Claire Kent’s Post

The dangers of over-elevation. Favorite buzzword in fashion and beauty boardrooms, elevation is to be handled carefully. The Business of Fashion describes how Burberry has being straying too far in pursuit for it. Equally, many luxury brands also see their prices heavily questioned and now face slower sales. In the end, they blame China’s slow-down ...which is so much easier than acknowledging a strategic faux-pas. In fact, over-elevation disrupts a key part of the mix: the VALUE. This fine balance of quality, desirability, function and price is essential for purchase intent and conversion. Rather ironically, Chinese consumers are world-masters at recognizing this balance. Today, winning Brands are often the ones either delivering the right value (E.L.F. BEAUTY, Ralph Lauren, JACQUEMUS, Sézane, Sol de Janeiro as examples) or showcasing quality (Loro Piana and Hermès) on top of an authentic story-telling. Also interesting to notice: Burberry Beauty saw its value mix refined by Coty and is now much more successful than when it was under the full control of the Brand.   Time for all to assess strategies as the hangover of over-elevation will be lengthy and painful. #luxury #fashion #beauty #price #value #china #mix #elevation #marketingbasics Read more:

DOES BURBERRY HAVE THE WRONG STRATEGY? Luca Solca for The Business of Fashion Key Takeaways: 📉 Burberry’s latest revamp has faltered. Sales dropped 12 percent in the first three months of 2024. The British trench coat maker isn’t the only luxury player that’s struggling in a cooling luxury market, of course. Gucci’s sales fell 20 percent in the first quarter. But Burberry’s poor performance has ratcheted up the pressure on those piloting its long-awaited turnaround to deliver results. 🔅 A ‘British Coach’ strategy would double down on outlets, reduce costs, and increase exposure to off-price channels, leading to higher profits but lower multiples. A “brand elevation” strategy would follow the more traditional luxury playbook: slimming down off-price, spending on creativity and communication, continuing to upgrade distribution. A private equity buyer could undertake the grisly but arguably necessary measures to stabilise the Burberry brand away from the prying eyes of the public markets (e.g. cut outlet sales, build desirability before price hikes), and then sell for a luxury multiple when the brand has been uplifted. But our analysis suggests the returns from the “brand elevation” strategy are likely to be considerably lower than those from a “British Coach” approach. 〽 Burberry has continued to underperform its peers, because it has yet to convince the market that its strategy to move upmarket will bear fruit. Burberry was a premium brand in the early 90s, but CEOs Rose Marie Bravo from 1997, Angela Ahrendts from 2005, Christopher Bailey from 2014, Marco Gobbetti from 2017, and Jonathan Akeroyd from 2022 have all tried to push its positioning higher. Significant investments were committed — including flagship stores across the world — and many sacrifices were endured: giving up profits from lucrative licences in Spain and in Japan, doing without sales to lower quality department stores in the US, and removing promotions from full-price stores. ⬛ There has been talk of Burberry being a takeover target for 25 years, but never a move. For European luxury groups, elevating Burberry is too expensive and would take too long. For private equity, valuation multiples have long been too high, but it’s harder to dismiss the possibility today, given where Burberry’s market cap has gone. But rather than sticking with a strategy that’s not working, could becoming a “British Coach” be the cure Burberry is looking for? LEARN MORE: https://lnkd.in/gjcSTXWp #web3 #investment #metaverse #fashionsystem

