Burberry is Bringing Tech-xy Back
Fashion from runway to purchase, mirrors transforming into runway footage, interactive shopping with apparel RFID tagging…are these enough to resurrect a fading British luxury brand?
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In Burberry’s store on London’s Regent Street lies the dichotomy of old and new. The traditional, nostalgic, classic British brand vs. the high-tech, novel, trendy environment. Among the British-made bronzed lanterns, furniture, traditional glass signage, and self-supporting stone staircase, are digitally-enabled galleries, 500 speakers, 100 screens, including the tallest indoor retail screen in the world [1]. Selected apparel and accessories are tagged with RFID, triggering multimedia content of products into iPad apps, which store associates use to access customer purchase history and preference to enable a tailored shopping experience. Traditional mirror instantly transforms into screens with runway footage and exclusive video from the satellite technology that enables live-streaming into the store. [2]
How do you revamp a 150-year-old luxury brand into the new age?
In 2006, Burberry was significantly underperforming against its peers. While the overall sector was growing at around 12-13% a year, Burberry was growing a mere 1-2% [3]. Burberry has lost much of its luxury brand value. Furthermore, its product offering, pricing and store design were inconsistent and outdated. Angela Ahrendts, who took over as CEO in 2006, dedicated her strategy on harnessing digital technology to re-energize the brand. Her strategy was 3-fold [4]
- Center around Brand
- Burberry must maintain its brand identity in its core strategy
- Focus on Millennials
- Burberry should cater to its new customer segment, high net worth individuals in emerging markets from Asia, which are 15 younger than in its customers in developed world.
- Connect Digitally
- Connect to consumers through all social media platforms
To execute on the second and third parts of the strategy, Burberry began investing heavily in digitization. Burberry spend more than 60% of its marketing budget on social media such as Facebook and Twitter, which is the triple of industry average. As a result, more people go online in one week to visit Burberry than all Burberry’s brick and mortar locations in the world combined [5]. Burberry has also built its largest and most technologically advanced store in the world, which provides an unmatched interactive experience for its customers.
Art of the Trench
The first initiative was the “Art of the Trench,” a microsite with self-posted content of people wearing Burberry’s signature trench coat, as an effort to raise awareness for the brand. In the Summer/Spring show in 2012, Burberry chose to live-stream the event, giving access to public instead of limiting access in the traditionally exclusive runway [6].
Runway to reality
Burberry premiered its Runway to Reality program at the Burberry Prorsum Fall/Winter 2013-2014 runway show. At the finale of the show, online followers could purchase a selection of coats and bags through Runway Made to Order service on their mobile device, before the pieces become available in Burberry stores. The Run to Reality allows Burberry to connect digitally with its consumers, reaching millennials and increasing access to public. In addition, the Smart Personalization program allows the option of engraving personal names into the metal coat tag or bag plate [7].
Customer 360
Perhaps one of the more controversial strategies is the Customer 360 program. The goal is to entice customers to allow Burberry to record their buying history, shopping preferences and fashion interests in a digital profile, which can be accessed by sales staff using iPad. For example, an assistant can tell what a customer bought last week, and what they said about Burberry on Twitter [8]. Ideally, it would allow salesperson to provide a much more personal service to customers.
Evaluation of Strategy
While Burberry has expanded its reach to its target new segment of millennials by connecting digitally, there is a key trade-off between brand dilution vs. raising awareness. In the luxury world, digital be perceived as mass market, which can dilute a prestigious brand. For example, having an exclusive waitlist to purchase a Hermès bag allows elite customers to indicate a high level of status that others cannot achieve. With personal customization, social media, and easy access to purchase, Burberry risks lowering its perceived value based on the scarcity principle.
Customer 360 also has certain risks. Buyers value their privacy, especially in social media communications and purchase histories. Customers may not feel comfortable having sales personnel knowing everything they’ve purchased from Burberry in the past or what they’ve Tweeted about the brand. The invasion of privacy may turn away customers to other brands.
In my opinion, there are aspects of Burberry’s strategy that makes sense and others they should stop doing. The high-tech flagship store in London and Runway to Reality raise Burberry’s perceived value due to the innovations adding to the product itself, but Burberry needs to cut down on the social mass marketing to prevent diluting its prestigious brand into a utilitarian good.
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References
[1] “Burberry Regent Street,” Retail-innovation.com, January 1, 2013, http://retail-innovation.com/burberry-regent-street, accessed November 2016.
[2] Ibid.
[3] “The Digital Advantage: How digital leaders outperform their peers in every industry.” Capgemini Consulting, https://www.capgemini.com/resource-file-access/resource/pdf/The_Digital_Advantage__How_Digital_Leaders_Outperform_their_Peers_in_Every_Industry.pdf, accessed November 2016.
[4] “Burberry & The Digitization of Shopper Marketing.” Thinkwaystrategies.com, August 22, 2012, http://www.thinkwaystrategies.com/content/burberry-digitization-shopper-marketing, accessed November 2016
[5] Wade, Michael. “New technologies can lead transformation, but management and culture have to follow,” ConnectedFuturesMag.com, http://www.connectedfuturesmag.com/a/S15A49/a-common-outcome-to-digital-transformation/, accessed November 2016.
[6] Burberry Company. “Art of the Trench.” https://artofthetrench.burberry.com/, accessed November 2016.
[7] Barbat, Flavia. “A Digitized Burberry Personalizes Pieces Straight Off the Runway.” Branding Magazine, February 20, 2013, http://www.brandingmagazine.com/2013/02/20/burberry-smart-personalisation/, accessed November 2016.
[8] “Burberry goes digital,” The Economist, September 22, 2012, http://www.economist.com/node/21563353, accessed November 2016.
