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Why Apple wants Burberry boss for digital retail push (updated)

Stuart Lauchlan Profile picture for user slauchlan October 15, 2013
Summary:
Burberry CEO Angela Ahrendts is defecting to Apple to head up its retail operations, both online and bricks and mortar. What lessons will she be taking with her from her digital makeover over Burberry?

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Angela Ahrendts

Amusing this morning to look back at a September 22 article on Tech Crunch about lessons that Apple should learn from Burberry. The article reads:

Apple could learn a lot from the fall of Burberry. The once-exclusive fashion brand became associated with trashy youth by greedily licensing out its signature tan chequered pattern for use on baseball caps and other cheap clothes. Suddenly, the rich clientele it had catered to for a century wanted nothing to do with Burberry. Could Apple’s iPhone brand have the same trouble after selling the cheaper, color-splashed iPhone 5c?

It went on to argue:

Burberry was able to save itself by hiring a new CEO, Angela Ahrendts, who led an effort to buy back 23 of its licenses and fight counterfeiters. Ahrendts also scaled back its signature plaid so it appeared on just 5% of Burberry clothing instead of 20%. It signed on new faces for the brand like Emma Watson, and sued people who used its trademark illegally. Burberry is even working with Apple and the 5s to capture photos of its new fashion line.

Well Apple's doing more than take this advice today. It's poached Burberry chief executive Angela Ahrendts over to join it as senior vice president for retail and online stores.

She says:

"I am profoundly honoured to join Apple in this newly created position next year, and very much look forward to working with the global teams to further enrich the consumer experience on and offline.

"I have always admired the innovation and impact Apple products and services have on people’s lives and hope in some small way I can help contribute to the company’s continued success and leadership in changing the world."

An obvious choice?

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Marc Benioff, Angela Ahrendts

Apple has had a stab at this role before when in April 2012 it hired John Browett, former CEO of European technology retailer Dixons Retail.

But Browett was only responsible for the physical stores whereas Ahrendts has a digital brief as well.

Browett also only lasted 6 months in the job since which time Apple's retail team has been reporting directly to CEO Tim Cook - as will Ahrendts.

Browett might have seemed a logical choice for the role given that Dixons and Apple are both electronics retailers, but the customer experience offered by the two are miles apart.

When Browett's first action was to look at cutting costs in the bricks and mortar business, he fell foul of the Apple customer culture almost instantly.

Bleeding edge

Ahrendts is unlikely to make the same mistake. She is widely credited with turning around Burberry's fortunes and the news of her departure came as Burberry revealed 17% growth in underlying retail sales in the six months to the end of September with retail sales from stores open at least a year up by 13%.

She's also been a massive advocate of using bleeding edge tech to enhance the customer experience, which Cook flagged up in his welcoming statement:

"She shares our values and our focus on innovation, and she places the same strong emphasis as we do on the customer experience. She has shown herself to be an extraordinary leader throughout her career and has a proven track record."

So on paper, maybe a better fit with the Apple ethos than her sort-of predecessor? A good indicator of what might be to come of course can be seen in her track record of building Burberry's digital culture.

Burberry's close work with Salesforce.com may give insight into what might be in store (pun intended) for Apple.

So closely linked have the two firms become that at one point, Ahrendts seemed to be a compulsory element at Dreamforce or the various CloudForce events around the world.

As both tell the tale, Ahrendts met Salesforce.com CEO Marc Benioff in the Ritz-Carlton in New York where she punted her vision of a company where anyone who wanted to touch the brand could have access to it. She wanted Burberry to be:

"the first company to be fully digital end to end".

All that was missing was the right digital platform to make that a reality. Luckily for her Benioff happened to know just where he could lay hands on one!

This was during the era of the 'Social Enterprise' pitch by Salesforce.com, now revised to the Customer Company but essentially with its core ingredients intact.

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Kisses from Burberry

So Burberry became one of the flagship Salesforce.com reference customers.

It's a heavy user of Chatter - or Burberry Chat as it's known - which Ahrendts argues has boosted internal communications between different parts of the business and helped the firm to react to demand.

