Burberry: Leader in Retail Tech
Burberry leads luxury brands in use of technology
Retail is arguably the industry that has been most impacted by digital technology and yet, still has the greatest potential for further innovation. Luxury brands, however, have been slow to embrace it. Despite e-commerce spending surpassing 300 billion in the US in 2014, many luxury brands still have limited or no ecommerce experiences. Haven’t visited chanel.com recently? Well, Chanel only offers beauty and fragrance items available for purchase online. Although Chanel has announced a partnership with Net-a-porter to expand their e-commerce or “e-service” offering in 2016, there remains questions around which products will actually be available for purchase. Céline product pages only offer contacting customer service or locating a store to customers who are potentially looking to buy a product. Despite the poor performance of these brands, Burberry has emerged as a luxury brand who has truly embraced technology both instore and online, capturing more value despite decreasing their product lines.
Early ecommerce experiences emphasized function over design. Understanding that the success of a brand, especially one with aspirational status, is heavily tied to the shopping experience, luxury brands were not willing to compromise design or service for online sales. Burberry launched its first ecommerce website in 2004, but it was not until 2009 that digital became a core focus of the business. They provided a consist shopping experience online and instore, launched campaigns that utilized technology to capitalize on user generated content, found ways to further share the Burberry history of craftsmanship through embedded technology and used technology to simplify inventory management across channels.
Art of the Trench Campaign
In 2009, Burberry launched the “Art of the Trench” campaign enabling customers to submit pictures of themselves in their trenches with the best pictures featured on the Art of the Trench website. Customers could then like and share their favorite posts as well as follow Burberry on facebook or click through to burberry.com. This campaign initially resulted in a 50% increase in e-commerce sales from the previous year and helped them reach 1 million facebook followers. Art of the Trench, now embedded into burberry.com, continues to to have amazing user-generated images.
Burberry Kisses Campaign
Burberry partnered with Google in 2012 and 2013 to launch the Burberry Kisses campaign, allowing users to virtually capture their kiss and send it to anyone in the world. By the end of the campaign users from over 215 countries had participated, solidifying Burberry as an innovator in the luxury space. This campaign also allowed for increased awareness of higher margin beauty and more recently skincare items.
Smart Personalization enabled customers to personalize their products and unlock videos, highlighting the craftsmanship and history of the item they purchased. These videos could be viewed using a mobile device or projected on a screen in the London store. This enabled product owners to feel more connected to the brand and their custom items.
This year Burberry piloted inventory sharing across in-store and online in the China market. This provides further value to customers since they can order online and pickup in store or order in-store and have their items delivered to their home. Inventory sharing also resulted in decreased delivery times to customers from ten days to less than three. There are plans to expand this program to other markets including the UK and the US.
Burberry traditionally created and captured value through producing and selling goods. Through technology they have been able to create value through user generated content, shopping convenience, and shared experiences while still capturing value through increased revenue. I am excited about the potential of technology in the luxury retail space as more brands make digital a priority.
Student comments on Burberry: Leader in Retail Tech
Thanks for this interesting read Anndrea. It’s fun to hear how Burberry has integrated the online experience and different digital channels to better engage with its shoppers. I definitely see the value they create for themselves through effective online marketing campaigns and also think they create value for the customer by making them feel more like Burberry is a lifestyle, not just a piece of clothing. Also super interesting that they are using technology in the back of house to improve the customer experience as well (i.e., inventory management).
I agree with you that they are a winner right now but my two concerns for the future are: 1. How easy will it be for other brands to jump on the same bandwagon and copy Burberry’s strategy and 2. is there any risk of alienating or loosing focus on the core customer who might not be very tech savvy and still enjoys the more traditional way of shopping (i.e., is there any risks this might “water down” Burberry’s brand image to a young, techy company?)
Insightful post Anndrea! I have long admired Burberry’s commitment to digital both as a consumer and as someone who has worked in the retail and luxury goods space. Carina, you raise some very real concerns that many brands face when they try to dip their toes into digital without fully committing or understanding what the role digital is playing for the brand. I think Burberry has made a number of moves over the past few years to mitigate these risks as much as possible. While some brands deploy disjointed digital marketing tactics, the sheer scale and depth of Burberry’s digital approach is impressive — digital is core to not only their consumer experience but also their backend. For Burberry, digital itself is not a strategy but rather a means to help land their strategy of “democratic luxury” whereby they want to provide universal access to the brand. The brand has made a purposeful choice to target the millennial and to deliver them a consistent brand experience at every touchpoint and has changed their operating model in order to do so. If interested to learn more about just how pervasive digital is at Burberry I highly recommend this video (fast forward to the 2 min mark…)
Thanks for sharing the video Kathyryn, and great post Anndrea! I find it interesting that Burberry took this leap to court the millennial consumer by embracing digital marketing and demystifying their brand. As your post highlighted the fact that Chanel, amongst other premier luxury brands like Hermes and Goyard, have continued to have low-or-no inventory offered through their website signals that these brands 1) either believe that their brands would become diluted or more accessible by embracing e-commerce, or 2) their sales have not suggested a required change in their marketing strategy. To some extent, I do understand this concern. A few years back, Louis Vuitton(LV) lifted its veil to sell its merchandise through eluxury.com before launching its own direct to consumer strategy. Today in China, sales of LV are diminishing among the ultra wealthy because of its ubiquity and is referred to as a “brand for secretaries” (see below article). I do think this is a balancing act, but it will be interesting to watch how Burberry’s aspiration to become accessible yet remain premium luxury ( surely, with its $2K trenchcoats) pans out over time.
