Magazine article Marketing

Mark Ritson on Branding: Burberry Boss Needs Poetry Lessons

Magazine article Marketing

Mark Ritson on Branding: Burberry Boss Needs Poetry Lessons

Article excerpt

Rose Marie Bravo is a tough act to follow.

Her tenure as Burberry chief executive included the successful de-merger from parent company GUS and the transformation of a British basket case into an international success story. But flattening European sales and an under-performing share price prompted the arrival of her replacement, Angela Ahrendts, last week.

On Monday Ahrendts met employees, Tuesday analysts, and Wednesday the media. By Thursday, it was apparent from her initial statements that Burberry's prospects do not necessarily look good.

Ahrendts' first error was to highlight a strategy for growing the brand in suburban US markets. 'We plan to invest aggressively in our underpenetrated markets, and we are underpenetrated in the US,' she said. 'While we've opened up a whole Southern belt of retail stores ... there's still the centre of the country, and the North-East. And we don't even play in Canada.'

There is nothing wrong with opening more profitable stores in places such as Indiana and Winnipeg - the problem is talking about it. One of the secrets of luxury brands is generating profits from widespread distribution channels, but highlighting only those that fit the brand's luxury profile.

When Burberry opened flagship stores in New York, London and Barcelona in 2002, the launches were attended by three Hellos' worth of celebrities and most of the world's fashion press. By contrast, when stores in Troy, Michigan and Shorthills Mall in New Jersey opened, there was no fanfare.

Another mistake is Ahrendts' focus on accessories as a driver of profitability. 'We will aggressively invest to build our non-apparel business,' she said. Luxury brands derive most of their profits from accessories. But there is a difference between where luxury brands make money and where they make their mark. They use their most exclusive products to build the brand, while (silently) making obscene profits on mass-produced handbags and shoes.

Haute couture, despite costing upward of pounds 50,000 a dress, is usually a loss-making venture for a fashion house, but provides an essential way to garner editorial, drive new ideas and maintain a brand's luxury status.

Ahrendts must learn to talk couture, while counting the profits from accessories. …

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