| Name | Burberry Group Plc. (BRBY: LSE) |
| Industry | Retail Apparel and Luxury Goods |
| Founded | In 1856 by Thomas Burberry |
| Headoffice | London |
| CEO | Marco Gobbetti (Notice period until December 2021) |
| Revenues | £2.34 billion, 2021; £2.63 billion, 2020; £2.72 billion, 2019. |
| Net Income | £396 million, 2021; £433 million, 2020; £438 million, 2019. |
| Competitors | Chanel, Christian Dior, Gucci, Ralph Lauren, Versace, Gucci, Louis Vuitton, Prada |
Company overview:
Burberry Group (2021) designs, produces, and distributes apparel, footwear, and accessories under the Burberry luxury brand. The three segments of Burberry are retail, wholesale and licensing. The retail and wholesale segments sell men, women, and children’s clothing, accessories, leather goods, beauty products, and fragrance products through stores, outlets, e-commerce, and franchise. Burberry issues license for fragrance, eyewear, and children’s wear using its trademarks (Bloomberg, 2021).
- You can find blank SWOT Templates here
- If you need assistance with your project, here are our done for you services
Burberry Strengths 2021:
- Brand history and recognition.
Burberry brand has 156 years of long history and is synonymous with British fashion retailers. In 2021, Burberry has a brand value of $5.195 billion (Interbrand, 2021) and joined the Global Most Valuable 500 brand list. Moreover, it is ranked 97th in Best Global Brands and 83rd in Global RepTrak 100 (SyncForce, 2021). For the spring-summer 2020 campaign, the company features celebrities like Gigi Hadid, Bella, and Kendall Jenner. - Global operations and network.
Globally, Burberry has 415 stores in Asia pacific, EMEIA, and the Americas, as shown in the diagram below. The company has 209 stores in the Asia Pacific, 120 in EMEIA, and 86 in the Americas. - Strong recognition for sustainability strategy.
Burberry has strong recognition for environmental and social initiatives on several global platforms. The company ranks 5th in FTSE Responsbility100 Index, 6th in Dow Jones Sustainability Index, inclusion in Bloomberg Gender-Equality Index 2021, and 1st in FTSE 100 for women in leadership index (Halliday, 2020). - Diversified group product revenues.
Burberry group generates revenues through four segments of men, women, accessories, and children. In 2021, the revenues from the men segment were 29% (£668 million), women segment 28% (£653 million), accessories 37% (£841 million), and Children and beauty segment was 6% (£144 million) as shown in the diagram below. - A strong presence on social media platforms.
Burberry has millions of followers on three social media platforms: Instagram, Facebook, and Twitter. On Instagram, the company has 18.4 million followers, 17.5 million likes on Facebook, and 8.2 million followers on Twitter. A solid social media presence ensures good customer engagement, high market outreach, and low customer response time (Unmetric, 2021).
Burberry Weaknesses 2021:
- Marco Gobbetti – Existing CEO resignation.
Kollewe (2021) stated that Marco Gobbetti is strongly credited for brand reposition and turnaround since it took over from Christopher Bailey in 2017. The CEO resigning to return to Italy has shaken investors and resulted in a 9% decline in share price. - Poor product development experience.
Rhode (2021) stated that Burberry displayed hoodies with a noose around the neck at the London fashion show. The suicide hoods attract criticism and backlash on social media, such as Liz Kennedy’s statement that ‘Suicide is not fashion’. Marco Gobbetti has apologized for the distress and mistake of poor product development. - Revenue and stores concentration in the Asia Pacific.
In 2021, Burberry’s 52% (£1,203 million) revenues were from Asia pacific with 209 stores in the region, as shown in the diagram. Burberry generates more than 50% of its revenues from Asia pacific, and changes to the social, economic, and political environment could adversely affect its revenues. - Limited business diversification.
The famous fashion brands such as Gucci, Chanel, Dior, and Hermes have broadened their product range through furniture, home décor, and personal grooming. However, unlike diversified competitors, Burberry has limited to three categories of apparel, footwear, and accessories (Burberryplc, 2021). - Counterfeiting and product imitation.
Burberry has severe threats from counterfeit products, such as brand reputation damage and loss of customer satisfaction (Raconteur, 2021). For instance, the company destroyed goods worth £28 million in apparel and footwear segments to guard against counterfeiting.
Burberry Opportunities 2021:
- The luxury furniture market in the US.