Burberry Shares Tumble Most In Decade On Luxury Spending Slowdown  Shares of Burberry Group PLC tumbled the most in a decade on Thursday following an announcement that the British trenchcoat manufacturer is unlikely to meet its yearly revenue targets, citing a global downturn in luxury spending.  For the Sept. 30-ending second quarter, Burberry said falling sales in the US and a downturn in China led to comparable-store sales increase by only 1%, compared to 18% in the year's first quarter. The company warned revenue targets for the year ending March 2024 won't be met and noted that profits will be on the lower end of analysts' forecasts.  Shares declined as much as 11% following the news, the steepest intraday drop since the 20% plunge on Sept. 11, 2012.  Even with half-year operating profits at $276.64 million, or 15% from last year, CEO Jonathan Akeroyd said Burberry said the company was making "good progress" on strategic goals.  "We continued to build momentum around our new creative vision with the launch of our Winter 23 collection in September, the first designed by Daniel Lee," Akeroyd said in a statement. He added, "While the macroeconomic environment has become more challenging recently, we are confident in our strategy to realize our potential as the modern British luxury brand, and we remain committed to achieving our medium and long-term targets." Meanwhile, softer demand for luxury goods has recently weighed on several large fashion houses.  Last week, luxury group Richemont was the latest evidence of faltering consumer demand for luxury watches, jewelry, and clothing. The owner of Cartier Jewelry reported first-half profits that missed Wall Street's forecasts.  Richemont Chairman Johann Rupert said on a call with analysts that inflation, slowing economic growth, and rising geopolitical tensions hurt sentiment, while the full effects of interest rates have yet to be seen.  Also last week, the company behind Don Julio tequila, Diageo, saw shares plunge, following a warning about a "materially weaker" performance in Latin America and the Caribbean. In October, luxury conglomerate LVMH, controlled by billionaire Bernard Arnault, reported sliding demand for high-quality products, such as leather goods, perfumes, watches, and wine, in China, Europe, and the US. A global luxury downturn is an ominous sign the economy is headed for some landing, if that is 'hard' or 'soft' following central banks' most aggressive monetary tightening spree in a generation to tame inflation.  

BURBERRY SALES FELL 12 PERCENT IN EARLY 2024 The Business of Fashion: The brand isn’t the only one struggling in a cooling luxury market, but the weak numbers increase pressure on CEO Jonathan Akeroyd to deliver Burberry’s long-awaited turnaround. Burberry’s revenues were flat excluding currency shifts in the twelve months through March 30, the British luxury brand said Wednesday. Sales dropped 12 percent in the first three months of 2024 as its attempts to build momentum around a revamped offer in a cooling luxury market faltered. Burberry isn’t the only luxury player who is struggling: Gucci’s sales fell 20 percent in the first quarter, while Italian footwear house Ferragamo registered a 17 percent drop. Even the sector’s biggest player LVMH reported a 2 percent dip in reported revenues. “Executing our plan against a backdrop of slowing luxury demand has been challenging,” chief executive Jonathan Akeroyd said. The brand has continued to focus its message on Britishness (albeit a more niche, arty take on its national heritage) as well as following up chief creative officer Daniel Lee’s runway vision with more accessible products for stores. “We are confident in our strategy and in our ability to navigate this period,” Akeroyd told reporters Wednesday, reiterating the company’s ambition to grow into a £4 billion-per-year business from just under £3 billion today. Still, the weak numbers pile on pressure for the latest round of leaders charged with delivering Burberry’s long-awaited turnaround. Burberry shares have tumbled 54 percent year-on-year, so the clock is ticking for Akeroyd and Lee to prove that their more textured, fashion-forward approach to the brand can gain commercial traction. Burberry has no controlling shareholder and is governed by board-sitters in the City eager to see a return. Burberry expects the first half of this year to remain challenging, followed by an improvement in the second half. A autumn collection focused on revitalising Burberry’s core outerwear category could help, as will increased marketing investments in the key Chinese and US markets, where slowing sales to aspirational clients have hurt business. Sales to Chinese clients both domestically and abroad were down 12 percent in the first three months of the year, Akeroyd said. https://lnkd.in/e_UZDBFR #ai #fashion #metaverse #web3 #ar #tech #investment

