WHY Burberry’s products are sold as retail not
Burberry has a huge potential. One
of the Burberry’s main competitive advantages are its “British Nationality” and
company’s history. Many customers perceive these as a sign of quality, and want
to purchase goods made in Europe, not in China, and customers are willing to
pay for premium prices and Burberry believes that’s the way to go. Company has
a many strengths which will result in growth and profit in years to follow.
Burberry recently got a new CEO,
named Marco Gobbetti who is a businessmann with priceless experience in luxury
industry, He was worked for for Moschino, Givenchy (owned by LVMH), Celine
(owned by LVMH). He has done incredible work in the latter. Gobbetti made Celine
with double-figure growth and high profits a retail success. He posseses strong
knowledge of leather goods. (theguardian)
Burberry has a high intangible
value of the brand and there is a strong brand loyalty so there is a
irreplaceability of the brand culture which is one of the unique sellings
points of the company. The core competitiveness that is impossible to be
replicated by fast fashion brands.
Most of the Burberry’s products
are sold as retail not wholesale. Customers in luxury industry are less price
sensitive as proportion of their spending on luxury products respresents s
fraction of their wealth.
Chances that suppliers will start to make end
products are slim because there are high entry barriers to enter the luxury
industry. Probability of forward integration is extremely low due to high entry
barriers to luxury industry.
There will be benefits in sales
for Burberry after the UK leaves European union. The sales in the UK will
increase because buyers from the EU will buy products they can claim VAT on
their way back home. Brexit will make
United Kingdom cheaper for European customers.
The aim is to turn the brand into
a true luxury brand. Burberry will increase prices of their products. They will
expand their handbag offering because handbags make higher margins than other
items. They want to improve buyer’s experience by training in-store employees
on leather good and styling. Making the most of the digital media. They were
one of the pioneers of »see now, buy now« model which allows customers to
purchase immediately after a fashion show. (businessoffashion)
The future of the luxury industry
is forecasted as digital. Report titled “Global Powers of Luxury Goods 2017”
published by Deloitte indicates that e-commerce will play a major role in
luxury industry. It also suggests that luxury industry and technology will be
closely linked in near future, which is a good sign for innovative Burberry.
Burberry is planning to remove their
items from certain shops that are not luxury enough and renovate their own
shops to make the label more limited and exclusive and more strongly locate the
brand as truly luxurly in the eyes of the consumer. (CNN)