She often cites the example of how the design team at Burberry were able to make changes to the cut of a certain style of suit after the on floor sales team fed back concerns from customers.

Every touchpoint

But the digital push goes beyond internal communication. The Burberry digital vision is to have social customer profiles to engage more effectively at every touchpoint, and launch customer social networks to listen and connect differently to traditional retail outlets.

The intention is to get to a stage where sales associates can access a digital profile that reports the buying history and related social activities of Burberry customers as soon as they walk in the door, the firm's Customer 360 programme.

Burberry's website - Burberry World - is intended to be an immersive multi-media experience:

"the ultimate expression of the Burberry brand where visitors can engage, entertain, and interact, as well as providing the ultimate online luxury shopping experience."

That means customers being able to watch fashion shows and videos displaying the latest collections, then seamlessly ordering from the fashions while perhaps listening to selections from the acoustic section that promotes music videos from previously unknown British singers and groups - all, of course, wearing Burberry clothing.

Elsewhere there have been eye-catching initiatives such as the collaboration with Google and its Art, Copy and Code project which resulted in Burberry Kisses, a marketing campaign which allows users to send a digital imprint of their actual kiss to a loved one anywhere in the world, from any device.

Why? Well according to Burberry it's about giving some heart and soul to technology. More prosaically it's about capturing attention and then up-selling After the impression is taken of the users lips, she can virtually try different shades of lipstick to see which one is best. And of course, once you know that, it's a small step to popping into a store to purchase.

And, ironically give today's news, Burberry created a 15-minute video taken exclusively on the iPhone 5s at its London, Spring/Summer 2014 fashion show, using nine phones on the runway, three on a mount that moved and swiveled, and one attached to the ceiling.

The flagship store in London's Regents Street is perhaps the most tangible manifestation of Ahrendt's digital thinking with a 22-foot-high screen dominating the floor, with images of the latest offerings.

Garments are fitted with interactive screens and RFID (radio frequency identification) tags so that customers can display clothes in front of interactive screens and be told how the products are made.

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Apple meets Burberry

It's not all been plain sailing though. One article in The Economist last year took a pot shot at Ahrendts focus on technology, arguing:

Critics fret that her obsession with bits and bytes is a distraction from Burberry’s core business of selling luxury clothes in shops where tourists feel comfortable unzipping their wallets…All this iPaddery is well and good, but some fashionistas fear that it projects too harsh an image. 'Louis Vuitton offers them deep-pile carpets. Burberry offers them big computer screens,' quips one London designer.

That clearly won't be an issue at Apple.

Verdict

A move that took the City of London by surprise, evidenced by the tumbling Burberry share price today, but an intriguing one for Apple given Ahrendts background in fashion and as the architect of a culture heavily immersed in digital and design as well as retail.

The potential loser in all this is Burberry, although with the other half of the success story of recent years, Christopher Bailey adding CEO duties to his role as Chief Creative Officer, there is at least continuity of approach. That said, Bailey will have a lot on his plate.

Already, in a note to clients, Morgan Stanley has said that there will be concern: “We anticipate some investor concern about combining the Chief Creative Officer and CEO roles, which are both time consuming and require very different skill sets.”

Two hires don't make a trend of course, but it's interesting to note that Ahrendts is Apple's second fashion industry hire in the last few months, following the signing of Paul Deneve, former CEO of French luxury brand Yves Saint Laurent as vice president for special projects - which to the rest of us means the i-TV and the i-Watch (or whatever they end up being called.)

All of which may provide pointers to Apple's solution to critics who've increasingly sniped at the supposed lack of innovative design thinking since the death of Steve Jobs.

By this evening - UK time  - Salesforce.com's Benioff had anointed Ahrendts as the next Apple CEO:

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And of course stand by for the Burberry iPhone C gags on Twitter any time now...

 

Disclosure: at time of writing, Salesforce.com is a premium partner of diginomica. 

 

 

 

 

 

 

 

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