Question

Why did Burberry choose to focus on the value, rarity, and inimitability of its core products centered on outwear, as opposed to the proliferation of unrelated products?

Why was Burberry able to turn around?

Burberry is 160 years old in 2016. Find another firm in any industry and any country that has also survived over 150 years (or at least 100 years). What are the “secrets” behind its longevity?

Some argue that there is no future in made- in-UK textile products. Others suggest iconic UK firms have a special responsibility to create jobs by manufacturing products in the UK. What is your view on this debate?

Answer 1

Answer ) Key to Burberry's doubling of revenue and profit in the last five years has been re-focusing on the iconic, core trenchcoat. When Ahrendts took over as CEO in 2006, the company was growing at only 2% a year. She quickly concluded that Burberry had stretched too far from the core.

Factors behind turnaround of Burberry-

1. Remember what made your famous

Ahrendts did what we always do on projects: she looked back to see what made the brand famous in the first place:

"For more than a century the Burberry trench coat was cool. But when I became CEO, outerwear represented only about 20% of our business. Fashion apparel and check accessories were leading our strategy.

It’s not unusual for a luxury company to be born from a single product and then diversify. Louis Vuitton began with luggage, and Gucci with leather goods. But each continued to earn the majority of its revenue from its original core products. Burberry wasn’t capitalizing on its historical core. We weren’t proud of it. We weren’t innovating around it.

2. Re-focus on the core

Re-focusing on the core was key to the growth strategy, as Ahrendts comments: "We would reinforce our heritage by emphasizing and growing our core luxury products, innovating them and keeping them at the heart of everything we did."

It is interesting to read that this strategy was met with some resistance inside the company: "I have to admit that some managers were cynical. A lot of them had been at Burberry for a really long time. I’m sure they left saying, 'Focusing on trench coats—that’s our strategy?' " Re-focusing on the core isn't as sexy as brand stretching, and can even seem basic and boring. But it can be highly effective if done well.

3. Refresh the core

The key to growing the core is to re-focus creativity and innovation on it. This can be through upgrading the products you have already, but also extending the core range, as Burberry did: "Burberry used to have just a few basic styles of trench coats: Almost all were beige with the signature check lining, and the differences between them were minor. Now we have more than 300 SKUs, including the classic Burberry trench in a range of vibrant colors and styles, with everything from mink collars to studded leather sleeves."

Furthermore, the iconic trench coat was reinstated as the product essence of the whole brand, in the same way that the boot is the essence of the Timberland brand: "Christopher and the designers and marketers all started dreaming up ways to reinforce the idea that everything we did—from our runway shows to our stores—should start with the ethos of the trench."

4. Centralise creativity

Stronger creative leadership was key to re-focus on the core. Back in 2006 there were separate design teams in Hong Kong and the USA. Ahredts could have tried to engage and align these teams to get them on board. Instead, she was much bolder. She closed down these teams and centralised creative leadership in London under Christopher Bailey, acting as a "brand czar.” Ahrendts comments that: “Anything that the consumer sees—anywhere in the world—will go through his office. No exceptions.”

The same centralisation of creativity, with uncompromising brand standards, has also been key to success at Gucci with Tom Ford, and Apple with Steve Jobs.

5. Aligning sales teams

Re-focusing on the core required a lot of effort internally to align the sales teams' efforts, and help them to sell the higher priced trench coats rather than "easier" sales of cheaper items like polo shirts: "We created videos to demonstrate Burberry craftsmanship. We equipped our sales associates with iPads. We knew that beautiful, compelling content would connect customers to the brand and our iconic trench."

6. Product passion starts within

My favourite bit of this brilliant story concerns the wearing of trench coats by leaders inside the business. When Ahrendts arrived she was shocked by what she saw as top managers arrived at her first strategic planning meeting: "They'd flown in to classic British weather, gray and damp, but not one was wearing a Burberry trench coat. If our top people weren’t buying our products, how could we expect customers to pay full price for them?"

Contrast this with how the CEO describes the company today: "If you ask a Burberry senior executive how many trench coats he or she owns, the answer is likely to be eight or nine. As for me, I can safely confess to owning a dozen. They’re not just raincoats anymore. They are the foundation of a great brand and a great company."

In conclusion, this has to be one of the best examples of how to re-focus on the core business for brand success.

Answer) Coopers Brewery Limited, the largest Australian-owned brewery founded in 1862, is based in the Adelaide suburb of Regency Park. Coopers is known for making a variety of beers, the most famous of which are its Pale Ale and Sparkling Ale. The brewery sold 69.7 million litres of beer in the 2013 financial year. It is also the world's largest producer of homebrewing equipment. Its shares are primarily owned by the extended Cooper family, and the company's constitution and classes of shares makes it difficult to sell shares outside the family.

With fifth?generation family members in charge at the company, Coopers has been able to distinguish itself from its main competitors in the sector, two multinational conglomerates with a combined market share of around 90 per cent. Coupled with investment in production facilities, firm's expansion into new domestic and international markets has proved to be profitable. Part of Coopers' success lies in the niche marketing strategies it has employed – strategies which emphasise the company's unique products and stress their history and traditions. The concept of the extended family is highlighted through the company's approach to its consumers and staff members. Philanthropic activities also enhance the company's reputation in the community at large.

Answer) The UK textiles sector needs a more imaginative industrial policy to help it build the capabilities needed for a sustainable future.the current UK Government consultation on industrial strategy and to debates about reshoring manufacturing as the Textile and Apparel sector remains important but is now dominated by small and micro-firms with, on average, low investment, productivity and wages. While it is possible to make high quality products in the UK, many producers struggle with low returns.the UK T&A sector has been considered largely a part of the UK’s industrial past, not its future and the sector has been in long-term decline since the 1970s. As a result, by the mid-2000s, more than two-thirds of manufacturing capacity had been eliminated and nine-tenths of the employment had disappeared. At present, more than 80% of the UK’s annual consumption (by weight) of clothing and textile products is manufactured abroad.Industrial policy needs to have a more explicit focus on important mundane sectors like textiles. Policy also needs to move beyond generic concerns around innovation and skills by addressing some of the specific challenges that a diverse sector presents.