QSM Chap 10 Service Culture in Tourism and Hospitality Industry.pptx
Burberry final ppt
1.
2. Introduction
• Burberry is a global luxury brand with a distinctive British heritage,
core outerwear base and one of the most recognized icons in the
world. Burberry designs, sources and markets apparel and
accessories, selling through a diversified network of retail, digital
commerce, wholesale and licensing channels worldwide. The business
is managed by channel, region and product, supported by corporate
functions.
3. Case Study Synopsis
• Founded in 1856 by Thomas Burberry
• British used trench in WWI
• Trademark - (a camel, black, red, and white plaid design)
• Used in lining of signature trench coats
• Original designs and quality
• Celebrities, royalty, politicians, etc.
• Symbol luxury and durability
4. Case Study Synopsis
• In 1955, Great Universal Stores Plc. bought Burberry
• licensed the brand in Japan through Mitsui and Sanyo
• Global recognition through licensing and distribution agreements.
• 1997 new CEO Rose Marie Bravo
• Cosmetic - logo and brand name
• Update product line - consistency
• Reposition - keep consumers and attract younger customers.
5. Case Study Synopsis
• 2003- Primary Collections
• Womenswear, Menswear, Accessories
• 3,162 wholesale doors worldwide
• 434 department stores
• 2,728 specialty stores
6. Case Synopsis
• Biggest challenge
• Create a consistent brand image
• Risk losing brand and credibility
• Prorsum - luxury line
• Advertising Campaign : 2 phases
• Stella Tenant
• Kate Moss
7. Case Synopsis
• Challenges
• Counterfeits
• Popular among urban and hip-hop musicians.
• Sustainability
• Brand positioning
• Burberry = healthy
• Manage popularity = long-term growth
8. Within the Burberry offering, there is a product hierarchy
defining components - each with unique branding and a
distinctive identity.
9. Prorsum
• Most fashion forward
collection
• Centered around runway
shows each year
• Latin word for “moves
forward”
• Inspires the other lines
• Hand-tailored
11. Burberry London (International) Line
• Core collection
• High-end positioning
• Key to the turnaround of the
Burberry brand
• Strong womenswear and
accessories segments
• Main markets are currently in
Europe and US
• Products mainly sourced in Europe
and UK
• Thomas Burberry Spain & Portugal
12. Burberry London (Japan) Line
• Sold in Japan and made
locally
• High quality apparel but
lower positioning and
price points than the
International Line.
• Weaker accessories due to
licenses held buy small
manufacturers.
• Blue and Black Labels
13. Burberry Brit
• Customer wears on
weekend
• Casual wear
• Uses innovative and
more contemporary
versions of the check.
16. Burberry Brand
• Defined by:
• Authentic British heritage
• Unique democratic positioning within the luxury arena.
• Founding principles of quality, function and modern classic style,
rooted in the integrity of its outerwear.
• Globally recognized icon portfolio: the trench coat, trademark check
and Prorsum horse logo.
17. Burberry Business
• Defined by:
1 Design, marketing and retail-led strategies
2 Digital focus and integration
3 Channel diversity: retail, digital commerce, wholesale and licensing
4 Multi-category competency: non-apparel, womenswear, menswear
and children’s wear.
5 Global reach and balance: across core regions and emerging markets
18. Culture
• The culture is distinguished by:
1 Core values: to protect, explore and inspire
2 Democratic and meritocratic ethos
3 Collaboration and connectedness
4 Contributing to its communities, including through the Burberry
Foundation.
19. Burberry sells its products to the end consumer through
both the retail (including digital commerce) and
wholesale channels. For 2009/10, retail accounted for
58% of revenue and wholesale 34%.
20. Channels : Retail
• 131 mainline stores
• 262 concessions within department stores
• 47 outlets
• Digital commerce in 27 countries
21. Channels : Wholesale
• Includes sales to prestige department stores
and specialty retailers worldwide.
• Sales to its franchisees who operate 97
Burberry stores, mainly in Emerging Markets.
22. Europe including Spain accounted for 44% of sales, Americas 27% and Asia Pacific
24%. Emerging Markets, which spans across all regions and includes China, India,
Russia, Eastern Europe and the Middle East, contributed 10% to retail and
wholesale revenue.