Very interesting post, thanks for sharing. I am particularly impressed with Burberry, given that high fashion brands usually are quite slow in embracing new trends. And that’s natural, as Carina mentioned in her comment, high fashion fears brand dilution more than anything else, that’s the reason they have high margins in the first place. I like the fact that Burberry is moving more to customer experience. The use of social media is a great way to engage. The digital store is the first step to potential virtual changing rooms in the future, where you could see at home how a particular piece of clothing fits using 3D capabilities. Maybe Burberry of the future will let you have your own shade of the Burberry trench that you can directly communicate to the factory making the piece? Nevertheless, I still believe the high fashion brands need to protect their brand equity and experiment with digital in a measured way. Retail start-ups are getting more and more innovative, and the only thing that blocks them from dominating the field is the trust customer’s have with traditional brands from quality of materials to a particular sense of style. Looking forward to seeing what Burberry does next!
Very fun post! I would push back, however, on the idea that Celine and Chanel are failing in terms of digital strategy. The fact that one cannot buy these brands online only adds to their aura of exclusivity and allure. It is precisely this aura that allows them to command exceptionally high prices for their handbags and other products. I wonder actually if the lack of digital presence (at least in terms of ability to shop their products online) speaks more loudly in the brands’ favor than any digital strategy could. I am torn between 1) believing that these brands have to catch up with the times and engage with the digital world more intensely and 2) thinking that these brands are being more smart than stubbornly stuck in their ways. Similar to some of the concerns posted on the Instacart + Whole Foods blog post around WFM’s losing the effect of the in-store shopping experience, brands like Chanel and Celine surely are focused on what is lost when a shopper cannot see, touch, and even smell a new handbag in person. It will be fascinating to see how brands can go beyond just a standard, beautiful website to simultaneously advance in the digital space and maintain brand exclusivity.
Highlighting retail is vital in this discussion, as I truly believe as an industry they still have the furthest to come in terms of digital transformation, and one of the biggest potentials from an innovations perspective – but they are just not there yet.
Burberry has done a fantastic job bringing digital to a high scale luxury brand. They have been moved away from a purely one way and remote relationship with customers, and instead increased customer engagement through encouraging a two way conversation. Using real people to showcase their trench coat, as an example, was a big transition from the usual model-only generated campaigns. However, I would argue if this was a true digital transformation, or just the clever use of a digital and social campaign, which is used less commonly in higher end luxury brands.
For me, the true innovation, and the thing to watch, is the inventory management process they are testing. The relationship between online and offline sales is one that is not yet understood by most retailers, and where I believe a digital and data centric transformation would be best deployed. If Burberry is already thinking about this and taking action to test this with their customer base – they are one to watch for the future!
I believe that Burberry has done a fantastic job at introducing digital elements to its business model, first driven by Angela Ahrendts, a CEO who truly understood the power that digital could play. Even as Angela stepped down (she is now VP of Retail for Apple), the company re-affirmed its commitment to finding new solutions and only recently announced the most disruptive change that the fashion industry has experienced in the past decade: “see now, buy now”. Launched in September 2016, this new approach allows final consumers (you and me) to shop live clothing worn by model, as the catwalk takes place. this required a major overhaul of the whole supply chain, which was used to present a fashion collection, and deliver it to stores 9-12 months later, as per industry standard. This could also be interpreted as a defensive move against fast-fashion retailers (ie Zara), which have built their own business model on the lag that is present from the time a high end collection is presented during the fashion show to when it is sold in stores. Historically, this lag has allowed fast-fashion brands to see the trends of the season as seen during the show, copy them and replicate those same patterns and designs for their own collections, and being able to distribute them in Zara stores at the same time as they hit Burberry stores. See more here: https://www.businessoffashion.com/articles/news-analysis/burberry-aligns-runway-and-retail-calendar-in-game-changing-shift