Burberry - SWOT (Strengths / Weaknesses / Opportunities / Threats) (document en anglais)

he Idea: Before Angela Ahrendts became Burberry’s CEO, licensing threatened to destroy the brand’s unique strengths. The answer? Centralize design and focus on innovating core heritage products.

When I became the CEO of Burberry, in July 2006, luxury was one of the fastest-growing sectors in the world. With its rich history, centered on trench coats that were recognized around the world, the Burberry brand should have had many advantages. But as I watched my top managers arrive for our first strategic planning meeting, something struck me right away. They had flown in from around the world to classic British weather, gray and damp, but not one of these more than 60 people was wearing a Burberry trench coat. I doubt that many of them even owned one. If our top people weren’t buying our products, despite the great discount they could get, how could we expect customers to pay full price for them?

It was a sign of the challenges we faced. Even in a burgeoning global market, Burberry was growing at only 2% a year. The company had an excellent foundation, but it had lost its focus in the process of global expansion. We had 23 licensees around the world, each doing something different. We were selling products such as dog cover-ups and leashes. One of our highest-profile stores, on Bond Street in London, had a whole section of kilts. There’s nothing wrong with any of those products individually, but together they added up to just a lot of stuff—something for everybody, but not much of it exclusive or compelling.

In luxury, ubiquity will kill you—it means you’re not really luxury anymore. And we were becoming ubiquitous. Burberry needed to be more than a beloved old British company. It had to develop into a great global luxury brand while competing against much larger rivals. Among luxury players, Louis Vuitton Moët Hennessy (LVMH) had almost 12 times—and Pinault-Printemps-Redoute (PPR) more than 16 times—Burberry’s revenue. We wanted a share of the disposable income of the world’s most elite buyers—and to win it, we’d have to fight for prime real estate in the world’s most rapidly growing consumer markets. In many ways, it felt like a David-and-Goliath battle.

One “Brand Czar”

On the surface, I might have seemed an unlikely CEO for a company that was considered quintessentially British. I was raised in a small town in Indiana and educated at Ball State University. I was a classic midwesterner—something the Financial Times had fun mocking when I first took the job. But I’d been fortunate enough to work with and learn from some of the most inspirational leaders in the fashion industry, from Paul Charron to Donna Karan. And I had 25 years of experience on my side.

I also clearly had one attribute that made me a good fit: I admire and respect great brands and helped to build some over the years. From Apple to Starbucks, I love the consistency—knowing that anywhere in the world you can depend on having the same experience in the store or being served a latte with the same taste and in the same cup. That’s great branding.

Unfortunately, Burberry didn’t have a lot of that. An experience in any given Burberry store in the world might be very different from the customer’s previous one. As part of my transition, I spent six months working closely with my predecessor, hitting the road to get a sense of Burberry worldwide. In Hong Kong, I was introduced to a design director and her team, who proudly showed me the line they were creating for that market: polo shirts and woven shirts and everything with the famous Burberry check, but not a single coat.

Then we went to America, where I was introduced to another design director and design team. This team was creating outerwear, but at half the price point of that in the UK. Furthermore, the coats were being manufactured in New Jersey. So we were making classic Burberry raincoats that said “Made in the U.S.A.” I later learned that we had outerwear licensees in Italy and Germany making trench coats that were even cheaper than those in the United States.

Great global brands don’t have people all over the world designing and producing all kinds of stuff. It became quite clear that if Burberry was going to be a great, pure, global luxury brand, we had to have one global design director. We had an incredible young designer named Christopher Bailey, with whom I’d worked at Donna Karan and who I knew was a sensational talent. So I introduced him early on as the “brand czar.” I told the team, “Anything that the consumer sees—anywhere in the world—will go through his office. No exceptions.”

Within a year we had let the entire Hong Kong design team go and had brought some of the U.S. outerwear team to the UK, where we centralized all our design under Christopher. We closed the New Jersey factory—along with one in Wales that was making polo shirts—and began investing in our Castleford facility in Yorkshire, which makes our heritage rainwear. Closing the Welsh factory caused a political firestorm—I was even called to testify before Parliament alongside Burberry’s highly respected chairman—but we stood behind our decision. As a company, we always do what’s best for the brand, because our job is to protect it and keep it powerful and relevant. If we do that, even if it involves closing a factory with 300 employees, many more jobs will be created in time. We’ve doubled the head count at Castleford since then and almost tripled our global workforce to nearly 10,000, adding more than 1,000 jobs in the UK over the past two years alone.

Sticking to the Core

Burberry is 156 years old; its coats were worn in the trenches of World War I by British soldiers, and for decades thereafter they were so much a part of British culture that the company earned a royal warrant, making it an official supplier to the royal family. Sir Ernest Shackleton wore a Burberry during his Antarctic expedition. Movie legends wore them on the silver screen. For more than a century the Burberry trench coat was cool. But when I became CEO, outerwear represented only about 20% of our global brand business. Fashion apparel and check accessories were leading our strategy. The more we examined the situation, the clearer it became that this wasn’t consistent with our luxury vision.

It’s not unusual for a luxury company to be born from a single product and then diversify. Louis Vuitton began with luggage, and Gucci with leather goods. But even as they diversified, each continued to earn the majority of its revenue from its original core products. Surveying the industry, we realized that Burberry was the only iconic luxury company that wasn’t capitalizing

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