Note: Do not use any outside research whatsoever.? All research is contained within the case PDF. Please provide your ow
Note:
- Do not use any outside research whatsoever.
- All research is contained within the case PDF. Please provide your own, original analysis.
Read the case study PDF: Burberry’s new challenges in order to complete this assignment. The Case Study is available in the attachment.
WRITE YOUR PAPER FROM THE PERSPECTIVE OF CONSULTANT SENDING A PROFESSIONAL DOCUMENT TO SENIOR LEADERSHIP ANSWERING THE PROMPTS BELOW. MAKE THIS LOOK, FEEL AND SOUND LIKE A REPORT FROM A PRO (NO FIRST PERSON, NO CASUAL LANGUAGE (DON'T JUST USE BIG WORDS TO USE THEM, BE COMMUNICATIVE AND READABLE).
Please answer the following (in a Case Study / written paper format):
- Create a Porter’s Five Forces Analysis Diagram (this will be a diagram – see attachment)
- This is not a design exercise, the boxes can be made in word, excel or a design program as you choose. Analysis is more important than an aesthetically appealing design.
- Perform a strategic analysis of of Burberry’s as follows:
- Please make your work far more thoughtful and in-depth than the discussion board
- Market / Market Domain (The Where)
- Describe Burberry’s market and position within their market
- Outline Burberry’s top 5 competitors and how they are positioned versus Burberry
- Value Creation (The Why)
- Describe Burberry’s key offerings and how they are positioned in their market. Are they positioned to succeed or are they facing risk?
- You are encouraged to look at their brand as well BUT remember a great brand is built upon great strategy, understanding of customers (re: segments) and the delivery of quality offerings.
- Pay attention to key segments throughout your paper as how Burberry approaches segments is everything to their marketplace strategy
- Describe Burberry’s key offerings and how they are positioned in their market. Are they positioned to succeed or are they facing risk?
- Activity Systems (The How)
- Offer an overview of Burberry’s key activities (marketing, product development, channels (retail, digital), supply chain
- Who are key stakeholders and partners for Burberry? (i.e. do they carry outside brands, private label, licensing arrangements, partnerships?)
- What is Burberry’s retail strategy?
- What is Burberry’s digital strategy?
- Are there risk or problems you’ve observed in Burberry’s activity systems?
- Provide proof (from the case) where relevant by looking at the exhibits attached
- Risk & Dilemmas Analysis
- Analyze the unique success factors of Burberry’s luxury business and explain how it contributes to the brand’s image.
- Strategic dilemmas
- How are external factors (changing competition, technology, buyer expectations) affecting Burberry’s ability to succeed?
- Provide proof (from the case) where relevant by looking at the exhibits attached
- How have internal decisions (choices Burberry has made) positioned them to compete and succeed? Have they done everything near perfect or have they left themselves open to problems ahead?
- How are external factors (changing competition, technology, buyer expectations) affecting Burberry’s ability to succeed?
- Should Burberry do anything differently as a result of your analysis?How are digital media (ecommerce, marketing) social media and bloggers affecting Burberry’s communications & marketing strategy and how they deliver customer experience?
- Burberry is dealing with a changing world where fast fashion and experiential luxury are on the rise while the relevance of fashion shows and department stores is in question? Analyze this situation exploring these four variables assessing their potential impact and importance to Burberry’s future.
- MOST IMPORTANT: Given all the analysis you have done so far (strategic analysis, the external and internal, dilemmas) – what are FIVE recommendations you would make to Burberry's senior leadership team making sure to "connect the dots" to how this solves SPECIFIC issues you have uncovered.
- Be sure to look at your own analyses above and come with issues to tackle and detail how your ideas may make an impact.
Important notes:
- Do not use any outside research whatsoever.
- All research is contained within the case PDF. Please provide your own, original analysis.
- Any use of outside research, discussion with anyone (including classmates) will result in a failing grade
- Case studies are from the perspective of the information in the case. If you know in real life what Burberry ended up doing you cannot use this information. You are only to use information in the case to perform analysis or make recommendations.
- References should be made to material taken from the case. (if you cite the case, mention the citation as you would any source that is not your own ideas).
Here is important information that WILL IMPACT YOUR GRADE throughout this course.
- Covid-19 / Pandemic impacts on strategy
- You will usually be asked to make a minimum of 3 strategic recommendations in most assignments. The pandemic is NOT to be a core part of your strategic analysis UNTIL AFTER you have provided 3 examples that examine the business without regards to the pandemic.
