CASE 18 Bur 4 einventing th Brand tis called doing a Gucci’ after Domenico De Sole and Tom, Ford's stunning success at turning nearly bankrupt Gucci Group into 2 £7 billion (€10 billion) (market capitalization) fashion powerhouse. Since 1997, when she took over, Rose Marie Bravo's makeover of the 143-year-old Burberry brand followed the same path, The Burberry story began in 1856 when Thomas Burberry opened his first gentlemen's outfitters. By the First World ‘War business was booming as Burberry won the contract to supply trenchcoats to the British army. Its reputation grew when it proved its contribution to the national cause. The Burberry check was introduced in the 1920s and became fashionable among the British middle to upper classes, Later, when it was worn by Humphrey Bogart in Casablanca ‘and Audrey Hepburn in Breakfast at Tiffany, the Burberry trenchcoat gained widespread appeal. Bought by Great Universal Stores in 1955, the brand's huge popularity from the 1940s to the 1970s had waned by the 1980s. A less deferential society no longer yearned to dress. like the upper classes, and the Burberry brand's cachet fell in the UK. This was partially offset by a surge in sales to the newly rich Japanese and other Asians after they discovered its famous (and trademarked) tan, black/ted and white check pattern. By the mid-1990s the Far East accounted for ‘an unbalanced 75 per cent of Burberry sales. British and ‘American consumers began to regard it as an Asian brand and rather staid. Furthermore, distribution was focused on, small shops with few big fashion chains and upmarket stores like Harrods stocking the brand. In the USA stores like Barney's, Neiman Marcus and Saks only sold Burberry raincoats, not the higher profit margin accessories (e.g. handbags, belts, scarves and wraps). Change of strategy These problems resulted in profit falls in the 1990s culminating in a £37 million (€53 million) drop in profits to £25 million (€36 million) in 1997. This prompted some. serious managerial rethinking and the recruitment of, ‘American Rose Marie Bravo as a new chief executive, Responsible for the turnaround of the US store chain Saks Fifth Avenue, she had the necessary experience to make the radical changes required at Burberry. One of her first moves was to appoint young designer Roberto Menichetti to overhaul the clothes range. His BURBERRy } i challenge was to redesign Burberry’s raincoats and other traditional products to keep them fresh and attractive to new generations of younger consumers. Furthermore, he sought to extend the Burberry image to a new range of products. The Burberry brand name began to appear on such products as children’s clothes, personal products, watches, biue jeans, bikinis, home-wares and shoes in ordet tozattract new customers and broaden the company’s sales base. Commenting on Menichetti Bravo said, ‘Coming i, | had studied Hermes and Gucci and other great brands, and it struck me that even during the periods when they had) dipped a bit, they never lost the essence of whatever made | those brands sing. And | thought, “This man will retaln what's good and move us forward"! : Design was further strengthened in 2007 with the : appointment of Christopher Bailey (from Gucci) as Burbertys creative director. He created Burberry ‘classics with a twist 0t example, recasting the classi tenchcoat in hot pink). Balle) job was to design clothes that met Bravo's vision of hert@9e and classic, but young, modern, hip and fashionable. second element of her strategy was to bring in advertising agency Baron & Baron and celebrity photographer Matio Testino to shoot ads featuring models Kate Moss and Stet Tennant. Other celebrities, such as the Beckhams, Callum Best, Elizabeth Jagger, Nicole Appleton and Jarvis Cocke! also featured in Burberry advertising, The focus wast? emphasize the new credentials of the Burberry brand without casting off its classic roots. Getting key celebtl I ites withe surberry checkin its advertising was highly tant in achieving this. Bravo once remarked that the picture of Kate Moss in a Burberry check bra cut the ge age of its customers by 30 years. strand in Bravo's strategy was to sort out distribution, table shops were closed and an emphasis placed on ‘stores in cosmopolitan cities. Prestige UK retailers uding Harvey Nichols were selected to stock exclusive zs, ravo commented, ‘We were selling in 20 small ps in Knightsbridge alone, but we werent in Harrods. ‘stores that were selling only raincoats were persuaded 5 stock high-margin accessories aswell Burberry essories increased from 20 per cent to 25 per cent of ‘over. This was part of a wider focus on gifts—the more ordable side of luxury that can drive heavy footfall fh the stores. As Bravo said, ‘Burberry has to be ght of as a gift store. Customers have to feel they can into Burberry and buy gifts at various price points.’ zemational expansion was also high on Bravo's priority list. cession of new stores were opened, including flagship 3 in London, New York and Barcelona, The New York ‘on 57th Street was the realization of a personal dream pany had been running in Manhattan for almost 25 ‘with one that was bigger, better and far more ble. tis the biggest Burberry store worldwide and a number of Burberry firsts: lavish gift department, a Hatters tea room. It also offers a service called Art of theTrench where customers can get made-to-measure oats customized by allowing them to pick their own g, collar, checks and tartan, The Barcelona store was ded as vital in helping to reposition the Burberry brand Span. Prior to its opening the brand was slightly less Vonable and sold at slightly lower prices than in the UK. ‘opening of the Barcelona store saw the London product zing displayed for the first time as Burberry moved. rds one global offering. Besides the USA and Spain, _Butbery’s third priority country was Japan since it was an _ Stotmous