1 Americas: includes US, Canada, Central and South America
2 Asia Pacific: includes China
23. Outerwear, which is the core of the apparel offer at over half of sales, is the category in
which Burberry is top-of-mind among consumers.
Burberry continues to grow outerwear by continued product innovation.
Another key strategy is to grow non-apparel where revenue increased by 10% underlying
in 2009/10.
Burberry is planning further growth in all areas of the business over the next few years.
24. Channels: Licensing
• Selective licensing agreements in Japan and globally,
leveraging the local and technical expertise of its license
partners.
• Royalty income primarily received from Burberry’s
licensees in Japan.
• Its global licensees
• fragrance
• eyewear
• timepieces
• small menswear
• European children’s wear
25. Social & Environmental Achievements
2010-2011
Increased the number of factories with worker hotlines by 54% to a total of 33.
1 Joined the Ethical Trading Initiative – the first luxury brand to do so.
2 Launched a Sustainability Digital Film to employees globally to raise awareness of corporate
sustainability initiatives.
3 Committed to increase the proportion of the Group’s UK electricity purchased from combined
heat and power sources from 29% to 100% to drive demand for renewables in the UK.
4 The Burberry Foundation distributed over 2,500 iconic trench coats to partner charities in
London, New York City, Hong Kong and Seoul, all working with disadvantaged youth.
26. Kate Moss Scandal
• Burberry distanced itself from Moss in
September 2005, days after The Daily
Mirror published pictures of her
allegedly snorting cocaine.
• The company dropped plans for Moss
to appear in its fall 2005 campaign,
and posters featuring the model were
removed from its flagship store.
• Burberry stressed in November that it
had not severed ties with the model.
• A year later she got back with
Burberry.
28. Geographical Mix
• Under Retail
• Low transactional exposure
• Outsourcing of productional activities
• Allows production in various countries
and currencies.
• Yen - Japan license
29. Vertical Integration
• Under Retail
• Recent acquisitions of licensees in Spain
• Distributors in Korea and the Asia Pacific
• Combined with ambitious retail extension
• Not very integrated
• Deliberately has limited production
capabilities.
30. Business Mix
• In the middle of luxury and retail.
• Consists almost entirely of apparel and
accessories.
• Burberry’s business mix seems comparable to
that of H&M, Hugo Boss and Inditex but also
to that of Gucci and Hermès.
31. Pricing Power
• Burberry sells premium products in a high-quality distribution network.
• This positioning is synonymous with higher prices and higher
distribution costs.
• The company has much lower transactional exchange exposure than luxury
goods companies
• Therefore does not need to make up as much revenue in times of
adverse exchange-rate movements.
• Burberry has in the past increased fees due by its Japanese licensees, Sanyo
Shokai and Mitsui & Co.
32. Design & Quality
• High on Luxury goods category
• Christopher Bailey worked at Donna Karan and
Gucci.
• Core heritage products
• A high fashion range - Prorsum
• high end product line - London
33. Management
• Under Retail
• CEO- Rose Marie Bravo
• Retail and Wholesale background
• President of Sak’s Fifth Avenue in US
• Chairman and CEO of Macy’s speciality
division.
• Angela Ahrendts - CEO July 2006
• Executive Vice President - Liz Claireborne
• President of Donna Karan International
35. Strengths
• Strong proven management team
• Licensing growth delivers high return on capital
• Heritage products
• Flexibility in product sourcing
• Lower transactional exchange exposure
36. Weaknesses
• Low vertical integration reduces capture of
margin and value from manufacturing.
• Low gearing into Japanese upside.
• Apparel segment - increased risk still accounts
for most of company profits.
37. Opportunities
• Retail network expansion
• Widening of wholesale distribution
• Extension of apparel offering
• Further development accessories (Spain & Japan)
• Increased distribution of Burberry London (Japan)
38. Threats
• Conflicting interests of GUS and external Burberry
shareholders.
• Reliance on 3rd parties in Japan
• Counterfeiting
• Control over licensees and wholesale accounts
• Company is mono-brand and trademark is core.
39. Conclusion
• Explore opportunities
• Demographic Studies
• Know their threats
• Relied on Licensing ---> Repositioning
• New image -----> Success
• Compete with some of the best luxury brands.
• Sustainability