According to Statista (2021), the luxury furniture market was worth $23 billion in 2017, which is expected to grow $31 billion by 2023 with a CAGR of 12%. Therefore, Burberry has the opportunity to expand in the US luxury furniture segment for business growth and expansion. - Artificial intelligence to identify counterfeit products.
Daoud et al. (2020) analyzed that artificial intelligence is helpful to identify counterfeit products in real-time. The artificial intelligence flag counterfeits using algorithms over the internet. It highlights that the product is not legit or exclusive to the retailer. For Burberry, artificial intelligence can scan objects (text and images) invisible to the human eye, and customers can precisely detect counterfeit products. - Augmented reality and virtual showrooms.
Virtual and augmented reality present novel approaches to interactive innovations and consumer experience. The new technologies present opportunities for Burberry to improve the e-commerce experience for the customers. For example, the VR and AR application offers ‘try-before-you-buy experiences from the comfort of their home and make purchase decision (Harvard Business Review, 2020).
Burberry Threats 2021:
- Intense competition and market share.
In the personal luxury goods market, there is fierce competition from other premium fashion brands like Louis Vuitton, Gucci, Dior, Chanel, and Prada. Ralph Lauren is the market leader in the personal luxury market with a market share of 39.2%, followed by Louis Vuitton 11.8% and Gucci 10.9%. Burberry has a market share of 5.7%, and intense competition poses a severe threat to Burberry’s growth and market share. - Criticism and backlash in China.
According to Forbes (2021), Burberry is the first luxury fashion retailer experiencing backlash in China. The company has raised the issue of human rights abuses in the Xinjiang region, and the Chinese customers have boycotted the brand. Moreover, Zhou Dongyu, the Chinese actress and brand ambassador of Burberry has canceled her contract with the company citing the lack of clearing of Burberry’s stance on the Xinjiang issue.
- The decline in demand for luxury products.
in 2020, the personal luxury segment registered a decrease of -23% after a decade of growth. Likewise, in America, the demand for personal luxury products decreased by -27%. Europe has registered a decline of -36%, which shows a significant shift in demand patterns and a lack of consumption in luxury product markets (Burberryplc, 2021). - Absence of wealthy tourists in the UK market.
According to Reuters (2021), long-haul travel will take a few years to recover from the Covid-19 impact in the UK. The absence of wealthy tourists is a severe threat to the company’s revenues. The COO of Burberry, Julie Brown, stated that there is still a “very muted travel picture” in the UK despite the ease in travel restrictions. Before Covid-19, the international tourist generates two-third of revenues for the company. - Exchange rate risk.
Burberry has a high foreign exchange risk because of significant operations in the Asia Pacific market. The exchange shift in major currencies such as CNY, HKD, and EUR could affect the company’s sales, costs, and profitability. Burberryplc (2021) estimates that a +/-5% move in exchange could result in £35 million adjustments in a company operating profits, as shown in the diagram below.
Burberry SWOT Analysis Conclusion 2021:
Burberry’s challenges include revenue concentration, poor product development experience, declining demand for luxury products, and intense competition. However, Burberry has a strong brand heritage, global operations, diversified revenues, and social media presence to tackle changing business environment. With market knowledge and dynamic capabilities, Burberry can maintain its brand position through tackling challenges and exploiting opportunities in the personal luxury market.
References:
- Bloomberg (2021). Burberry Group PLC – Company Profile.
- Burberryplc (2021). Investor Relations
- Burberryplc (2021). Results and Reports
- Daoud, duard, et al (2020). Improving fake product detection using AI- based technology.
- Forbes (2021). As Burberry Faces Backlash In China Over Xinjiang Cotton, Other Luxury Brands Could Face Boycott.
- Halliday, Sandra (2022). Burberry gets sustainability index boost.
- Harvard Business Review (2020). How AR Is Redefining Retail in the Pandemic.
- Interbrand (2021). Best Global Brands 2021 – Burberry.
- Kollewe, Julia (2021). Burberry’s change of leader should not mean a whole new wardrobe.
- Raconteur (2021). Can tech tackle counterfeit fashion?
- Reuters (2021). Burberry’s UK sales dented by Covid travel restrictions.
- Shruti Rhode (2021). After suicide hoodie, noose necklace debuts on runway leaving netizens enraged.
- Statista (2021). Burberry’s revenue worldwide by region 2015-2021.
- Statista (2021). Global luxury furniture market size from 2017 to 2023.
- SyncForce (2021). Burberry.
- Unmetric (2021). A deep dive into the social media habits and performance of Burberry.