Media sources:
Cover image: http://luxurysociety.com/en/articles/how-burberry-does-digital/
Video 1: https://www.youtube.com/watch?v=pBnz8NBpEDc
Video 2: https://vimeo.com/79763502
I have been a long-time fan of Burberry’s digital strategy but since the departure of Angela Ahrendts in 2014, the company has not been doing nearly as well financially as it was under her leadership. There have even been discussions of a potential Burberry sale. I had not considered the mass market appeal that you noted in its strategy to be the root cause and because it was so successful under Ahrendts – who took care to make the ads luxurious despite being on social media and which I would argue have continued – I wonder if it is something else that is causing the financial decline. Curious as to whether you think this is potentially attributable to a broader leadership issue versus Burberry’s “social mass marketing” of its brand?
I agree with you that Burberry needs to maintain the balance between access and brand exclusivity. However, I disagree that the Runway to Reality program is additive to its brand equity. Based on the scarcity principle, Runway to Reality dilutes the exclusiveness of getting a runway piece because it is open to all followers of Burberry. While I do see some value in going digital, there is a way in going digital while retaining exclusivity for the Runway to Reality program: limit the program to be accessible to top customers only. This would increase loyalty among top customers, while retaining the exclusivity factor and boost pre-selling of runway pieces.
Another initiative that could be of value is impacting the purchase experience itself. For example, Sizer.me enables getting customers’ exact sizes using computer vision algorithms, thus allowing them to find clothing that fit them well. Such experience can be much more smooth and engaging to the consumer.
While I agree that there is a fine balance maintaining “luxury” brand equity and mass marketing, I would actually argue that Burberry’s aggressive social media marketing has actually been key in revitalizing the declining brand. High end heritage luxury brands, like Chanel and Hermes, have huge social media (i.e. Instagram) presence – the images and advertisements shown actually contribute to driving the “luxury” image of these brands. These companies, however, have extremely limited digital distribution channels (versus digital marketing) – in my opinion, this is how they maintain their exclusivity.
I think Burberry has been on the decline over the past few years not because it has become “too mass” but because of its product – the high-end customer market has been shifting towards advanced designer brands over the past few years (i.e. Givenchy, Balenciaga, Saint Laurent, Alexander McQueen) and Burberry’s product line has largely been focused on more of a “classic” look. Competitor companies, such as Chanel, have realized the shifting customer trend, and have launched product lines that are more fashion forward, while continuing to drive their “classic” product line. Burberry will need to figure out how optimize its assortment – introducing more fashion-forward products while maintaining its heritage trench coat business – to stay relevant going forward.
Thanks for writing! Agree with LR’s ultimate point. Burberry has done a pretty great job of using digital marketing to raise brand awareness and to target millennials. In addition to what you’ve listed, in 2010, Burberry also started the “Burberry Acoustic Sessions” that were meant mostly to “showcase young British bands that Burberry believes in” by recording sessions with emerging British artists dressed in select Burberry products. Theses videos are available on the Burberry website and on Burberry Acoustic playlist on YouTube. They succeed in reaching young millennials and in crossing the “classic” boundary into something cooler, more niche, and ultimately English in the selection of the musicians. It’s a pretty brilliant way to leverage the ease of musical recording and accessibility with old school editorialization of fashion. The consumer reaction has been wildly positive, creating a lot of positive buzz for the brand and the musicians. Ultimately, Burberry has done very well to use digital products to increase brand awareness, but I would recommend that they make some of their product line, perhaps Prorsum, unavailable online, to regain some of the exclusivity they may have lost. Although, they announced last year that they were unifying all their brands under one, so maybe they’re really not on the right track with the product exclusivity here…
https://us.burberry.com/acoustic/
https://www.youtube.com/playlist?list=PL53FCE734F52B7B6C
http://campusvinyl.com/bucknellu/burberry-acoustic-sessions/
http://wave.wavemetrix.com/content/burberry-engage-consumers-acoustic-music-project-and-fashion-collections-00629
https://www.businessoffashion.com/articles/news-analysis/burberry-to-unify-brands-diffusion-lines
Thanks for the article and the very clever title. Along with some of the others, I hesitate to ascribe Burberry’s fall off too heavily to its more digital push. What I would like to understand better is if Burberry knows how many new customers, ideally millennials, it is getting as a result of this strategy vs. the number of customers it is losing as a result of the strategy. I would argue that customers who are brought in to the brand because of its digital image outnumber the amount that leave because of it, given the importance of accessibility for new customers. I’d also be interested to see third-party reviews of how stylish its recent designs have been – is there a correlation between those ratings and financial performance? I expect it would be a stronger correlation than the possible inverse correlation in sales vs. digitization.
Great article! I didn’t know that much about Burberry’s strategy until reading your post. I was actually expecting that the company would have used “digital” in a different way–more in line with H&M and other fast fashion brands to source trends more quickly, update styles with quicker turn around times, and hyper-tailorize offers to specific locations. Instead, it’s interesting that they took the approach of using digital to try to make the experience in the store feel personal and tailored. They might be missing a big opportunity to better connect with customers through better designers and more feedback directly from customer data. Again, when you mentioned putting technology in mirrors, I almost expected this to be a way to watch customer engagement with products, analyze reactions and shopping behaviors, and collect other data. But instead it seems like it’s a way to simply match customers to certain products (from what I Googled online about it, but I could be wrong!). And Shane G. (above in the comments) mentioned the departure of Angela Ahrendts in 2014–it must be hard for the company to continue to execute on this strategy to the full breadth that she had maybe originally envisioned (in part because she left, but also because the technology landscape continues to evolve so rapidly in the consumer segment). Again, great post!
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