Burberry’s plans for a profitable turnaround paid off over the holidays, thanks to a popular video campaign, improved customer service and resistance to wholesale markdowns.
On Wednesday morning, the company shared results for the third quarter ending on December 31, 2016. Overall, retail sales climbed 4 percent to $903 million (735 million pounds), with comparable revenue up 3 percent. According to the brand, digital growth outperformed in all regions. Over the sales period, Burberry’s holiday video campaign saw 22 million views worldwide, doubling the reach of the 2015 holiday campaign.
“With a record number of views of our festive film and strong demand for new products in our collections, this third quarter improvement reflects early progress from our plans to drive Burberry’s performance for the long term,” said chief creative officer and CEO Christopher Bailey in a statement.
Burberry’s plans to restructure the business were put into motion last June, when it announced that sales in 2015 had fallen overall by 8 percent. The turnaround included a strategy to cut a total of $144 million in expenses, and grow past the expected luxury market growth of 2 to 3 percent in the next few years. Christopher Bailey, who has served as chief creative and executive officer since former CEO Angela Ahrendts departed the brand for a position at Apple in 2014, will step down as CEO as well. Bailey will stay on at the brand as chief creative officer, while Céline CEO Marco Gobbetti will join the team as executive chairman this month, and will begin his turn as CEO in July.
With global sales now on the upswing, Burberry is looking to its robust digital holiday campaign as an impetus for its seasonal boost. “The Tale of Thomas Burberry,” the festive video that served as the hook for the campaign, ran both organically on Burberry’s YouTube, Facebook and Instagram pages, as well as on both platforms as sponsored ads, reaching 22 million worldwide. As Burberry likes to experiment with digital tools, there was a chatbot tie-in for the campaign: On Facebook, customers were directed to learn more about the campaign on Facebook Messenger. Once there, viewers could choose to learn more about Burberry’s heritage through automated facts, browse the seasonal collection in Messenger or start a live chat with a brand representative.
It’s not the only platform where Burberry has tested conversational commerce: The company has launched campaigns on WeChat, WhatsApp and Line in the past.
“There are some brands like Burberry that will hop on new innovation first because it’s part of how they express themselves,” said Nadina Guglielmetti, managing director of social media at Huge. “Figuring out how to capture that data about your audience is next.”
To that end, Burberry has made moves to enable its sales associates to make more direct connections with consumers. Over the holidays, the brand piloted a customer feedback tool that resulted in a spike of sales associates reaching out and making appointments for customers to come back into the store. According to the company, average transactions with returning customers doubled as a result. Charlotte Crowley, director of investor relations at Burberry, noted that incorporating Apple Pay on mobile saw significant lift in conversion, with mobile driving the majority of digital growth. Additionally, the brand resisted early promotional discounts at its wholesale partners in the U.S.
The inch upwards for Burberry’s sales are a signal that a strong digital strategy is an effective complement to a restructuring strategy that emphasizes improved customer service and core products like bags and leather goods, and minimizes promotions. While Burberry has become a leading digital brand, lagging sales have raised questions about how effective a digital luxury brand is.
“Brands [like Burberry] that are synonymous with digital innovation are struggling,” said Maureen Mullen, chief strategy officer and co-founder of digital think-tank L2. “But it would be very interesting to see where Burberry would be if they hadn’t invested in digital. Maybe virtually irrelevant.”