Future Growth Strategies (Part 2: The Strategies)

Posted on November 6, 2011 by

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Future Growth Strategies

Part 2: The strategies

1. Leveraging its Global Brand 

(1) Growing its existing product line of Childrenswear:

The trend of emergence of the new-rich in the emerging markets gives rise to the viability of a more extensive range of children’s wear. In particular, the trend of Asian emerging markets facing decline in birth rate encourages increasing willingness to spend on premium products for children. The reason for this is that having fewer children in the family has enabled the older generation, such as parents and grandparents, to have greater capacity and motivation to spend on each child[1].

According to Chief Executive Officer Angela Ahrendts, sales growth of children’s wear products is projected to double by year 2012 from year 2010[2], further supporting potential. Thus, building upon its current Brit, London and Prorsum product categories, we recommend Burberry to deepen its existing line of children’s wear to grow from its existing contribution of 4% to overall revenue[3].

Our team therefore believes that, to Burberry, the increasing willingness and capacity to spend coupled with the brand-selectiveness of these consumers provide promising prospects for children’s wear.


[1] Hall, A. (2007). 10bn luxury market that’s just kids’ stuff. United States, Washington: McClatchy – Tribune Information Services. Retrieved from <http://search.proquest.com/docview/459339663?accountid=28662&gt;

[2] Roberts, A. (2010). Kids’ Clothes Get The Designer Treatment. Bloomberg Businessweek, (4196), 27-28.

[3] Burberry Annual Report 2010/11.

(2) Intensify Non-apparel development:

Non-apparel remains a key driver of growth, contributing 40% of retail/wholesale sales during the year.[1] In 2010/11 it was again the Burberry’s fastest growing product category. As such, Burberry has been focus on under-penetrated non-apparel categories to leverage further Burberry design and merchandising expertise and iconic branding through investment in product development, marketing and supply chain. The backbone of Burberry’s non-apparel business is currently large leather goods, followed by men’s accessories, shoes, and global licensing into three areas: fragrance, timepieces and eyewear.

As many luxury brands are also doing so, [2]we concur with Burberry to intensify its development into non-apparel.  This is because it allows Burberry to widen its distribution to a wider range of consumers with more accessible pricing to non-apparels. Please refer to diagram:

Burberry may be inaccessible to consumers who have lower spending power, whom are yet attracted to Burberry’s selling propositions. This in particular, could be targeted at young consumers whom first step into the workforce and have their first pay, looking for brands which attract them. We found out that this target group are more prone to spend on non-apparel items, which have relatively accessible pricing. When they are satisfied with their initial purchases, they could potentially be Burberry’s loyal customers. Hence, we feel that Burberry could tap onto this market, which have vast opportunities to grow.

Taking Burberry Beauty for instance, there seems to be growing popularity of their beauty line. And it will soon become a vanity staple. The Brit brand, which branched out into the beauty world last summer, has sold its makeup line exclusively in the UK, online at Nordstorms and in some select West Coast stores. Now, the line even lands in NYC with its first counter at Saks Fifth Avenue. Burberry Beauty is promoting its silky smooth lipsticks, a mix of core eye shadows and bold shades, as well as its sheer skin products.  Especially its Nude Rose lipstick, Midnight Plum shadow and Fresh Glow.[3]

Check out the video to see how the make-up artist achieve an effortless elegance with Burberry sheer skin products!

http://www.youtube.com/watch?v=Hby4Fnyx-a0&feature=player_embedded

Areas of concern

Widening its range of consumers definitely increases Burberry’s sales revenue and promotes its brand. However, we also agree that Burberry has to be caution in doing so, at the same time Burberry has to take caution that it does not dilute its brand equity.

(3) Create country-specific products:

For Burberry, winning Chinese consumers inside and outside the country is critical. China is set to become the world’s largest market for luxury goods by 2020, when sales are expected to exceed $100 billion, according to investment-research group CLSA Asia-Pacific Markets.[1]

According to Ms. Ahrendts, CEO of Burberry, China is now Burberry’s fastest-growing market, and is poised to become the company’s biggest market within the next five years. With Burberry’s recent acquisition of 50 stores in China and the first market to launch the digital retail model, China shows strong sign of holding up as a key market for the brand in the near future.

To tap on the growing demand, we recommend that Burberry launch an exclusive line especially for the growing market. This will liken to the Burberry Blue Label, exclusive to Japan. Just yesterday, the 2011 Top Marques Shanghai luxury goods show, highlighted a trend toward individualism and customization in luxury good purchases by the country’s affluent.[2] Therefore, introducing a new line exclusive to the biggest Asian market will potentially bring about great sales potential.

Alternatively, Burberry can look into launching a range of exclusive and highly limited-edited product specially created specially for its key flagship stores in China. This is similar to what Louise Vuitton had done for the opening of Ion Orchard Road store, where the special items had the label “Louise Vuitton. Orchard Road Singapore” imprinted on it. These could be seen as a new move by the brand to add value to its consumers.


