Can We Take Advantage of Burberry's Strategy?

Burberry CEO Marco Gobbetti announced this week that his company is doubling down on its luxury products and raising prices of its luxury products across numerous categories.  Gobbetti believes the premium sector is tantamount to hell.  He said, "Today's customers are polarizing between luxury and mass market.  The mid-market used to dominate. It no longer has a place with the consumer, and this polarization will be reflected in our pricing."

 

Gobbetti is moving Burberry away from mid-market products and pricing and focusing on producing more higher-priced leather bags and accessories and personalized shopping that gives customers immediate access to products they debut at fashion shows. 

 

Burberry was a digital pioneer among luxury manufacturers, being the first to use Facebook and Snapchat to promote the brand, and the first to live stream a runway show for its customers.  Being first in digital marketing for a luxury brand paid dividends for Burberry, which saw its revenue jump 27% in 2011.  Since then growth has slowed and currently it is not increasing at the same rate as its competitors.  That's why the company is rolling out a new strategy to focus on higher-priced, higher margin products.  Burberry plans to remain active digitally but focus more on improving the customer experience instead of "flash."  This will be accomplished by creating a personalized product feed on the Burberry e-commerce platform that is going to be launched later this year and a universal mobile checkout system ala Amazon Go. 

 

Burberry plans to use its digital channels to build itself as a luxury brand and using social media to appeal to entry-level customers who may look to trade up.  Burberry is betting on its ability to produce more upscale products more frequently. 

 

Is there a lesson for decorative plumbing and hardware showrooms?  Are your customers moving away from mid-market products to either trade up or trade down?  Would it be a good strategic move to position your brand as a true luxury player?  Please share your thoughts on the DPHA Facebook page or with our LinkedIn group.