market for the company already, _ The esults of this activity were astonishing, Profits soared to £162 millon (€227 million) by 2005, a six-fold increase since _thetook over, and in 2002 Great Universal Stores floated. _ 2te-third of Burberry, its subsidiary, on the stock market, ‘48ing £275 million (€396 million). Then, in December 2005 ‘tdemerged Burberry completely, allocating Burberry stores _ 79GUS shareholders in proportion to their holdings in a deal ‘ith £1.4 billion (€2.0 billion). Sutberry did face problems, however, One was the weeding- | “tof grey-market goods, which were offered cheaply in __ “Se only to be diverted back to western markets at iscounts. Not only were sales affected but brand image oar could be tarnished. Like Dior before it, Burberry was willing to spend the necessary money to try to eliminate this activity. Another problem was that of copycats which infringed its trademark. Burberry claim to spend about £2 milion (€2.8 milion) a year fighting counterfeits, running advertisements in trade publications and sending letters to trade groups, textile manufacturers and retailers reminding ‘them about its trademark rights. It uses an Internet monitoring service to help pick up online discussion about counterfeits It also works with Customs officials and local police forces to seize fakes and sue infringers. ‘The fondness with which so-called chavs regarded the Burberry check was a third problem, One observer defined a chav as a young, white, under-educated underclass obsessed with brands and unsuitable jewellery. One product with which chavs became particularly associated ‘was the Burberry baseball cap. They were also associated with violence, particularly at football matches. Th sight of football hooligans appearing in the media adomed in beige and black check was not one appreciated at Burberry HQ. In response, the company stopped producing the infamous cap and shifted emphasis to other non-check lines, including its Prorsum line of luxury clothing designed by Christopher Bailey. A fourth problem arose in 2005 with the announcement that Bravo had decided to step down as chief executive. The woman who had built Burberry into an ultrafashionable ‘major global brand would need to be replaced. Her successor is Angela Ahrendts, who was recruited from the US clothing company Liz Claiborne, which owns such brands as DKNY jeans and Juicy Couture. After a period of working together, Ahrendts took the helm in July 2006 with Bravo taking the newly created role ofvice-chairperson,a part-time executive position. Ms Ahcendlts made changes to the Burberry product line by making the check more subtle and using it mainly in linings and discreet areas of garments. She also placed greater emphasis on higher margin accessories such as handbags and perfumes, and top-of-the-range feshion. She has continued to use British celebrities such as Agnes Deyne and Emma Watson to represent the brand, Burberry also, opened stores in emerging markets such as China, India, Russia, the Middle East and eastern Europe. In 2008, Burberry first standalone chldrens-wear store in Hong Kong was opened, and in 2011 the company bought out its Chinese franchise partner in order to tighten its rein on its global image. It has also built up its presence in the US with the opening ofits new headquarters in New York and further store openings. She also improved efficiency by instaling new IT systems and replacing 21 scattered distribution centres with three regional hubs in the US. Her attention has also been placed (>)(3s) foXsor ‘on better sourcing in an effort to improve margins. Major investments in digital marketing have been made with digital representing 60 per cent of the marketing budget. Burberry has over 8 million Facebook fans who can watch most of its catwalk shows live and purchase Burberry products direct from its virtual store. ‘These activities meant that Burberry proved remarkably resilient during the economic downturn, particularly helped by demand from middle classes in emerging markets. By 2011/12 sales had risen to £1.9 billion with profits of £376 million, Ms Ahrendts saw menswear and male accessories such as bags and scarves as key to Burberry’s next chapter of expansion. In 2072 its first standalone menswear store next to its branch in Knightsbridge, London was opened. References Based on: Heller, R, (2000) A British Gucci, Forbes, 3 April, 84-6; Voyle, S. (2002) Looking Beyond the Traditional Trenchcoat, Financial Times, 12 November, 12; White, E. (2003) Protecting the Real Plaid from a Lineup of Fakes, Wall Street Journal, 7 May; Barton, B. and N. Pratley (2004) The ‘Two Faces of Burberry, Guardian G2, 15 April, 2-3; Barns, E (2005) Are Advertisers Wise to Chase the Chav Pound?, ‘Campaign, 24 March, 18; Callan, E. (2006) Burberry Seeks to Offer Luxury in US Midwest, Financial Times, 7 July 1; Walsh, F.(2006) Burberry Chief Turns on Charm with 19 per cent Growth in Retail Sales, Guardian, 13 July, 28; Kollewe, J.and G.Wearden (2008) Burberry Sees Profits Rise While Laura, Ashley Suffers, Guardian, 29 May, 26; Gumbel, P ig Luxury Market Loses Its Lustre, Fortune, 22 August 9 Wardell, J. (2009) Burberry Makes Loss For Year, Busy | Week, 19 May, 64; Wood, Z. (2010) Burberry Buys Oy Chinese Partner to Unify the Brand, Guardian, 17 Ritson, M. (2011) Burberry Offers a Lesson in Co September, 16; Leroux, M.and S. Thompson (2012) Banks on the Ascent of (Fashionable) Man, The Times, 24 May, 43. i (Questions) e How were the clothes bearing the Burberry ng augmented to create a brand before the 1 What elements of the brand-building factors discussed in this chapter have been usedby Burberry to rebuild its brand? What problems might arise in trying to bulld Burberry into a global brand? 3 What are the dangers inherent in Burberry’s strategy since 1997? "This case was written by David Jobber, Professor of Marketing, © University of Bradford,