[2] http://www.forbes.com/sites/russellflannery/2011/10/30/luxury-show-highlights-trend-toward-individualism-among-chinas-rich/

(4) Investing in Underpenetrated Markets:

Key emerging markets that Burberry should invest in due to their strong potential growth include China, India and the Middle East. These regions have huge growth in personal spending power, standard of living and demand for luxury goods in these regions. Burberry has plans to increase the number of retail stores particularly in these countries in the year ahead.

China: This is currently the fastest growing region that Burberry operates in. With China’s economic boom, mainland Chinese are slowly but surely moving away from a savings culture to a spending culture. In fact, they are fast becoming the most active luxury consumers in the world, supported by a growing middle class whose personal incomes have swelled in the recent years. However, there are many other competing luxury brands also tapping into the growing China market. Moreover, Chinese consumers are generally focused on getting value for money, making them brand conscious but not brand loyal. With this in mind, Burberry needs to devote more resources into engaging the Chinese market and building greater brand resonance among its consumers. This would ensure that Burberry stays as one of the forerunners in China’s growing luxury fashion industry.

India: The luxury sector in India saw huge growth of 20% over the past year, and expects to see an increase close to 20% every year until 2015. Sales revenues in the apparel category itself increased by 30%. Currently, Burberry has just newly opened three more stores in Delhi, Mumbai and Hyderabad. As India’s economy continues to grow and its citizens’ personal incomes increase, Indian consumers are now seeking to enjoy better lives. They are also becoming increasingly well-informed and quick in adopting new trends, especially in the luxury product space. However, due to regulatory and infrastructure constraints in the country, Burberry has to better engage and reach consumers through the Internet especially those in cities outside the metros. As space in premium shopping malls is very limited as well, Burberry also has to be very watchful and opportunistic in acquiring quality retail spaces at the right prices. Moreover, in a market still dominated by traditional wear, Burberry may also want to consider catering several product offerings specific to the Indian market.

Middle East: The Middle East, having both high spending power and high fashion-consciousness, is also a new market that Burberry should heavily invest in. The Middle East is an important market because there is strong government support as seen in the premium shopping mall boom and proliferation of state-of-the-art infrastructure which facilitates a robust retail fashion business. In addition, the number of people becoming more Internet-savvy and engaged on social media is surging. Lastly, the target consumers in the region are young, brand-savvy and they look out for customized and unique items to express their individuality in a socially acceptable manner. Burberry may want to design customized garments for this region in the future such as fashionable ‘abayas’ and ‘thobes’ to increase demand and brand resonance in the Middle East.

2. Enhancing brand experience

(1) Continue to innovate and remain the digital pioneer/leader in the luxury fashion market

Technology is now part of the brand’s DNA. Going forward, Burberry has to continue to innovate and remain the forefront of the luxury fashion industry as a digital leader.

Luxury brands today need an online presence, but the virtual world is trickier for them to navigate than most. Not enough presence, and brands risk losing potential customers and revenue opportunities; jump in headfirst and they risk demystification.

Furthermore, more and more luxury competitors are jumping onto the bandwagon, and fighting for attention in the digital space. What this means for Burberry is to continually engage its consumers in a way that is relevant and novel to them, and on the other hand, avoid the risk of social media fatigue as the digital landscape become overpopulated.

In the days ahead, the brand needs to continue its strong growth in the digital realm, yet remain wary about the consequence of such heavy dependence on social media through managing the accounts thoughtfully – this could include limiting the account to a restricted number of tweets per day, rather than barraging ‘followers’ with minor details.

(2) Build brand knowledge through:

2.1 Burberry Movie: Heritage

It is increasingly important for luxury brands to have a global and unique branded content strategy. The content strategy offers new possibilities for brands to create content beyond advertising, including movies, documentaries or books dedicated to their history, values, remarkable products, and the men and women – outstanding craftsmen – who designed and manufactured them.”[1]

Some centuries-old brands are part of the common cultural patrimony, and have followed trends and cultural evolution throughout history. As such, they are privileged witnesses of an era, of a lifestyle, and of the evolutions of the craft industry. There is therefore great incentives for luxury brands to seize every available opportunity to talk about themselves, distinguish themselves from other brands and revive their fascinating history – where brand creation happens.

A luxury brand like Burberry is no exception. Just like how competing luxury brands has successfully made their own movie, “Coco Before Chanel”, “Blue Lady by Dior”, Burberry can explore a new medium to tell of its own luxury story with a rich brand history  – through a film. Founded by Thomas Burberry, he was trained as a draper as a young boy and later opened his own business in England. Through the invention of Gabardine fabric, the Burberry coat has become the classic British raincoat – first produced for military use during the World War, and later the official outfitters for the Royal family.

