Guardian article – 31 Jan 2014

How Mulberry got squashed in fashion's

squeezed middle
The brand was one of Britain's success stories – but
alienated its core customers by putting up prices
without raising quality accordingly Mulberry have
reported poor, heavily discounted Christmas trading,
causing its shares to plummet by 27%. Photograph:
Matthew Lloyd/Getty Images
One upon a time there was a nice, British leather
brand called Mulberry that occupied the middle
market where it flourished very happily. Many of its
acolytes were women of the same vintage as this
Seventies institution, customers who admired good
quality at good value prices. Then, the company
acquired a fashionable new designer who beguiled
their daughters, giving them "it" bags for "it" girls, the
various Alexas, Lanas and their ilk. Everyone was
terribly proud and its forces went from strength to
strength. And then, someone got greedy …
This week, Mulberry issued its third profit warning in
18 months in the wake of poor, heavily discounted
Christmas trading, causing its shares to plummet by
27%. Its chief executive, one Bruno Guillon, who
joined the label in 2012 from Hermès, has been
criticised for hoicking up prices in a bid to carry
Mulberry upmarket, forcing it from the £150-£500 per
purchase bracket to the £1,000+ range. The brand
makes more than 60% of its sales in the UK, but is
bent on global expansion, within Asia, not least.
British sales are down 3% and there is talk of a
substantial Korean cancellation.
If all this seems a tad handbags at dawn, Mulberry
was once one of the Great British success stories, at
a time when there were few to celebrate. In July 2011,
this Somerset-based company hit the headlines with
news that it was now worth a billion pounds.
Bloomberg reported a 526% increase in Mulberry's
stock, and the Duchess of Cambridge sallied forth on
her first official tour toting its £850 Polly Push Lock.
Fewer than three years on, and what we are talking
about may be nothing less than the making and
breaking of a British brand.
The recession and (please God) its aftermath have
proved "interesting times" for the fashion industry, in
the Chinese sense of "that bit too interesting".
Nevertheless, its success stories – Hermès being the
case in point – have been in bona fide luxury, in which
design, quality and longevity can be seen to merit
loftier price tags. It has emphatically not lain in
alienating one's core customers in a cynical and
unconvincing lurch towards blingier prices with no
corresponding polishing up of product.
Mulberry will not even be staging a show at the next
London fashion week, that publicity tool vital in
securing not only celebrity bums on seats, but visuals
for the upcoming season. Moreover, it continues to
lack a designer after the departure of its creative
director and uncommon genius, Emma Hill, who quit
last summer – reportedly in dispute over the Guillon
grand plan. And last year, sources revealed many of
Mulberry's "British" products to be made in Turkey
and China, including its signature scotch-grain
luggage. Guillon may be arguing that the more
expensive lines deploy better leathers and are UK
produced, but to too many of us this will feel like a
case of emperor's new clothes.
For the other great recessionary lesson has been that
quality sells at honest prices: witness the John Lewis
phenomenon. Success is about knowing who one is
as a brand and knowing who one's customer is – the
two being intimately related. Wannabe Alexas craved
Mulberry for being aspirational yet accessible, older
birds for well-made wares at competitive prices.
Neither will be in the market for a £4,500 Mulberry
ostrich tote: youngsters will go back to Reiss, the
wealthier veterans to Celine.
The fashion industry undoubtedly boasts its own
"squeezed middle". Sales among mid-market chains
were down 2.2% in December compared with 2012.
M&S and Debenhams endured depressing
Christmases. Yet those prepared to "style it out", in
"it" gal parlance, can and will reap rewards. Youth
retailer Ted Baker posted a 25% rise in sales between
August and November, while Jigsaw, led by former
John Lewis fashionista Peter Ruis, saw sales jump
7% to £64.2m in the year to 28 September, net profit
growing 21% to £1.9m. Both will be in a position to
make moves on traditional Mulberry enthusiasts.
Another problem that Mulberry and other retailers
face is that moment when "it" becomes – well – a tad
shit, tipping over from cool into being that bit too
ubiquitous. Fashion moves on and labels have to be
prepared to roll with the punches. However, the
upside is that, with some adjustments, such a feat can
be pulled off again. Just look at once derided rival
Burberry, currently reporting a 15% festive sales
boost. Still, one obviously has to retain a brand with
which to do business.