Can Burberry’s new ‘Transformation Management Office’ make its marketing work harder?
Burberry is hoping the introduction of a new ‘Transformation Management Office’ to oversee its business turnaround strategies will also spur ‘improved returns on marketing spend’ as it continues to struggle to turn a profit.
Burberry's 2016 Christmas advert
In May this year, against the background of further subdued global demand for luxury goods, Burberry outlined ‘key strategic’ plans to improve the business, including expanding from ‘digital prowess to e-commerce leadership’.
Giving further insight on the plan to investors today (9 November) during Burberry’s first half financial results, Bailey said that he is ‘pleased’ with the work in this area so far. Digital traffic increased year-on-year, with mobile accounting for over 50% of the uplift and conversion improved in both channels. Burberry is also developing a customer app to improve mobile checkout and foster a more personalised connection with its customers, alongside a redesigned website for desktop.
Bailey also said that Burberry’s September Fashion Week show created a “strong reaction to more commercial pieces” that were made available immediately afterwards following the fashion house’s shift to a ‘seasonless’ approach to meet consumer shopping expectations.
“We also saw record reach across PR and social media with 15 million views of the show on owned and partner platforms," added Bailey. This was in part driven by new and innovative ways including Facebook Live, Messenger and Snapchat… and our spend was more efficient than ever”.
However, these early gains were overshadowed by bottom line results that are yet to be positively impacted. Profit before tax fell by 24% to £146m, with revenue slipping to £1.16bn, this despite the brand enjoying a £125m windfall following the plunge in the pound in June.
Burberry is now pinning its hopes on a new ‘Transformation Management Office’, which the fashion house said in a statement today will ‘drive and co-ordinate the delivery of all our strategic initiatives’.
This includes key target areas such as marketing, for which Burberry hopes the new office will deliver “improved returns on marketing spend with allocation and timing decisions supported by enhanced data analytics and detailed econometric modelling”.
While specific details of how exactly it plans to improve returns have yet to be divulged, Burberry did say that investments in digital marketing to date will allow the business to reduce the cost of each view by 20%. It comes as Burberry looks to focus its marketing efforts on its products over the brand itself.
Once the pinnacle of success in the luxury space, Burberry has been a brand in turmoil for the past few years. After hitting heady heights in 2009 when actress Emma Watson helped the brand eschew its ‘chavvy’ stigma, the brand proved its digital prowess and claimed its place as the poster child for the digital age, through innovative campaigns via WeChat, Snapchat and Facebook.
However, Burberry has since been grappling with ebbing demand in key luxury hubs including Hong Kong, something Christopher Bailey failed to reverse during his tenure in the dual role of chief executive/ creative director, the former of which he announced he would step down from in July.
Burberry’s struggle seems to contrast with some of its luxury counterparts, which have enjoyed success in recent months. Yves Saint Laurent (YSL) and Gucci are defying the lackluster performance of their contemporaries, after seeing ‘exceptional growth’ driven by e-commerce efforts.
The Kering-owned brands' efforts in the digital space saw sales from Gucci's e-commerce website increase by more than 50% during the third quarter, while revenue from YSL's online store nearly doubled.
Revenue overall at Kering, which also owns Balenciaga, Stella McCartney and Alexander McQueen, grew by 10.5% to €3.1m.