- IF you choose to make Covid a central point, it will need to be your 4th recommendation (3 recs need to be non-pandemic related)
- The reason / the "Why": While the pandemic has clearly had global impact, it is vital you learn to analyze businesses, markets and strategies without only looking at the pandemic alone. The pandemic is a somewhat rare event and we want to make sure we exercise other forms of situational and strategic analysis as well.
- Grade impact: You will lose as much as a full grade level if your analyses all hinge on the pandemic alone.
- Sustainability & influencer strategies are a given, mentioning them without research and market insights is the worst form of leadership… therefore they are NOT allowed unless specifically directed.
- If you want to use them, ask in advance and let’s decide if there’s a strategic reason backing their use
- If they are specifically requested then they will be relevant to your answers and encouraged
- The reason / the "Why": Students have tended to simply use influencers or sustainability as suggested business strategies with no research or data backing them. Analyzing the impacts of sustainability is encouraged IF you are willing to do the research to back it up.
- Obligatory use of “sustainability” or “influencer” will result in points loss - as much as a grade level
- Never use first person (I, me, myself) in class writings. They will result in immediate loss of a grade level
- The reason / The "Why": We are here to write as future leaders so let’s "level up" our discourse such that we communicate at the most senior level possible.
- SPECIAL TIP: The answer is always…. always… always start with the consumer (namely customer segments) and creating value for them.
- Value creation is always our goal
- ALWAYS FOCUS ON SEGMENTS… become "customer obsessed"
- Remember - demographics are not segments - we want to include everyone who shares the same drive and passion and demographics alone will rarely, if ever, capture those drivers. (see video for more commentary)
W17177
BURBERRY’S NEW CHALLENGES1
Marta Jarosinski wrote this case under the supervision of Professor June Cotte solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com.
Copyright © 2017, Richard Ivey School of Business Foundation Version: 2019-07-15
By the time Angela Ahrendts left her position as chief executive officer (CEO) of Burberry in 2014,2 the Burberry brand image had improved considerably. Ahrendts had successfully led the luxury fashion firm during her seven-year term with the help of the company’s creative director, Christopher Bailey, who was set to replace her as the next CEO. Over this same time, however, a number of changes within the fashion world had a significant impact on the overall luxury fashion industry. Fast fashion, digital technology, and new venues of communication changed the way the world’s leading luxury brands operated. The industry did experience financial growth year-over-year.3 Burberry and other luxury brands continued to be the industry trendsetters. However, the luxury companies were slowly losing some of their power and control over their brand image, both artistically and financially. As the new CEO, Bailey had to consider changes in Burberry’s business strategy that would best help the company adapt to this changing environment.
BURBERRY’S HISTORY
The Beginning
In 1856, Burberry was opened in a small outfitter’s shop in Basingstoke, Hampshire, England, by Thomas Burberry, a 21-year-old draper’s apprentice.4 Burberry’s customer base grew throughout the rest of the 1800s. However, it was the invention of gabardine—a breathable, waterproof, and tear-proof fabric—in 18805 that later proved to be a key development for Burberry, putting the company on the world map within the apparel industry. “By the turn of the century, Burberry offered an extensive line of outerwear for both men and women. The company designed hats, jackets, pants, and gaiters especially for hunting, fishing, golf, tennis, skiing, archery, and mountaineering.”6 The business continued to grow with the pioneering of the Burberry trench coat. In 1901, Burberry was commissioned by the War Office—a department of the British government—to design a new uniform for the British officers. There had been much debate over the identity of the first trench coat designer, with both Burberry and Aquascutum— another British apparel company—claiming to have spearheaded the design of the garment.7 Nevertheless, this conflict did not hurt Burberry’s position and the brand grew in popularity.
