A Close Look At An Old Luxury Brand Burberry "Makeover"

Looking at the share price of British luxury brand Burberry (Bo Baili) over the past five years, roller coaster ups and downs reflect this classic and difficult transformation path.

In July 16th, Burberry suddenly ushered in a long-running stock price increase, which was once up to 16%, the highest single day gain in the past 10 years. The direct reason for the surge in share prices is the latest Quarterly Bulletin released by Burberry on that day:

In the first quarter of fiscal year 2019 (up to 13 weeks in June 29th), Burberry's global comparable store sales increased by 4% over the same period last year, pushing the total sales volume to 498 million pounds and increasing 2% by year-on-year exchange rate. This increase seems normal, but Burberry is looking forward to it for a long time. CEO Marco Gobbetti said, "after many years of transformation travel, this quarter's performance is satisfactory." He outlined briefly the transformation measures in the first quarter: adding new products designed by the new creative director, Riccardo Tisci, continuing to transform the consumer's perception of the brand and adjusting the retail network.

This is the first achievement acceptance of Riccardo Tisci after joining Burberry for the first year. In February this year, the first series he designed for Burberry was officially launched around the world. By the end of June this year, he had accounted for half of the new products he had designed for mainline stores. According to the earnings report, the first quarter growth was mainly driven by the new series designed by Riccardo Tisci. Compared with the same period last year, the new series of products has gained two digit growth in all markets.

This is also the second year of Burberry transformation. In 2017, Burberry excavated Marco Gobbetti from the LVMH brand C e line as chief executive. The veteran luxury goods industry announced a five year transformation strategy after taking office, aiming to comprehensively reform from all aspects of creativity, marketing, digitalization and distribution channels. In March 2018, with the accession of Riccardo Tisci, Burberry officially changed to a new era. The Italy designer who was born in 1974 took the helm of LVMH's brand Givenchy for 12 years. When he joined Burberry, the latter was in urgent need of a new creative system to consolidate its luxury brand positioning.

The monogram upsurge of "magic"

Driven by street tide, symbolic culture represented by logo and slogan is attacking the fashion aesthetics of the younger generation and becoming a popular language for expressing themselves. This symbol culture is also affecting luxury brands. In fact, the revival of Monogram in the luxury industry is based on the same logic.

Monogram means "alphabet", which was designed on the coins of ancient Greece in 350 BC. After the modern era, the most widely known use of Monogram in the luxury industry includes Louis Vuitton (Louis Weedon), which was born in the late nineteenth Century and has been fashionable all the way to the "old flower" pattern.

Nowadays, with the revival of the old style and the coming of big logo, Monogram is endowed with more significance. It is both an important symbol of the luxury brand to inherit the brand spirit, and has also begun to become a personalized logo for young consumers to show their attitude. In recent years, Gucci, Dior, Fendi and other luxury brands are strengthening the use of Monogram in products.

Symbols are not new to Burberry. Burberry has always been one of the most recognizable logo designs in the world, but since the beginning of twenty-first Century, its brand image has been battered by imitation and imitation. Therefore, Burberry launched a new monogram, to a certain extent, also has the significance of reshaping the brand image.

Riccardo Tisci found inspiration from the brand archives, interlaced the initials of the brand Burberry Thomas Burberry (T and B), created Burberry Thomas Burberry Monogram for Burberry, and released it by personal account in August 2018. At the same time, there is also a brand logo, replaced by sans serif font "Burberry London England". Less than 5 months after joining Burberry, Riccardo Tisci announced Burberry to enter the new era through new logo and new monogram.

Then in London Fashion Week in September, Riccardo Tisci released his first show in Burberry, which showed the new look of Burberry to consumers. In the new series, the TB alphabet combination and the new Monogram were used in high frequency T-shirts, shirts and handbags. 5 months later, the new series of Riccardo Tisci officially entered the world's main stores. In March this year, the proportion of new products in stores was only 10~15%. By the end of June this year, this figure has increased to 50%.

In parallel with the launch of TB Monogram products, there are also updates of Burberry's image of global stores over the past six months and intensive marketing campaigns launched around the new series.

Starting from the flagship store in Regent Street, London, Burberry gradually renovated the main stores in the global core market, including the flagship store in Shanghai's Kerry Center in Jingan, China. In visual remolding, the interior of a store is more like a modern space with unique artistic style. The appearance of the shop through a large area of printing highlights the existence of the new monogram. If you have been to Kerry Center recently in Jingan, you must be impressed with the TB Monogram facade of flagship store.

As part of streamlining and optimizing the store network, Burberry has also closed down poorly performing stores and opened new stores while refurbishing existing stores. This is actually a common practice of luxury brands during the transition period. By the end of the first quarter, Burberry had refurbished 23 stores. 9 of the 38 non strategic stores that had been announced were closed, and 9 new stores were opened, and 3 were in China, located in Shanghai's IAPM, IFC, and China World Trade Center mall.

