Burberry results: Strategising true luxury


In the wake of Burberry’s results (revenue stayed broadly flat at 2%, but profits edged up 4% as CEO Marco Gobetti’s strategy started to show promising early signs), we evaluate the British brand’s strategy in context of the wider luxury market.


Reinforce value of ‘true luxury’


Burberry is aiming to offer more ‘hard luxury’ by narrowing its product and price focus – a timely strategy given the recently revived fortunes of the global luxury industry.

This strategy will also prove to be vital in defining Burberry’s currently slightly ambiguous position – which varies from accessible to premium luxury, and will drive both brand momentum and pricing power.

Marco Gobetti and Riccardo Tisci, Burberry’s new senior management team, have a background rooted in luxury (Tisci at Givenchy, Gobetti at Givenchy and Celine), making them a strong team to enable this new upmarket vision.

Tisci’s edgy design prowess will push Burberry’s towards a more directional product offering, but this creative reboot must be carefully managed so as to not dilute Burberry’s uniquely British legacy. This legacy must be built upon to deepen Burberry’s almost singular ownership of British luxury – a strategy that will pay dividends in APAC and Middle Eastern markets.


Match desirable products with desirable experiences


Net-a-Porter is already at a stage where it is able to sell hard luxury through its digital platforms (recently, they sold a £130,000 watch through WhatsApp) – but the transition to hard luxury will not be easy, as high net-worth clients will need to be nurtured and serviced beyond the product transaction.

Building an experience suitable for high net-worth clients must be at the core of Burberry’s revival – the retailer is already rationalising its wholesale and licensing businesses, and has mentioned revamping existing store spaces. The transition to hard luxury will not be easy; as high net-worth clients need to be nurtured and serviced beyond the product transaction. This will include upscaling its in-store experience and driving desire and destination appeal though its online experience. Editorials, content and a communication strategy that speaks to a more considered customer base, will all be essential.


Capitalise on digital strengths


 E-commerce is reshaping the luxury industry and a retailer’s propensity for future success will be driven by luxury brands’ ability to keep up with the pace of digital transformation. Bain expects online luxury sales to account for nearly a quarter of total luxury sales (currently holding only a tenth of total luxury but growing 24% in 2017).

A luxury brand’s ability to provide a cohesive, competitive digital offer is only likely to become even more important as digitally native consumers (Gen Z and younger millennials) age and become more active participants in the luxury market.

Burberry has been a pioneer in tapping into the digital luxury space – and this will no doubt prove to be their strength moving forward. Burberry – through its social media engagement (48m followers and counting), early adoption of mobile and collaborations with young influencers – has built strong digital relationships with its young consumers. It is vital that Gobetti and Tisci, utilise Burberry’s digital strengths as they move forward.

Burberry must now build a deeper understanding of its consumer through data analytics, and use this to offer a more reactive product offer, build social media engagement, and drive market-leading tech developments, especially in mobile.


Nivindya Sharma, Director of Retail strategy and Insights at WGSN Instock, discussed Burberry’s strategy on CNBC – access the clip here.


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