Telling the Burberry story with a movie can reinforce brand associations with consumers all over the world, and a good opportunity for the brand to reassert the immaterial values inherited from the past, and demonstrates how it can still be ahead of time.


[1] http://luxurysociety.com/articles/2011/03/why-luxury-brands-need-a-global-and-unique-branded-content-strategy

2.2 BurberryMuseum & BurberryMobile

Following our BuberryMuseum recommendation for Burberry local marketing campaign (See Assignment 4), we propose extending it globally as a worldwide tour (i.e. BurberryTour) to showcase the British heritage, Burberry history, and digital future innovations. This would serve to remind the international market about Burberry’s brand story, and even raise awareness amongst non-users.

Once proven successful, the BurberryMobile application should also be launched internationally to make the brand’s digital initiatives more relevant and engaging to its target audience. Today, the iPhone and other smart phones allow for deep and rich experiences within rich media, in-app and in browser.

Many luxury brands including Chanel, Louise Vuitton, Fendi and Huge Boss has made their way into mobile space, albeit mostly through iPhone applications. So, there is no doubt that luxury brands are starting to understand the appeal of the iPhone as a marketing channel.

It is important to note that the level of personal connectivity mobile affords means luxury brands can reach consumers at each step in the marketing funnel – awareness, trial, persuasion and loyalty – to deliver brand affinity and drive sales.[1]

More than just an iPhone application, BurberryMobile will integrate mobile into other broader campaign efforts to forge the personalized experience that uniquely comes with mobile by providing the right message at the right place, and leading them to other brand platforms such as the ArtoftheTrench, and Burberry World – which may facilitate successful purchase and brand loyalty.

BurberryMobile’, suitable for all smartphones, will feature a comprehensive consolidation of all Burberry’s online media platforms, namely its Facebook and Twitter accounts, online store BurberryWorld, support initiatives for British bands BurberryAcoustic, and online community ArtoftheTrench. Exclusive Mobile-only features would include BurberryInvest, BurberryShow, BurberryTalk and BurberryYou (more detailed explanation in Assignment 4).

(3) Improve store experience

“Brands that continue to do things consistently, and have a true heritage and DNA, represent value for consumers. It is more brand specific than industry specific. Brands that innovate, design, surprise their consumers—brands with those traits will perform well in this market. “

Daniel Lalonde- President and CEO, Louis Vuitton North America

Luxury has been redefined in recent years – flaunting is being frowned upon and there’s a deeper appreciation for the craftsmanship that went into each product creation. Louis Vuitton has captured on this trend and capitalized on both design leadership and brand heritage to retain its crowning glory in the luxury retail sector.

Increasing brand resonance

The Louis Vuitton Voyages exposition took to the world earlier this year. It showcases how the brand values have been kept since its founding years, and how Vuitton “skilfully blends tradition and innovation, making luxury a cultural heritage, the fullest expression of a refined art of living.” (Yves Carcelle, Chairman and CEO of Louis Vuitton).


The idea of the “Louis Vuitton Wardrobe” came from the clever design of its compartmentalized trunks, which allows for organization of hats, shows and clothes, just like a wardrobe. During the exposition, pieces made for famous people were showcased too. For example, Vuitton created trunks for Empress Eugenie, wife of Napoleon III, which housed her couture gowns and special cosmetic cases for her toiletries, complete with crystal bottles. Even today, Louis Vuitton still embodies luxury travel and continues to meet their client’s individual needs, for example Karl Largerfeld’s personalised i-pod library and Jean Larivière’s photography case.

The exposition shows how far the iconic brand has come from its’ founders humble beginnings. It further
boosts aspirations for people who want to own one of the coveted trunks. Burberry should tap on its similarly rich heritage to bring forth the history and craftsmanship of the brand to become a brand that consumers will aspire to own because they want to be a part of the heritage. The Louis Vuitton travel heritage encourages consumers to bring their decades-old Louis Vuitton luggage on jaunts around the world; they become a part of the brand’s heritage.

In-store experience

Burberry has done well by bringing technology in-store to elevate consumers experience. However, moving forward, it should constantly seek to engage consumers on an ongoing basis.

Brands are also moving away from the traditional hard sell of retail to focus on improving the shopping experience.

Burberry can weave in relevant art works, which complement its heritage, to design its flagships stores. By making art an integral part of the shopping experience they can link their brands inextricably with innovation and creativity. The layout of the Burberry store can make the consumers shopping experience a more holistic one by appealing to their intellect as well as their wallets.

http://www.youtube.com/watch?v=Gu7vwcSL-hA&feature=player_embedded

A successful example of this is the Espace Gallery at the Louis Vuitton flagship store in Paris. It is now the city’s third most popular tourist destination after the Notre Dame Cathedral and the Eiffel Tower.