Burberry’s Digital Transformation
Come read and find out more about Burberry’s amazing transformation into the digital age!
When it comes to top luxury brands, digital strategy has found a champion in Burberry. When Angela Ahrendts took over as Burberry CEO in 2006, the Burberry brand was underperforming and out of touch. Since then, the company has embarked upon a remarkable transformation to completely revamp its business model to thrive in today’s digital age. Burberry has delivered on this new digitally-focused business model in two key ways: (1) by going all-in on social media and mobile marketing and (2) by creating a model for the ultimate in-store digital experience.
But wait, why is digital so important?
Many brands that rely on a personal, physical experience have struggled to translate that “feeling” to a digital presence. It is necessary for brands to connect with customers in a shareable and digital way: 84% of store visitors use their mobile devices before or during a shopping trip, 22% of consumers spend more as a result of using digital, and 75% of consumer shopping behaviors are influenced by social media [1]. Burberry has modified its business model to capture value via digital transformation leading to increased customer acquisition and in doing so has revamped its operating model by focusing on millennials (most of the corporate staff in the London corporate headquarters are under the age of 30) [2].
Digital Media as a tool
Shortly after 2006, Burberry was one of the first luxury brand retailers to pursue digital as a core strategy by meaningfully integrating social media use into its marketing and products. In 2009, Burberry was the first of the major fashion houses to launch its own social networking site, The Art of the Trench, which was a site which provided a public space for Burberry trench coat enthusiasts to post images of themselves wearing the garment [5]. This was a bold move because the Burberry trench coat is the brand’s most iconic product and has a true legacy. The site allowed for users to like, comment, share, and learn about the trench coat and related trends and was dubbed as a “digital democracy,” being for the customers, by the customers [1]. The site is both modern and sophisticated and is easily accessible on all digital platforms including desktop, mobile, and tablet [1]. Additionally, in 2011, Burberry used Instagram and Twitter to reveal its 2012 lineup and became the first luxury brand to sell through Twitter’s “Buy Now” program [1]. This innovative use of digital interactivity has propelled the brand to new heights in terms of prestige (17 million Facebook likes and 5.3 million Instagram followers [3]) and financial reward as revenues grew impressively from £1.5 billion in 2011 to £2.5 billion in 2015 [1].
In-store digital experience
In 2012, Burberry opened a sleek new flagship store in London’s Regent district. The new location provided a state-of-the-art digital experience no customer has ever experienced to “blur the lines between digital and physical shopping experiences.” [3] Upon walking in the store, the customer is meant to feel as if he or she is walking into the company’s website. The store includes digital signage screens on floors and wrapped around the walls, live-streaming hubs and mirrors. The screens display models walking along catwalks from Burberry shows. Customers can also use their phones to identify items to save to their online checkout account to purchase a style online that is available in the store [1]. Additionally, the store employs an innovative use of RFID chips so that when a customer picks up a certain item, a video of the item (such as a model on a runway or how the item is made) will play on a nearby screen [1]. Finally, all store employees are equipped with iPads which include a database of customer purchase history and preferences to create a more unique customer shopping experience [1]. By seamlessly merging the online shopper experience with innovative digital technology, the flagship store offers an unparalleled customer experience thereby elevating the Burberry brand amongst its peers.
Going forward, Burberry should continue to raise the bar in terms of digital strategy in order to maintain its millennial brand image. As Burberry’s explosive growth from its digital/eCommerce platform plateaus (its digital commerce revenue grew 22% in FY 2016, not quite as explosive as the 30% growth experienced in the prior year [4]), the brand must continue to innovate and grow its digital presence. One particular step to take could be to further integrate the brand into specific social media platforms such as Snapchat – for instance by creating a Snapchat filter showing the user in Burberry clothes on a catwalk. As other competing brands continue to “catch up” to Burberry when using digital technology, it is up to the company to build upon its innovate and millennial-focused image.
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[1] Yousef Khan, “HOW BURBERRY EMBRACED DIGITAL AND TRANSFORMED INTO A LEADING LUXURY BRAND,” Centric Digital blog, November 9, 2015, [https://centricdigital.com/blog/digital-strategy/digital-transformation-in-traditional-fashion-burberry/], accessed November 2016.
