Burberry are a luxury fashion brand with authentic British heritage with quality, function and modern classic style, rooted in the integrity of its outerwear. Their unified, passionate and seasoned management team are one of few that have truly understood the importance of creatively changing with the times.Within the decade, there have been visible changes in consumer values, technology and globalisation. High fashion brands such as Burberry are still able to charge ten times the cost of manufacturing for a garment and show a 27% increase in revenue, (Q3).
Traditionally, designer labels have followed the path of creating a design rich, but loss-making, main line and a cash generative diffusion line. However, this formula may not equal success. Christian Lacroix's iconic couture line may have been courageous and bold, but the failure to push the diffusion line ultimately led to the brand's end.
So, what changes do brands need to make for long-term success today? What will the future hold?
One of the recent changes in the business model for fashion is that high street brands such as Mango and H&M are mimicking catwalk trends immediately. This makes fashion quicker to access and at a cheaper price, pushing down sales of high fashion products.
Designer labels are reducing seasonality risk by creating up to six complementing collections per year. These interseasonal lines are fast becoming the highest sales paths, with brands choosing to make cruise and pre-Fall collections at more accessible price points. The more new stock there is, the more often a customer will return to the store and spend more, creating a client relationship and brand loyalty for the designer. Burberry are a brand that have taken this on board, and their 2011 pre-Fall collection has become an instant success with high demand for every piece.
Suppliers need to acknowledge the affects of globalisation and hence create a network to meet the demand. As a result, there is no guarantee a brand will be sourcing its product from the same country, let alone the same supplier, season after season. As demand grows from all over the world, creating a fragmented customer base, costs will naturally increase. Burberry have re-engineered its supply chain, cutting the number of distribution centres, replaced air freight with more cost effective sea freight, saving the firm £25m; all in the name of fast fashion. They have also increased their efficiency in terms of replenishment of stock, thus leading to their promising figures for this quarter.
There exists a hunger for every designer to create an iconic bestseller to establish themselves. But the lesson here is to reap the profits and then know when to let go. Overdependence on a product can push a brand too far and in due course, the market will become disinterested. Burberry have successfully overcome the 'chav' issue and used the mimicking of the check and trench to their advantage; adding eccentric detail and increasingly luxurious fabrics.
High fashion firms are increasing their expertly located retail presence in efforts to gain more control over their image and representation. This financial year alone, Burberry have increased their selling space by 25% by opening 7 new main line stores including in Sao Paulo, Brazil and Puebla, Mexico.
Looking to the future, with menswear trending in line with emerging markets, firms need to focus on capturing this new market. Due to the decreasing cultural differences across borders, we shall see the fast menswear fashion growth occurring within the next 10 years.
Technology is also a large area of growth for luxury brands. Burberry have the highest luxury brand fan base on Facebook, with a staggering 4.2 million fans. The brand also release live streaming of their collections in order that customers may share the full experience of a Burberry fashion show. A new idea of Burberry's is the www.artofthetrench.com website. This is a social media website which introduces the iconic trench coat to the digital generation and is attracting the new, younger luxury customer to the brand.