A theme that has emerged over the past couple of years in the retail sector is how high-end, luxury brands should react to digital disruption of their niche industry. We’ve seen some brands tackle this head on, some attempt to collaborate with ‘the enemy’ Amazon and others stick their high-margin heads in the sand.
The scale of the problem could be seen last week as investors fled from Burberry after its new CEO outlined a bold new strategic direction for the firm that has a substantial digital pivot, but also a very high price tag.
What Marco Gobbetti wants to do most of all is not only to maintain the luxury brand image, but to make it even more exclusive, to go from being an “accessible label” to unashamed high-end luxury. That of course potentially narrows the customer audience in the process. That’s heresy in an omni-channel age where retail is all about increasing the consumer touchpoints to as many people as possible.
So is Gobbetti deliberately running away from the e-commerce revolution? He is at pains to suggest otherwise:
Contrary to popular belief, one of the key reasons I joined this brand was because of its digital leadership. To me, digital is an absolutely integral part of Burberry and will continue to be one of our biggest opportunities. As soon as you land on our homepage, you will be clear that Burberry has a strong fashion point of view with an endless feed of exciting content. We will convey our point of view through highly curated product assortment and merchandising, innovating angles and stories on our products, and new views and formats that bring our products to life.
Personalization is about digital platform responding to the customer. It is about changing how we interact with them because we’re listening to what they’re telling us explicitly through what they buy and implicitly through what they’re viewing. Omni-channel is a much used term, but our priorities are straightforward. We will allow customers flexibility in how they want to pay for and receive product, consistently and seamlessly across all channels.
All of this is building on a track record of digital innovation, he adds:
Back in 2009, we were the first brand to operate on Facebook at a time when most luxury brands believe it would be damaging to create such a direct relationship with their customers. Since then, we have continued our digital leadership in the industry. We were the first to live stream our runway show. We formed marketing partnership with leading tech companies such as Apple, Google and Snapchat. We built a global e-commerce platform with a deep level of localization. And this year, we have the number one digital luxury brand in China. Digital is part of our brand identity, another dimension of our innovation.
In fact, he argues, Burberry can claim to be a leader in digital thinking in the luxury retail sector, although this may not last.
Clearly, there is a lot of catching up that players are doing in the industry. That’s quite obvious, and it was expected. So will we be able to enjoy forever the same lead that we had before? No. But what we have is an innovation lead, an innovation leadership for the moment We will invest significantly in it to continue it, will really make the difference. We are the one that pioneers collaborations, new ideas with the technological companies. We have always been the one that has gone where other brands have not gone or have come after us, and this will continue.
Our investments will be very significant in digital not only in the technology platforms but also in the content, which is today a significant element in drawing customers in there. So we think, we’re convinced, that we have the elements to really remain leaders there.
Digital is “the great gateway to Burberry”, and this has to continue, insists Gobbetti, but it’s also necessary for all luxury brands to re-evaluate who they are and what their relationship to their existing and potential customers is. According to Judy Collinson, Burberry’s Chief Merchandising Officer:
We are talking to the evolving luxury consumer. This client is by nature young but any age, open, informed. They are critical, enthusiastic. They take their clothes personally. Fashion is part of who they are to the world. They want to look new. They want to be themselves, but constantly refreshed. We will excite, challenge, entertain this client. We will build a real relationship.
OK, so that’s the plan. How does that work out in practice? It begins with taking a hard look at the communications channels with those customers, says Gobbetti, including driving what he calls “a content revolution”:
Here, we’ll do three things. One, think differently about all content, from campaigns to what we publish across all digital channels and our on-site. We must focus on the most powerful experiences for our clients across every channel: physical, digital and even augmented reality.
Across all communications, we will leverage our digital reach to convey our new brand energy. As an early adopter, we have outstanding digital reach, with our 50 million fans globally, across 15 platforms, 22 accounts and 11 languages. More than our typical network, this will allow us to communicate the changes in our brand instantly around the globe. In addition, our data and analytics also enable us to get the best from this reach, connecting the right content to the right platform and audience.
Then there’s the challenge to transform the customer experiemnce, to ensure consistent luxury brand delivery across all touchpoints, physical and digital:
The customer experience and refreshing the customer experience is an important part of our plan. In digital, we’re already taking steps. Digital is perhaps the first gateway to the brand as we know. Customers inform themselves primarily through digital even before they pushed it also on our stores. So there, we have already made an important renewal in our website, and we’re working to even a bigger renewal of our website coming at the beginning of next year. There will be more content. There will be an approach that will be much more curated. The offer will be tailored for digital. So we expect that to be quite an important step for us.
He concludes by arguing that while there’s a lot of disruption ahead, Burberry is well-positioned to evolve to meet the challenges :
Digital has been, for us, already a reality for a long time, so we have a pretty good head start in that. And digital is, today, fully integrated in the mindset of our sales people since, I would say, quite a while…We have a strong luxury network and innovative digital leadership. We have always had first-rate creative talent, and this will continue. Luxury consumers are changing and we, too, need to change.
Burberry is facing up to a lot of changes. The departure of its chief creative force Christopher Bailey unnerved many investors and Gobbetti’s decision to drive the brand up-market is in effect running contrary to the general direction of the retail sector. That said, it’s a clearly positioned strategy, albeit one that’s demonstrably high-risk and high-cost. If he pulls it off, Giobbetti might end up causing other high-end luxury brands to re-evaluate their digital positioning. If he fails, then the palpable panic among investors will be justified.
Image credit - Burberry