Burberry. How the fashion brand was galvanized and decline turned into growth.

Brand corrosion can happen to even the best of brands. Luxury fashion brands being no exception. Burberry found out the hard way when the British clothing icon abandoned its high fashion legacy and moved into dog collars and Hawaiian shirts.

In November 2008 Burberry saw its equity plummet to an all-time low. At 160.00, share price had taken a head dive from 720.50 April the year before virtually reducing company value by more than 75%.

This happened in a market that was booming. Luxury and high fashion were among the fastest growing sectors in the world. But Burberry saw little of this action. Burberry had introduced so many brand extension that its proud British heritage was no longer visible.  The brand had corroded.

 

“It’s what you forget that kills you”

In the song ‘Emily’ Welsh rockers Manic Street Preachers explains how we are what we remember. When we forget, we die.

The song deals with a much more serious topic than fashion, but the message is universal. In the case of Burberry it was its history and classic trench coat, which was forgotten.

Why? Because Burberry had developed an itch for experimentation. A product of laissez faire licensing policies. The Burberry brand name was now used on clothing that was off the core brand identity.

As more and more products were launched that did not reflect the Burberry brand identity, the brand corroded and the brand’s unique strengths came under attack.

 

No identity – no brand

Brand corrosion can be reversed. And the brand galvanized even. It is a question of focus – throughout the value chain. And a doggedness in maintaining the brand’s core features so that they are still present and strong when they come into contact with the customer.

Burberry had 23 licenses around the world, each one doing something different, from coats and leashes for dogs to kilts and Hawaiian shirts. Burberry was using the famous Burberry check, but was spreading it thinly.

Something for everyone. But nothing exclusive. No core story. No brand to identify with and fall in love with.

 

Trench coats in the trench

The US was a perfect example. Burberry trench coats for sale in the States were too cheap and had ‘made in USA’ on the label. Off brand. Not exclusive enough to compete with the likes of Louis Vuitton, Gucci, and Alexander McQueen, who could command much bigger price tags and more loyal customers.

Angela Ahrendts had been appointed CEO of Burberry in July 2006. She recognized that branding is about consistency. And that a global fashion brand has to deliver the same experience all over the world. Just like any other global brand including the world’s top brand names like Apple, Coke, and Nike.

She closed down the US factory, the factory in Wales that was making polo shirts, and let the Hong Kong design team go. All designs now had to go through the Brand Czar, Christopher Bailey, a young rising star.

In the short term it meant letting 300 people go. But within two years they added 1,000 jobs in the Castleford factory where the trench coats are made.

 

Return to glory

Burberry returned to its core story: the 156 year old company that made trench coats worn by WWI heroes. The brand that earned a Royal warrant. And counted some of history’s most admired people among its friends. Ernest Shackleton wore a Burberry trench coat on his Antarctic expeditions. Hollywood movie stars wore them. Burberry helped popularize the phase: “Worn by…”

Still, the check pattern and the trench coat alone wasn’t enough to support the vision to become a leading luxury brand. Fighting brand corrosion requires aligning the entire value chain:

“We had great people, but we were organized like a department store. We had a person over each men’s category and a person over each women’s category. They made decisions that worked for their departments but might not make sense for the whole business.

We needed to change, to focus on the big picture: the brand. In addition to putting Christopher in charge of all design, we had to hire functional expertise – a head of corporate resources, a head of planning, and a chief supply chain officer. It was all pretty basic, but necessary if we were to reach our goals.”

 

Up the stock charts

Their brand rejuvenation story started in 2006. The branding overhaul – including restructures, shutdowns, and layoffs – had a massive negative impact on the company value. But not for long. Then the brand started to flex its muscles.

Burberry has since 2008 been one of the fastest growing luxury brands according to the Interbrand index. In 2015 Burberry ranked 73 on Interbrand’s ‘2015 Best Global Brands’ with a brand value of almost USD 6 billion.

And share price? Well, when Angela Ahrendts left Burberry in April 2014 to join Apple, Burberry share price had climbed to almost 1,500.00.

 

Sources:

Harvard Business Review:

https://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-global-luxury-brand

Google Finance:

https://www.google.com/finance?q=LON:BRBY

Interbrand:

http://interbrand.com