[2] Angela Ahrendts, “Burberry’s CEO on Turning an Aging British Icon into a Global Luxury Brand,” Harvard Business Review, January 2013, [https://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-global-luxury-brand], accessed November 2016.
[3] Amy Bruining, “A Look at How a Luxury Brand Reinvented Itself and Took the Lead in Today’s Digital World,” Britton Marketing Group blog, January 2016, [http://www.brittonmdg.com/the-britton-blog/burberry-leader-in-digital-social-media-case-study], accessed November 2016.
[4] Burberry, FY 2016 Annual Report, p. 21, [http://www.burberryplc.com/documents/ar-15-16/burberry_review_2015_16.pdf], accessed November 2016.
[5] Scott Davis, “Burberry’s Blurred Lines: The Integrated Customer Experience,” Forbes blog, March 2014, [http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines-the-integrated-customer-experience/#5a8c954722fc], accessed November 2016.
Coming from a retail background (working most recently in the Juniors Division), I constantly heard about the importance of focusing on the Millennial customer. This segment will have tremendous spending power; it’s been estimated that they will be spending $200 billion by 2017 in the US alone. In fact, millennials are predicted to be the largest spending generation in history by 2035. Retailers recognize the importance of capturing the Millennial customer now. The logic is that these young customers will continue to spend with the brand over time (and will have ultimately developed a loyalty for the brand when they are older and have increased salaries to purchase even more!)
In terms of capturing the Millennial market share– Burberry is strategic in its use of digital media, as this generates buzz for the brand and its products. It gets people sharing the product with those in their network, and ultimately leads to increased sales. Burberry’s interactive, digitally transformed, store experience also veers from the traditional brick-and-mortar experience that Millennials likely perceive to be outdated and boring.
I wanted to share an interesting article with you that provides further insights as to why Millennials are the future of the luxury retail industry. The article related to your blog post as it discussed how Millennials are gradually preferring experiences to material objects. Shopping at Burberry seems to provide an exceptional experience via the integration of technology into the store (e.g. with the RFID videos and live-streaming mirrors).
http://wwd.com/fashion-news/designer-luxury/millennials-luxury-spending-10417737/
The article concludes with a short paragraph that I think relates to your blog post well:
“The luxury brands that will capture the minds of Millennials will have authentic, original content. They will not be afraid to play in the digital space and appeal to independent thinkers in new and interesting ways. They will be the arbiters of cool and make unexpected connections. If Millennials are the future, luxury brands need to rise to the challenge, and embrace them.”
Very interesting article and comment by Erica!
In line with the need of generating this content for millenials, I wonder how Burberry has adapted its Organizational Structure to support this. For example, if 75% of Burberry’s customers were influenced by content seen online, how are they ensuring they are present to respond to any questions or critics they may receive on social media? Do they have dedicated people to monitor mentions online? What is the proposed governance to respond to customers interactions online?
Digital transformation goes beyond the actual adoption of technology in-store. Digital requires you are present everywhere. In this sense, I wonder how prepared Burberry is to be digital beyond the store experience and really interact with consumers on the online environment.
Hey Pete,
Great article, thanks for sharing. It is certainly an interesting time to be a luxury retail brand. As eCommerce continues to devour the world, there are a decreasing number of physical retailers who can claim to offer a better experience than purchasing on the internet. Buying a book or buying groceries is simply a more convenient and often less expensive purchasing experience than a physical retail shop.
I believe that luxury goods retailers, on the other hand, do have a place in the future. If a woman is going to spend $4,000 on a Louis Vuitton bag, they are going to want a purchasing experience that reinforces the luxury, style and class that they are looking for in their purchase. Handling a bag in a decadent retail flagship store in the heart of London is a lot more in line with the brand experience a customer wants than clikcing a picture online and getting a bag sent to you in the mail.
