointed Karren Brady to chair his Taveta holding company earlier this week.
Jonathan Anderson unveils collection for Uniqlo. A launch event on Tuesday saw the unveiling of the designer’s 33-piece collection for the Japanese giant. The British-inflected collection, which will debut on September 19, includes double-breasted trench coats, tartan jackets, Fair Isle sweaters and striped school scarves. “For me, the point of doing this collaboration was that I believe in democracy in fashion,” Anderson told BoF.
Katie Grand joins W magazine. Instead of directly replacing former fashion and style director Edward Enninful — who will begin his post as editor-in-chief of British Vogue in August — the Condé Nast media brand has appointed Grand as contributing fashion creative director, where she will style fashion stories and help editor-in-chief Stefano Tonchi conceptualise special issues and editorials. Grand will continue in her role as editor-in-chief of Love, the magazine she founded in 2009. In addition, W has hired Vogue’s Sara Moonves as style director and Rickie De Sole has been promoted to fashion director.
NewStore announces $50 million Series B funding round. Leading the round is Activant Capital, joined by returning investors General Catalyst and Stephan Schambach, who founded the mobile retail platform in 2015. NewStore will use the investment to expand its platform and roll out the solution to retailers looking to realise their omnichannel aspirations, as it looks to take on big, established players like Amazon.
Amazon launches shoppable photo feed. The iOS app, called Spark, allows members to showcase and purchase products on its platforms, and marks the retail giant's first clear move into the world of social media. Currently only available for paying Prime members, the service has been labelled a cross between Instagram and Pinterest, infused with e-commerce. Spark comes four months after Instagram launched its own shoppable feature Instagram Shopping, and two years after Pinterest introduced “Buyable Pins.”
Flipkart is preparing to offer $950 million for Snapdeal. The revised bid could lead to a merger agreement between India’s two largest local e-commerce providers within three weeks, say sources. While a merger would create a stronger homegrown competitor to Amazon.com, which has been gaining ground in India as it invests $5 billion in the market, Snapdeal investors — including billionaire Azim Premji — have raised concerns, as the move would see the value of the business cut by at least 85 percent from its peak of $7 billion.
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