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Burbery

Reinventing Burberry

It is called ‘doing a Gucci’ after Domenico De Sole and Tom Ford’s stunning success at turning nearly bankrupt Gucci Group into a £7 billion (market capitalization) fashion powerhouse. Since 1997 when she took over, Rose Marie Bravo’s makeover of the 143-year-old Burberry brand looks like following the same path.
The Burberry story began in 1856 when Thomas Burberry opened his first gentlemen’s outfitters. By the First World War, business was booming as Burberry had won the contract to supply trench coats to the British army. Its reputation grew when it proved its contribution to the national cause. The Burberry check was introduced in the 1920’s and became fashionable among the British middle-to-upper classes. Later, appearances on Humphrey Bogart in Casablanca and Audrey Hepburn in Breakfast at Tiffany’s gave the Burberry trench coat widespread appeal.
Bought by Great Universal Stores in 1955, the brand’s huge popularity from the 1940’s to the 1970’s had waned by the 1980’s. A less deferential society no longer yearned to dress like the upper classes and the Burberry brand’s cachet fell in the UK. This was partially offset by a surge in sales to the newly rich Japanese and other Asians after they discovered its famous (and trademarked) tan, black/red and white check pattern. By the mid-1990’s, the Far East accounted for an unbalanced 75 per cent of Burberry sales. British and American consumers began to regard it as an Asian brand and rather staid. Furthermore, distribution was focused on small shops with few big fashion chains and upmarket stores like Harrods stocking the brand. In the US stores like Barney’s, Neiman Marcus and Saks only sold Burberry raincoats, not the higher profit margin accessories (e.g. handbags, belts, scarves and wraps).

CHANGE OF STRATEGY

These problems resulted in profit falls in the 1990’s culminating in a £37 million drop in profits to £25 million in 1997. This prompted some serious...