Over the years, Burberry continued to gain public fame through both its quality design and celebrity status. Burberry developed a reputation for quality through the involvement and use of Burberry products in various expeditions, sporting events, and excursions. For example, Roald Amundsen and his team wore
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Burberry gabardine clothes and used Burberry gabardine tents during their 1911 excursion, when they became the first people to reach the South Pole. Ernest Shackleton completed his Imperial Trans- Antarctic Expedition in 1915 also wearing Burberry.8
On another front, the Burberry trench coat’s iconic fashion status was strengthened through its popularity among famous actors. For example, Humphrey Bogart wore Burberry in 1942 in the Academy Award- winning film “Casablanca.” Audrey Hepburn was also dressed in a Burberry trench coat in her role as Holly Golightly in the 1961 blockbuster “Breakfast at Tiffany’s.”9
While the company established its reputation and its name, it also developed the Burberry logo and, with it, the Burberry dream. The firm registered the “equestrian knight” trademark in 1909.10 In 1920, the iconic “Burberry check” was registered as a trademark and added as a lining to the trench coats.11 The check was incorporated into accessories in the late 1960s.12
Recent History
Over the years, Burberry’s public image began to change as the luxury status of the Burberry brand began to diminish. In 1997, Rose Marie Bravo was brought in as CEO to restore the perception of the brand.13 Under Bravo's leadership, the company’s $460 million14 in annual sales nearly tripled to $1.3 billion.15 Included in her transformation was the launching of the Prorsum collection, Burberry’s fashion-forward runway line, as well as the building of Burberry’s presence in fragrance, accessories, children’s wear, and home goods.16
When Bravo stepped down at the end of her contract period, Ahrendts replaced her as CEO, and Burberry’s revenues tripled again to more than $3.1 billion,17 while the company’s stock price soared.18 Various initiatives drove this growth, including opening new retail stores,19 minimizing licensing, outsourcing production, and solidifying control over design.20 Several clothing licenses were revoked, including those in Spain and Japan, and the company bought out its franchise partner in China. These moves, combined with new outsourcing of manufacturing, consolidated the power over the brand with the central headquarters.21
To ensure a consistent brand image, Ahrendts hired Bailey, a promising young Burberry designer, as chief creative director and required all Burberry products to obtain Bailey’s approval before they could be included in a collection.22 Ahrendts was able to turn around Burberry’s brand image through centralizing the design team in London, minimizing the use of the check pattern on the company’s products, and leveraging the iconic trench coat.23
In addition to solidifying control over the brand and its design, Ahrendts’s focus on growing Burberry’s digital presence was obvious:
Former colleagues say she stressed the growth of Burberry’s website when other luxury brands shied away from e-commerce. She placed Apple iPads in stores, streamed Burberry fashion shows live, and adopted new software to cut costs and improve profitability.24
In an industry that has been slow to embrace e-commerce, Burberry launched one of the first luxury websites to offer full online sales to customers. The company actively engages in social media with its Art of the Trench website and a collaboration with Google Inc. that encouraged people to send digital “Burberry Kisses” around the world via email.25
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Burberry Now
Burberry experienced several years of consistent revenue growth and a general trend of income growth from 2004–2014 (see Exhibit 1). When Ahrendts left, Burberry was a thriving luxury house. In spring 2014, Bailey became CEO of Burberry while retaining his role as chief creative officer.26 In order to sustain the company’s growth and positioning, Bailey needed to ensure that he was both proactive and quick to react to the changes brought about by Burberry’s market, the luxury industry, the fashion world, and the general global market. He needed to take into account changes affecting the industry as a whole, including the various luxury customer segments and their changing roles, the global customer market, fast fashion, fashion shows, department stores, and the move towards experiential luxury. Further, Bailey needed to consider the impact that digital technology had on the luxury market, and how Burberry’s competition was approaching a digital environment. Bailey had to decide if any key changes in the company strategy needed to be put into place.
CHARACTERISTICS AND TRENDS IN THE LUXURY INDUSTRY
Burberry competed in the global apparel, accessories, and luxury-goods market, which included clothing, jewellery, watches, leather goods, and cosmetics. This industry was a subset of the personal luxury industry and the larger luxury industry, which included apparel, accessories, cosmetics, wine and spirits, cars, hotels, in-home food, out-of-home food, home furnishings, and yachts.27 A new part of the luxury industry—experience-based luxury—was a growing segment of the luxury market. “People are spending far more on luxurious intangibles such as safaris and vacations as consumers choose to splurge on memories over handbags or watches.”28 With this cultural shift also came a growing demand for a luxury in-store experience as an aspect of shopping for personal luxury goods.
