It’s the beginning of a new era for Burberry.
Former Givenchy designer Riccardo Tisci is taking over as chief creative officer for the British brand, replacing Christopher Bailey, who joined the brand in 2001. Tisci’s hire is a creative departure from the tone set by Bailey’s time at the brand — at Givenchy, Tisci married streetwear with high-end luxury — and is the second time Burberry CEO Marco Gobbetti has brought him in to elevate a brand. He hired Tisci to his position at Givenchy in 2005, when Gobbetti was serving as CEO of the French house.
“His designs have an elegance that is contemporary, and his skill in blending streetwear with high fashion is highly relevant to today’s luxury consumer. Riccardo’s creative vision will reinforce the ambitions we have for Burberry and position the brand firmly in luxury,” said Gobbetti in a statement.
Tisci joins Burberry two years into its ongoing restructuring plans, announced in 2016. Most recently, Gobbetti laid out a vision for Burberry’s future collections that included striking a balance between high-end luxury and more rapidly released fashion-forward collections, to simultaneously bringing back some of Burberry’s prestige that was marred thanks to over-distribution and wholesale markdowns.
Overall, revenue growth has stalled. While comparable sales increased 11 percent in 2015, to $3.4 million, they dipped in 2016 by 1 percent and in 2017 by 2 percent. Most recently, the company shared its third-quarter update for the financial year 2018, with comparable sales improving slightly, by 1 percent for the quarter.
With Tisci in place and his first collection for the brand to be shown in September, here’s a look at the brand he’s inheriting.
Gobbetti has said multiple times that Burberry wants to “ground itself firmly in luxury.”
During a November call with investors, he acknowledged that what that means for the brand has had to change, thanks to customers changing.
“Today’s customers are polarizing between luxury and mass market. The mid-market used to dominate fashion. [It] no longer has a place with the consumer, and this polarization will be reflected in our pricing,” said Gobetti. “Brands in the top segment enjoy price empowerment, and drive growth through a premium price, while the mass market has attracted entry-level customers through lower-priced fashion. Mid-market players have stagnated, and we must move ourselves up to ground ourselves firmly in luxury.”
To adapt to this new customer, Burberry is taking a two-pronged approach: Change distribution, production and quality of its core luxury items, particularly leather goods and handbags, and release smaller collections more frequently throughout the year. The goal is to change perception of the brand through a series of global initiatives and brand experiences.
Part of that process means reconsidering its wholesale partners. While it negotiates with department store retailers in the U.S. about its plans to reposition itself in the market, the brand partnered with Net-a-Porter on an exclusive 14-piece capsule collection to take advantage of the e-commerce retailer’s digital luxury audience.
Rethinking in-store experiences
Managing a smart wholesale network is critical for luxury brands, particularly those in Burberry’s boat that have fallen into the dreaded mid-tier market territory as a result of over-distributing to struggling retailers. But updating direct retail channels is equally important as brands look to get closer to customer data, and while Burberry has emphasized its digital reach, the in-store experience matters, too.
“You can’t ignore the store, because that’s where customers are immersed in your brand. Luxury retail needs to get a much closer and tighter understanding of the customer, including the ones buying, what’s being bought, and how they want to interact with you,” said Antony Karabus, CEO of HRC Retail Advisory. “Then they can react.”
To update its in-store network, Burberry has rolled out a digitally enabled store model that equips salespeople with tools that can recognize customer profiles and histories with an email address. The tool will also lay out Burberry’s global inventory, making it possible to ship items from any store, depending on where they’re ordered from.
Earlier this month, Burberry partnered with Farfetch to to incorporate proprietary technology into Farfetch’s operating system that brought the brand’s full inventory to the e-commerce marketplace. Through that update, customers from every country can shop Burberry online and, through the store network, receive items in a much faster shipping window.
The partnership is part of Burberry’s ongoing plan to reach customers internationally as it updates its product inventory. It’s also working with international partners including Tmall and JD.com to reach Chinese customers at a time the market is booming.
“Reaching our global audience with immediacy and relevancy is part of our ongoing plan to restructure,” said Gobbetti to investors in November. “That consistency is key to our digital strategy.”
As all these changes are underway, it’s promising that, according to Burberry CFO Julie Brown, the brand doesn’t plan to return to growth until 2021.
“I think Ricardo and Marco could indeed turn out to be an effective combination to revive Burberry. They have a proven track record, and Riccardo is recognized as a high-profile talent,” said Luca Solca, head of luxury goods at Exane BNP Paribas. “Tisci’s greatest challenge is this: Reigniting brand excitement.”