LUXURY SLOWDOWN The luxury industry can be influenced by economic trends and consumer preferences. Downturn is imminent, it's essential to monitor market indicators and adapt your strategies accordingly, whether you're a consumer or a business in the luxury sector. Economic shifts and changing consumer behavior can impact the luxury market. Cost efficiency is a crucial concept in business in this "VUCA" times. Organizacions need to be focus on to producing goods or services with the least amount of resources, such as time, money, or materials, while maintaining or improving the quality of the final product. Achieving cost efficiency can lead to higher profitability and competitiveness. #Management #VUCA #Costefficiency

IS BUSBERRY A VICTI OF ITS OWN STRATEGY? The Business of Fashion: After a decade of turnaround attempts, the British trenchcoat maker’s efforts to thrive as a top luxury player continue to falter. The brand needs more accessible prices and marketing — and quick. This week, Burberry reported sales down 12 percent in its most recent quarter, while full-year revenues of £2.97 billion ($3.77 billion) were flat at constant exchange rates. Shares in the company have fallen 57 percent over the past year and are now trading at their lowest level since 2016, ratcheting up pressure on Burberry chief executive Jonathan Akeroyd and creative director Daniel Lee to deliver a long-awaited turnaround. Burberry’s woes are, in part, the product of a more difficult luxury market: inflation and slowing economic growth have taken their toll, particularly among the Chinese customers who used to power the brand’s business both domestically and in European shopping hubs. But the company’s wounds are also self-inflicted: after building massive name recognition and a $3.8 billion per-year business in the 2000s and early 2010 — with a strategy rooted in an easy-to-digest interpretation of its British identity and a price positioning that straddled the line between top luxury houses and premium labels like Polo Ralph Lauren — Burberry has been bogged down in a decade of stagnation as its strategy to push upmarket falters. To be sure, the downfall of US department stores and the rising cost of manufacturing high-quality products made the brand elevation strategy feel like a necessity. The brand bet that its bags and shoes goods could surely be lifted in line with the luxury clout of its flagship trenchcoats. Meanwhile, the prospect of one day being acquired by a big luxury group like LVMH or Kering offered further enticement to the top end of the market. Efforts to elevate the Burberry brand began in the mid-2010s under Christopher Bailey (then serving as both CEO and creative director) and intensified under former CEO Marco Gobbetti and designer Riccardo Tisci from 2018 to 2022. Now on its third CEO and third designer (and third logo) in a decade, Burberry is persisting in the Sisyphean task of convincing the world to buy $2,700 Italian-made handbags from a British outerwear brand. By over-indexing on top-end, niche fashion, Burberry is leaving money on the table: its singular position as Britain’s only megabrand requires a broader approach. The brand needs more accessible prices and more accessible marketing — and quick. learn more: https://lnkd.in/gV7KkRbm #metaverse #fashion #invest

Good to know

It will be tough navigating the current economic and geopolitical uncertainty across the globe that is affecting all economic sectors not just luxury. Marketeers and business leaders should already be prepared to minimize the effects of such expected downturn with bespoke and out of the box strategic marketing plans.

Luxury is (and definetely should be) going back to where it belongs - a niche for those who value craftsmanship and outstanding quality. Of course brands need to take ESG matters into consideration while staying true to its values and essence. It makes no sense at all IMHO to innovate for the sake of good profit only. From queuing issues to social media promoting luxury democratization, there is a lot on discussion right now that demands luxury brands executives to rethink their strategic plans. It’s urgent! On the other hand, this opens up many opportunities for very strategic product portfolios and masstige brands. That’s why I love this business. #luxurybrands #esg #masstige #luxurymarket

Ermenegildo Zegna Group, an Italian leader in luxury menswear, has launched its flagship store Zegna at Jio World Plaza, Mumbai Click on the link below to know more... Zegna | Reliance Brands Limited #luxury #menswear #stores #retailnews #retailtrends #retailsector #retailindustry #retailing #retailresults #retailupdates #businessnews #retailgrowth #retailindia #retailtrends #retailbusiness #ir #IndiaRetailing