The personal luxury market, valued at more than €250 billion29 in 2015, grew 13 per cent from 2014.30 For this market, the euro exchange rate played a significant role in the financial results and growth forecast. There were two key reasons for this. First, the major personal luxury industry players were based in Europe, the third-largest market for luxury purchases after the United States and Japan.31 Second, the tax-free shopping offered to tourists visiting Europe—primarily from China and the United States, where the currency was strengthened in comparison to the euro—supported sound growth in the European market.32
Several important trends were evident in the market, and Burberry needed to understand and act upon them. The first was a blurring of formerly strict pricing divisions between luxury and non-luxury goods. In line with an increase in household purchasing power over the last few decades, prices of top-of-the-line luxury goods experienced an upward trend (see Exhibit 2). Premium mass-consumption goods (trading up), which were not previously considered luxury items, experienced a similar upward trend in price. However, luxury entry products experienced a slight downward trend in price over the same period. These shifts caused the price of premium-sector goods to overlap the price of luxury entrants, blurring the separation between luxury and premium goods.33
A second important trend was the growth of online shopping at the expense of traditional brick-and- mortar shopping in the United States and Europe. Although the online segment was still small, online sales achieved a 7 per cent share of shopping revenue in 2015, nearly doubling online penetration since 2012.34 Any luxury brand that wanted to stay competitive needed to recognize this trend and incorporate online sales into the brand’s future sales strategy.35 Bailey seemed intent on continuing Ahrendts’s strategy of weaving online into everything Burberry did.36 This was clearly communicated in the CEO’s letter within the 2014/15 Burberry financial statements:
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The merging of our online and offline worlds remained a hallmark of our efforts here, as we sought to provide outstanding experiences to a luxury customer who is ever more global, and ever more digital. Initiatives including the relaunch of our mobile site and the roll-out of our “Collect- in-Store” programme resonated strongly, as did the expansion of third-party digital partnerships—giving customers on leading platforms globally a more authentic experience of our brand. And we continued to invest in enhancing our data and insight capabilities, knowing that the key to serving our customers better is understanding them better.37
For Burberry to remain competitive within the personal luxury market, its strategy needed to consider and align itself with industry trends. Bailey and his team needed to decide if Burberry would continue to pursue a more risky but potentially rewarding leadership position in the digital environment and what the company needed to do to improve its future positioning.
Luxury Customer Segments
The luxury industry consisted of three customer segments: absolute, aspirational, and accessible.38 The absolute segment had the smallest number of individuals yet represented immense purchasing power per individual customer. These customers were defined as ultra-high-net-worth individuals. To these customers, money was not an issue. The demand from this group was not strongly affected by the economy; therefore, their demand was stable. The high purchasing power per customer in conjunction with the group’s higher requirements in terms of customer service and quality goods meant that their needs could not be overlooked. These customers expected an extremely high-quality experience, along with perfect goods and services.39
Absolute segment members appreciated the brand history and heritage. They wanted to own pieces that were unique and emphasized their elitism. They shopped for ready-to-wear and bespoke (personalized or tailored) haute couture goods. This segment sought discreet goods that emitted quality and understated opulence,40 while placing value on high aesthetic content and extreme quality. This group created word of mouth and supported relevant initiatives within its limited circle. Therefore, effective communication with the absolute segment revolved around the group’s interests, such as exclusive watch collection discussions by a watch creator or relevant humanitarian initiatives. Collectors within the group relied on the value of the product and expected devotion, expertise, and discussion about the service provided.41 An emotional, distinctively exclusive shopping experience set luxury brands apart from the rest of the industry, and luxury fashion houses had specific client service teams that catered only to this group, because privacy was crucial.42
The second customer segment was the aspirational group. This group included celebrities, professionals, and business people with a high amount of disposable income. Though they had high spending power, some individuals from this segment would trade down or not buy at all during an economic downturn. The aspirational group fathomed the lifestyle of the absolute segment, aspired to it, and looked for upward integration. To reach this group, the brands needed to “re-create the emotional and creative world of the brand, containing the cultural and psychological references that justify the price.”43 This segment valued some level of exclusivity, particularly in the buying experience. At the same time, the aspirational group was still aspiring to be recognized by others and become associated with luxury. Therefore, brand recognition—particularly the recognition of the exclusivity of the brand—was important. This segment was best reached through an environment that gave the impression of limited accessibility, such as club marketing or special privileges. Club marketing referred to marketing to high-net-worth individuals gathered at events for a common interest; special privileges included services such as concierge service.
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Both of these were means of creating the exclusivity while clustering together the widespread network of this segment.44 This group valued variety, quality, and faster-changing product lines, as well as style, artistry, design, and performance.
