Both Sides Now

Posted by Carol Spieckerman on May 02, 2011

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“I don’t believe that if you are going to build a long-term sustainable brand that you can chop up every component part and expect everyone to have a perfect P&L. It just does not work that way.”

It would be easy to dismiss a sentiment, like the one posted above, as flippant or even out of touch with reality if those words were spoken by an executive at a middling brand company. However, considering that the source was Angela Ahrendts, CEO of Burberry, a 155-year-old luxury brand that is now one of the fastest-growing brands in the both retail and wholesale, it would be prudent to take her words as sage advice.

Burberry shares recently hit an all-time high (doubling since the start of 2010) and second quarter revenue is up an enviable 30%. Still, it hasn’t been an easy ride. Ahrendts spearheaded a transformation that rescued the brand from a deadly combination of out-of-control licensing and franchising, inefficient sourcing, and rampant knock-offs of its signature check print. That clean-up job involved closing down 35 product categories, spending millions of dollars on franchisee buy-outs, and implementing sweeping IT and supply chain improvements – very unsexy, resource-draining initiatives that nonetheless paid off in hard numbers. But, these efforts also laid the foundation for the fuzzier side of the house.

Burberry may now be one of the most efficient and tightly-focused brand houses going, but it has evolved into a multi-dimensional powerhouse that plays at the bleeding edge of social media and emerging technology. It was the first luxury brand to live-stream a fashion show in 3D around the world and it pioneered the use of social networking sites, webcasts, and in-store technology to build a brand community at a time when other luxury houses largely steered clear. Yet, Ahrendts says that separating out the sales generated by these platforms is “beside the point.”

Best-in-class retailers and brands like Burberry are beginning to layer opportunistic participation plays in social media, event marketing, and in-store theatrics onto solid foundations of operational efficiency and quantifiable metrics. While the quest to quantify is always on; consumers’ calls to connect must be answered, and those calls are coming from many new directions.

Bottom line:

  • Brands and retailers are no longer selling in channels; they are optimizing consumer touch points and many points that matter can’t be measured.
  • Broadening the reach of a focused brand portfolio into new consumer touch points can be much more powerful than stretching brand categories to the outer limits (even if it means doing a bit of after-the-fact editing).
  • Now that major efficiencies have been wrung out of the operational side of businesses, retailers and brands are pushing creative boundaries once again.

Carol Spieckerman will discuss this dynamic and the other ways that retailers will step out in 2012 and beyond in her retail safari at the year’s Licensing Expo. You can sign up for this event by adding it to your Expo registration.