I am surprised, however, that Burberry has endeavored to “take their website to the store” as opposed to vice versa. They need to be careful that they don’t cheapen the retail experience by introducing too much ubiquitous technology. Having iPads in your store doesn’t communicate much more than “I have the same tech as everyone else”. The more creative endeavors that they have undertaken with their technology, in my opinion, are more in line with what they should be striving for in their brand.
In the HBR article you reference “Burberry’s CEO on Turning an Aging British Icon into a Global Luxury Brand,” Angela Ahrendts states that “In luxury, ubiquity will kill you—it means you’re not really luxury anymore. And we were becoming ubiquitous.” [1]
I believe she was speaking to Burberry’s scattered product line, but if you extend that statement to the brand’s promotion, then I find this tension between creating a strong online presence (you mention Burberry’s own social networking site, The Art of the Trench, as well as 17 million Facebook likes and 5.3 million Instagram followers) and the danger of ubiquity difficult to navigate.
I also found Burberry’s use of RFID fascinating! Retailers initially thought RFID would improve supply chain operations, but it turns out RFID has been very promising, especially for omni-channel retail and for managing in-store inventory. Retailers like Macy’s have used it to track apparel inventory on the sales floor, where keeping track of each item’s many variants (size, color, etc.) is extremely complicated [2]. I love how Burberry has actually found a way to use RFID to create a unique, high-tech, and luxurious experience that further differentiates it from other brands.
[1] https://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-global-luxury-brand
[2] http://fortune.com/2014/04/16/can-rfid-save-brick-and-mortar-retailers-after-all/
It’s super cool to see a fashion brand founded in 1856 not only continuing to stay relevant, but to be an industry leader in technological innovation! At the same time, I definitely have similar questions to the ones Rafi has posed here about online and social media presence for a brand that continues to present itself as very high end and exclusive. I love the idea of the Art of the Trench to get younger customers engaged with the brand and thinking about how they can engage with it, but at the same time it’s strange to think of a luxury brand liking the idea of “digital democracy” — at it’s core, they survive as a company because their brand is perceived as luxe and exclusive, not democratic and easy to access. How many customers will continue to spend $1000+ on a trench coat that they think just anyone can also get? Why spend so much on something that feels ubiquitous and democratically accessible?
For retail brand owners, such as Burberry and others, I think that instead of trying to protect themselves from the threat of Amazon and other online stores, they should embrace the technology and adapt their operating model.
Just like the music industry adapted from music concerts as promotion to grow album sales, to songs becoming promotion towards generating concert sales. Brands should also adapt by making stores the promotion towards online sales. Free standing stores should become a place where the brand is elevated and customers can interact with it in a more personal level.
I think that Burberry is doing is just that. By becoming digital, the brand will be able to interact with the customer from the point he/she enters the store to any time later in the day by staying connected digitally. Driving in-store sales should not be Burberry’s priority, but instead create a brand loyalty and bond that will lead to subsequent sales online by any of the existing online marketplaces.
As for creating their own social network “the art of the trench”, I am interested in knowing how much of the sales growth was due to that initiative. I feel that promoting your brand among existing customers might not be as effective as using existing social networks to target new customers who are not yet aware of the brand. When it comes to showing off a luxury brand, people usually like to show it off among people who don’t already have the brand.
Thanks for the insightful post, Petey S! Burberry is one of my favorite brands and I am a proud owner of their iconic trench coat.
I’m curious about how much data the store employees actually have on the customers and what the “right” way is to use that data. Personally, I really dislike intrusive sales representatives and would prefer to reach out for help when needed. If a sales representative approached me already knowing my past purchases, I might be a bit scared off! I think Burberry should strike a balance between inbound and outbound marketing when it comes to data usage.
I also wonder from a marketing perspective if Burberry will be able to retain its luxury appeal if focuses on millennials through its digital strategy. I’ve seen their new ads with Cara Delevigne and Kate Moss: Cara is one of the most popular social media queens among the young 20-somethings but I’m afraid that her image is not aligned with the timeless classiness of Burberry. In the future, will Burberry be able to continue to sell their expensive, timeless $1,000+ trench coats or will they be selling athleisure to younger consumers?