The third group of luxury shoppers was the accessible segment. This group was made up of middle-class and upper-middle-class customers. The emergence of this group proved that “luxury is no longer the embrace of the kings and queens of France but the mass marketing phenomenon of everyday life.”45 Accessible segment members sought to differentiate themselves through the status of the brands they wore, although their income level limited their accessibility to the luxury goods they could purchase. The social aspect was important to this group46 because a luxury good symbolized a membership badge and the ability to show status and wealth by association with the affluent class. Accessible segment members often chose goods that explicitly showed the brands, whether through distinct brand designs, monograms, logos, or brand symbols, but did not expect personalized service. Therefore, immersing marketing and customer service was an effective communication method.47 Due to the individuals’ limited spending power, price was an important consideration, so the desire to be associated with the affluent class led some group members to purchase counterfeit goods. This became an especially important factor as the prices of personal luxury goods went on a rising trend. “From 2002 to 2012, the prices of their handbag offerings increased by an average of 14 percent each year . . . as a result, many luxury brands have introduced smaller versions of their best-known bags—with a scaled-down price tag to match.”48
Over the years, the aspirational segment grew at a faster rate that the accessible segment, which grew at a faster rate than the absolute segment.49 This change in overall market demand affected how luxury brands needed to market their goods in order to secure sales while simultaneously protecting their brand image. In conjunction with this, “the average consumer was also far more educated and well-travelled than a generation ago and had developed a taste for the finer things in life.”50 Each customer segment was more knowledgeable about luxury brands, their quality, where they were produced, and the image the brands portrayed.
Bailey needed to consider which—if not all—customer segments should be Burberry’s focus going forward. He needed to consider how industry changes would influence the best approach for each group. Bailey and his team also needed to plan the impact of any changes on various aspects of the business: supply chain, marketing, positioning, and product mix.
THE EMERGING MARKETS
In 2015, North and South America was the second-largest segment of the personal luxury industry, accounting for 24 per cent of the market’s total value, and Europe was third largest at 18 per cent. However, these established regions were overpowered in size by the Chinese segment, which made up 31 per cent of the market and played a key role in the growth in luxury spending worldwide.51
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China
Though not yet quite as established as the European and U.S. markets, the Asian market—specifically, the China region—was becoming the largest luxury customer segment.52 An economic boom spanning several decades had led to a growth in the wealthier Chinese population and, consequently, a growth in luxury sales.53 Chinese customers were borderless customers who shopped as tourists. Chinese shoppers spent more abroad than they did at home. Mainland China accounted for only 20 per cent of their global purchases, a trend that54 was further supported by international policies encouraging the Chinese to spend more abroad. “Globally, governments are amending visa policies to attract Chinese tourists.”55
After 2012, the Chinese mainland luxury market experienced a slowdown56 due to an economic slump, anti-corruption measures on gift giving, and the devaluation of the Chinese yuan.57 However, this had little impact on borderless Chinese customers. “The average spend by Chinese shoppers in Europe processed by Global Blue over the first six months of the year [2015] was €981 (US$1,112), a 7 per cent increase from a year ago.”58
Luxury market experts had identified some common characteristics among Chinese luxury customers. On an individual level, the Chinese heavily emphasized physical appearance. At a social level, the Chinese luxury consumer, compared to the largely individualistic Western consumer, was strongly influenced by social norms. The collective Chinese consumer attributed much value to recognizable brands.59 However, over the years since the Chinese boom, the Chinese luxury customer was becoming more and more sophisticated, having higher expectations of the products’ quality and service and placing less importance on superficial aspects.60 Although the total population of Chinese luxury shoppers had increased, the majority of the luxury purchases were still made by the upper-class segment, which made up about 4 per cent of the population but contributed approximately 74 per cent of Chinese luxury-goods sales in 2015.61 Therefore, an understanding of this top tier was crucial for a luxury brand’s success.
Brazil, Russia, and India
The industry could not afford to ignore the other three major emerging national economies that made up the so-called BRIC group: Brazil, Russia, India, and China. Both Brazil’s and Russia’s market growth had been hindered by political and economic uncertainty within these countries.62 On the other hand, India’s luxury market’s growth rate of 13 per cent was higher than that of any other BRIC nation,63 including China.
Each of these three regions had unique customers:
• The Brazilian market was growing, but the wealthy market’s long-time trend of spending abroad, combined with high tariffs in the country, limited the market’s expansion.64
• Russian customers had knowledge and experience in luxury and expected tradition, modesty, and wealth. However, they were willing to spend more for valuable products to show off their wealth.