In China, Burberry will also open the limited boutiques with the theme of "exclusive identification kingdom" to Shanghai, Nanjing, Beijing and other major cities, and display new products on the art installations of TB Monogram, inviting celebrities, supermodels and KOL to come to the platform. They are wearing the latest Burberry photos and widely spread in social media.

More than that, the TB Monogram boom has spread from brand stores to city streets, shuttling through TB printing buses in Shanghai, Hangzhou's theme lighting and Beijing's 798 Art Center graffiti wall. From the offline to the online, the overwhelming TB Monogram has a "brainwashing" trend, behind which is Burberry's determination to establish a brand new image in a short time.

The dawn is beginning, and the transformation is still in progress.

From changing logo and Monogram to the first new series of launch and sale, Burberry has been controversial over the years. These different voices are mostly due to resistance to new monogram, including many fans of Burberry, who believe that "the new Monogram has left Burberry's luxury feeling intact" compared with the classic grid. Double click on social media. Similar reviews are rare.

However, consumers may show a higher degree of acceptance of the new Monogram's application in garments, at least from the data point of view. In the Burberry's first quarter earnings report, the brand's men's wear and women's wear both achieved double-digit growth.

But sales of Burberry accessories business are still declining. Riccardo Tisci has expanded the brand's bag series, launched the Grace (Grace) bag decorated with "Burberry" letter embossed micro standard, and "TB" logo as the decorative clasp bag, these new products are now placed in the prominent position of the store. Burberry's explanation is that the new accessories have been growing, but they have been offset by the dull performance of the original series, so the whole thing is still down.

Julie Brown, chief financial officer of Burberry, said in a conference call with analysts that it takes time to build a full range of product lines, while accessories products are under greater pressure because the choice of leather materials and the design and manufacture of leather products are time-consuming.

Julie Brown said that by September this year, the new series of Riccardo Tisci designs will increase to 60%~65% in the total volume of Burberry commodity supply, which will reach 75% by the end of the year. Referring to the best seller in the first quarter, she listed some of the products in B Series, and emphasized that TB Monogram series was especially popular among the Chinese Millennials.

B Series is the limited series launched by Burberry in September last year, and is designed by Riccardo Tisci. The first product is a sweater with a black "Burberry" logo, which sells for 450 pounds. It was sold out in less than 24 hours when it was first launched in September.

Unlike the traditional model, Burberry has adopted the new "Drop style" on the tide brand, and launched the B Series limit series on the 17 day of each month through social media platforms such as Instagram, WeChat, Kakao and Line. The "Drop style" sales model, which comes from the tide brand, is being adopted by more and more luxury brands. It is more like a marketing tool, stimulating the excitement of consumers, and creating a mysterious scarcity for the brand.

It is worth noting that in the first quarter, in the Burberry market, China's mainland market contributed the most, with an increase of 15%, pushing the whole Asia Pacific region to achieve a high digit growth rate, while Europe, the Middle East, India and Africa (EMEIA) and the US market recorded low bit growth. Obviously, Chinese consumers are the main driving force for this wave of growth.

On the one hand, the growth of China's mainland market comes from the positive response of Chinese consumers to the new series, and on the other hand, it benefits from the trend of luxury consumption reflux in the mainland's domestic market. Julie Brown revealed that the consumption of Chinese consumers in the global (including local and overseas markets) has reached a high digit growth rate, which is still increasing continuously compared with the low single digit growth rate in the same period last year.

Through a series of reforms, the latest transcript of the 163 year old luxury brand has proved its ability to reverse its decline. From the conference call, it can be felt that the top brands can finally breathe a sigh of relief. After all, Burberry's performance has been in a period of stagnation for many years.

Before Marco Gobbetti and Riccardo Tisci joined hands with the new group, Burberry was held by British designer Christopher Bailey for many years. The latter joined Burberry in 2001, was promoted to creative director in 2009, and became CEO in 2014. The industry has rarely held two jobs at the same time. However, during the three years of his administration, the design golden boy, who had worked together to revive Burberry, failed to resist the declining trend of Burberry growth. The problems of product aging, consumer fatigue and brand positioning were all obvious.

In the past three fiscal years, Burberry sales continued to decline, but the decline narrowed gradually. In the 2016, 2017, and 2018 fiscal year, respectively, 2%, 1% and 1% respectively, the favorable opening of the first quarter of the fiscal year undoubtedly injected confidence into the new management.

But Burberry still faces many challenges: how will Burberry deal with the old money as the new series increases in the supply of stores? Excessive discount sales will definitely affect the brand image; the propaganda around the new Monogram is developing vigorously, but the brand needs more urgent from the looting of consumers' attention, so as to achieve continuous sales transformation. But for the high profit category of leather goods, Burberry still lags far behind Louis Vuitton, Gucci and other strong competitors. For the new creative team led by Riccardo Tisci, the future road is still full of unknowns.