Once synonymous with British heritage and timeless elegance, Burberry has faced turbulent times in recent years. While the brand has undoubtedly held a strong position in the luxury market, a series of strategic missteps has impacted its performance.

A fall from grace

Burberry's global market share in the luxury apparel segment has dipped from 3.2 per cent in 2015 to 2.7 per cent in 2023 reveals Euromonitor International. Revenue growth too has stagnated, hovering around the £2.8 billion mark for the past three years. And the company's stock price has plummeted by over 40 per cent since 2019.

Table: Burberry's financial performance

Burberry's challenges can be attributed to several interconnected factors. First, brand dilution as overexposure of the iconic check pattern has affected it. While it was once a symbol of exclusivity, it has become ubiquitous, diminishing its allure. The brand's attempts to appeal to a younger demographic has resulted in a diluted brand identity. The core luxury customer base feels alienated, while the new target market remains elusive. Also, the rise of luxury competitors, particularly those with a strong digital presence and agility, has eroded Burberry's market share. Then there are factors like global economic uncertainties and shifting consumer spending patterns have impacted luxury brands, including Burberry.

Strategic missteps

Over-reliance on traditional markets is a major factor for Burberry’s loss of market share. Burberry's focus on mature markets like Europe and North America may have blinded them to the booming luxury market in China. Add to this, frequent creative director changes (four in the last decade) might have resulted in a lack of brand identity and direction. Also, aggressive discounting and a large outlet network could be damaging brand perception and cannibalizing full-price sales.

Consider the contrasting fortunes of Burberry and Moncler. Both are European luxury brands, but Moncler has seen significant growth in recent years. Analysts attribute this to Moncler's successful focus on digital marketing and e-commerce, particularly in China. They've consistently offered fresh designs and diversified their product portfolio beyond outerwear. Moncler has cultivated a clear brand identity associated with luxury sportswear and adventure. Similarly, Louis Vuitton successfully expanded its product range while maintaining brand exclusivity through limited edition collections and collaborations with renowned artists. And Gucci reinvigorated the brand under Alessandro Michele by embracing a bold and eclectic aesthetic, attracting a younger demographic without alienating core customers.

A path to revival

Burberry has recently appointed a new CEO, outlining a turnaround plan. The new CEO, Fiona Kelly, has acknowledged the challenges and stated, "We are committed to reigniting the magic of Burberry...by focusing on our heritage, product excellence, and innovation." Analysts say here's what they need to focus on:

Capturing Chinese market: Increasing brand awareness and tailoring offerings to Chinese consumers' preferences.

Digital transformation: Investing in e-commerce platforms and social media engagement.

Product innovation and relevancy: Revamping core collections and exploring new product categories.

Rejuvenating the brand image: Building a more consistent and relevant brand story that resonates with younger generations.

The bottomline is Burberry's journey to recovery will require a steadfast commitment to redefining its brand identity, reconnecting with its heritage, and delivering exceptional customer experiences. By implementing the proposed action plan and learning from competitors' successes, Burberry can regain its position as a leading luxury brand.