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

Analysis SWOT: Strengths / Weaknesses / Opportunities / Threats

a) Strengths:

Burberry has a global footprint; there are about 440 stores all around the world. Asia Pacific goes ahead of Europe with respectively 37% and 32%, in 2010 Europe accounted for 34% of retail / wholesale revenue and Asia Pacific with 33%. Americas represented 25% (27% in 2010) and the rest of the World still represents 6%.

Burberry’s product distribution is much diversified. There are: retail, wholesale, e-commerce and licensing distribution channels. This represents strength because it keeps income steady.

This is a strong branding, it is Interbrand’s top 100 Brand, its rank in 2012 is 82. The brand is getting more and more present in the digital world, and its innovative talent is still powerful. Burberry reached sales record.

b) Weaknesses:

Burberry has not a strong efficiency. Indeed an industry standard’s inventory turnover is around 4.04, Burberry’s is about 2.2. The reason for this weakness is that is a fashion brand so it has to turn over fashion styles very quickly to meet trends, fashion changes frequently. One of the reasons that could explain this low turnover is that during the summer, outerwears do not represent a great part of the sales so the inventory turnover goes slowly.

The fact that Burberry is principally knows for its outerwear provoked a low resonance in countries which do not need these types of clothes. People from warm countries cannot identify themselves to this brand so Burberry should work on a marketing strategy specialized for these markets.

c) Opportunities:

As we already said there is a growth in emerging countries, because people earns more significant incomes, they want to spend their money so it provokes an increase of sales of luxury goods. These markets represent a great opportunity to Burberry; it will pick up their total revenues.

Burberry is really present on the Internet, and people are increasingly shopping on websites, so the company could take a real advantage of this trend, it develops its scope.

d) Threats:

There are two main externals reasons that may threaten Burberry: the economic crisis created a downturn so consumers pay more attention to prices and they do not buy clothes as compulsively as before because they earn lower incomes, they prefer to save their money instead spending it in luxury goods. The other external reason is that fashion is a rough industry, trends change all the time and to compete you have to be able to follow this constant change. Burberry has to keep being innovative if the company does not want to lose its customers. There is an intense competition so Burberry has to fight to keep its place on the FTSE 100.

There is also another problem, but internal this time, the checkerboard which is on almost all of their products, Burberry’s strategy is to be an exclusive brand but there are several other brands which use a checkerboard too. The threat is that the regulars won’t buy their clothes if anyone can have the same ones in another brand. So Burberry has to face its competitors again.

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