• In contrast, Indian luxury consumers were value-conscious and were always looking for stylish and aesthetic products. Because craftsmanship and value were important to relate to Indian consumers, it was challenging for luxury brands to enter and develop business in the country.65
Burberry had established specific sales trends with its business operations and strategies in each region (see Exhibit 6). However, future market trends needed to be considered when making strategic decisions. Bailey had to consider and predict the magnitude of these emerging markets, their role in the personal
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luxury industry’s future, and the importance of these decisions on each market. He needed to take into account the ever-growing global customer and how Bailey’s ultimate decisions would affect the customer’s brand perception.
THE LATEST CHANGES TO THE LUXURY INDUSTRY AND ITS ENVIRONMENT
A Challenge to Tradition: Fast Fashion
Fast fashion brands (short-shelf-life fashions produced very quickly in response to trends) revamped the fashion industry starting around 2000.66 These brands—particularly Zara and H&M—used their strengths in supply chain and customer understanding to fill a void of speed that was apparent in the industry at the time, asserted by slower and smaller scale production luxury fashion and couture houses. Unlike other affordable fashion retailers who followed a reactive strategy to the luxury trends, fast fashion brands “pioneered a different business model, predicated on the idea that store purchases are the best indicators of what consumers want, coupled with localized sourcing for more than half of its products.”67
Thanks to their unique strategy, fast fashion brands mastered the ability to produce fashions seen on the runways in a matter of weeks, with very little or no marketing budget. For example, Zara’s operations were able to succeed by relying on its advanced supply chain, non-focused style, enormous stock selection, and coveted store locations next to top luxury and fashion streets around the world.
Though sourcing from Spain and Portugal is more expensive, the supply chain is shorter, and the company can react more quickly—typically in a matter of weeks—to new seasonal trends. As a result, Zara does not have unwanted inventory, and rarely lowers prices. The genius of this model is that it picks up on every trend, but is never associated with any one style: the chain offers something for everyone, and the enormous selection, with literally thousands of options, varies as frequently as every week. Unlike other fashion brands, Zara does no advertising whatsoever, choosing to rely instead on expansion, with chic locations in more than 73 countries, and aesthetically appealing shop window displays.68
Fast fashion brands did not approach the fashion market by competing to be the style leaders, replace luxury brands, or increase their own margins. Instead, fast fashion shaped the phenomena of mixing and matching high- and low-priced items. As this new approach to shopping began saving customers money and providing them with additional options, particularly in trending items, most customer segments quickly gravitated to fast fashion companies. Due to affordability, fast fashion allowed ongoing personal transformation at a mass-market level.69 Stores also provided customers with a one-stop shopping experience by offering an array of fashion products, including makeup, accessories, and personal grooming products, in addition to their ready-to-wear line.70
As it became apparent that the fast fashion organizations were here to stay, many luxury brands took a strategic “if you can’t beat them, join them” approach. Luxury brands, including Lanvin, Sonia Rykiel, Jimmy Choo, Karl Lagerfeld, Stella McCartney, and Viktor & Rolf,71 each collaborated with H&M to create a limited edition collection. This collaboration offered advantages to both H&M and the luxury brands. H&M gained acknowledgment by high-net-worth shoppers, and the luxury brands grew their fan base, which paved the way for a larger market of aspirational customers for these luxury brands.72
Luxury fashion houses were also influenced by the entry of fast fashion to rethink and make changes to certain aspects of their strategy. In response to fast fashion, luxury houses increased the number of collections they produced as well as the speed with which the collections moved from the fashion
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runways to the shop floor. They invested in modern production techniques and worked on developing better-managed supply chains. Through this, they were capable of delivering—on an annual basis—at least two women’s ready-to-wear collections and two women’s couture collections, as well as pre-fall, resort, menswear, and accessory lines. The fashion houses also increased their stock selection, in both their online and physical stores.73
The evolution and change for the luxury houses in response to fast fashion came at the cost of capital injections and loss of high profile designers. Celebrity status designers resigned from prestigious positions, accrediting their departures to the pressure of doing several shows a year, which did not allow for a work atmosphere where their creativity could flourish.74 At Burberry, Bailey needed to consider what sort of reactive and proactive steps he needed to take in terms of competing with fast fashion. He wondered …
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PPT 1-1
Marketing Management
Week 3: Building Strong Brands:
How to STP (Segment, Target & Position)
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