In The Name of Fashion

Follow the Checkered Plaid!

Posted in Companies by inthenameoffashion on January 21, 2010

Burberry has been one of the companies making waves in the industry. As a traditional luxury brand with a rich British heritage, the company has broken out of its conservative nature to embrace modernization, kicking off with the Art of the Trench collaboration with Scott Schuman of Sartorialist fame, a website often viewed as the paradigm for brand customer engagement. Breaking traditional coverage of runway shows, Burberry has been one of the first to offer live streams of shows and live commenting (though I’m sure moderated) on their website. A new ad campaign with 19-year-old Emma Watson, most recently joined by her brother, also helped to revitalize and garner more attention to the brand. Lastly, Burberry has also given back to the community, creating a storm with their return to London Fashion Week and contributing to reviving London as a major fashion showcase.

With stellar 3rd quarter results, it was clear that these marketing efforts had paid off. Not only did the company beat analyst expectations, but also outperformed their previous 3rd quarter by 15.5%, in both wholesale and retail (buuut just to put things in perspective, last year around this time the economy was severely depressed). Regardless, in a time where companies are struggling to stay alive, Burberry has handily shown their new powerful position as a leading player in the luxury industry.

Dennis Weber, an analyst from Evolution Securities commented, “The macro environment remains tough and the outlook for the wider luxury environment therefore uncertain. But Burberry’s Pyramid strategy is working well and leads to market share gains in important markets, like the US.” (The Guardian)

And that led me to the point of this post. What exactly is the pyramid strategy?

The pyramid strategy refers to is the distinction across Burberry’s lines and different product offerings. The position correlates with the cost, number produced and desirability of the line. As you move up the pyramid, the product becomes more expensive, fewer items are produced and the desirability of the item increases.

For instance, Burberry has 4 lines:

  1. Burberry Prosrum
  2. Burberry London
  3. Burberry Brit
  4. Burberry Sport

A general fashion line pyramid would have these qualities:



Adjusted for Burberry’s portfolio:

Other important things to consider, which cross over fashion lines, are products and geography. (Burberry’s November Investor Pack, released Dec 2009)

Across 4 products:

  1. Womenswear
  2. Menswear
  3. Children
  4. Non-apparel

Spanning 5 geographies:

  1. Europe
  2. Spain
  3. Americas
  4. Asia Pacific
  5. Rest of World

From their corporate website, they’ve outlined where they will focus efforts for this year:

  • Leveraging the franchise
  • Intensifying the non-apparel development
  • Accelerating retail-led growth
  • Investing in under-penetrated markets
  • Pursuing operational excellence

AND have delivered in most areas. So far, so good non? Burberry to lead us out of the recession (at least the UK)!

*Another good read on Burberry.

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2 Responses

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  1. jwu said, on January 27, 2010 at 1:14 am

    🙂

  2. PetiteAsianGirl said, on May 18, 2010 at 2:03 pm

    Interesting post on one of my favorite brands. It is good to hear that they are doing well, but I never did understand their Brit/Sport lines. The offerings from those to lines are pretty uninteresting (to me, anyways) so I am surprised there is enough demand for both lines to continue operating. Would they really be considered contemporary?

    I just noticed that they started to offer Prorsum for children ages 2-14. Shocking! $1,000+ trenches for the kids… I guess there has to be demand for that, otherwise they wouldn’t have done it.

    Anyways – great blog! My friend showed it to me, as I currently work in finance and would love to switch paths into Fashion.


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