Case study

Towards the end of the 1990s the iconic British garment company Burberry was in trouble. For the financial year ending 31 March 1998, profits plunged from 62 million to 25 million. The owners of Burberry, Great Universal Stores, were advised to sell off their ailing subsidiary. Fast forward to the financial year 2011/12 when Burberry was named the fourth-fastest-growing global brand in surveys conducted by both Interbrand and BrandZ. The turnaround of Burberry commenced in 1997 with the appointment of a new CEO, Rose Marie Bravo, recruited from the position of President of Saks Fifth Avenue. The challenges facing Bravo at that time were enormous. She found that because of a strategy of expansion over several decades, the Burberry brand had been trashed. Burberry products could be found in over 60 different stores in central London alone, but not in any of the prestige department stores such as Harrods, Selfridges or Harvey Nichols. An out-of-control licensing strategy had resulted in product design, quality and pricing inconsistencies across markets. Because of this strategy the Burberry product range had become overextended, while at the same time a parallel market of Burberry products had emerged as a major problem. The first action that Bravo took was to tackle Burberry's image problem. This included a new logo design, a change of name from Burberry's to Burberry, new packaging and an advertising campaign based on a distinctly British theme featuring leading fashion models such as Kate Moss. Bravo believed that Burberry could be successfully positioned in a market niche sandwiched between the pure luxury brands at the top and the mass-distributed brands below. In 1998, a new premium high couture and runway fashion brand named the Burberry Prorsum range was launched, and in 2000 a flagship Burberry store was opened in New Bond Street. This was followed by the opening of landmark stores in the major fashion capitals of Milan, New York, London (Knightsbridge) and Barcelona. In 2001 Christopher Bailey was appointed design director and the Burberry London ready-to-wear range was upgraded to reflect the updated lifestyle positioning of the Burberry brand. By then the road to recovery was well underway, and the turnover and profit decline had been halted by 2004. In 2002/03 turnover had climbed to 593.6 million and earnings before interest and taxes were 116.7 million. The stage was now set for the second phase of Burberry's revitalisation. In 2006, after a six-month transition, Bravo handed over the CEO reins to Angela Ahrendts, the former Vice President of Liz Claiborne. Ahrendts' vision was to elevate Burberry to the position of a major player in the global luxury brand market. To achieve this, she identified a market segment that she believed had been largely untapped by any of her competitors: millennials - the luxury customers of the future.

One of Ahrendts' first actions was to promote Christopher Bailey to the position of chief creative officer. With 23 licences around the world, Burberry products had become ubiquitous and out of touch with the image requirements of a luxury brand. Bailey was introduced as the 'Brand Czar' and staff were informed by Ahrendts that "anything that the consumer sees - anywhere in the world - will go through Bailey's office. No exceptions". This was followed by the closing down of a design team in Hong Kong and factories in New Jersey and Wales. A new 'brand-first' positioning strategy was developed based on three core attributes: the quintessential British character of Burberry, the democratic nature of the brand and Burberry's historic origins - born from a coat. The focus on Burberry's heritage provided the direction that inspired creativity and innovation within the company. From just a few basic styles of trench coat, Bailey and his team designed a completely new range of trench coats in a large variety of styles and colours. The ethos of the trench coat permeated everything the company did, from runway shows to store displays. The retail operation was strengthened over the next six years with the opening of 132 stores in markets that had stores for two or more of Burberry's luxury brand competitors.

What is the high-end luxury market that Burberry is intending to target? Is there a danger that Burberry will alienate the millennial market that the company has targeted since 2006 under the leadership of Angela Ahrendts?