Luxury fashion brand Burberry saw a steep decline in sales, down 12%, with annual revenues coming in at just £2.97 billion ($3.77 billion). Its shares have also fallen 57% in less than a year. The economic downturn caused by COVID-19 and internal strategic shortcomings are seen as the main factors behind the downturn. Despite digital marketing efforts and the launch of fresh designer lines, the company continues to lose its edge in the competitive luxury market.
Broad economic factors such as slowing market growth and high inflation rates, as well as political uncertainties such as Brexit and the US-China trade war, are having a negative impact on the purchasing power of the wealthy. This, combined with increased competition and increased interest in sustainably produced products, further increases the challenges Burberry is grappling with.
The company's repositioning decisions over the past decade aimed at penetrating the luxury market appear to have been misplaced: major competitors such as Gucci and Louis Vuitton continue to outsell Burberry, signaling the failure of the company's attempts to match the luxury brand recognition achieved by these high-end fashion brands.
Burberry's eventful journey in the luxury market
In particular, Burberry's efforts to expand into cosmetics and fragrances have not stimulated sales, highlighting that the company's strategic move toward the luxury market may have been misguided.
Despite the product's quality, repeating iconic patterns and high prices cause customer dissatisfaction. Declining employee satisfaction and falling sales among young people suggest a mismatch between Burberry's traditional appeal and the changing tastes of the wealthy.
The CEO is pushing for a complete brand makeover, including store renovations and product line expansion. This includes considering unique marketing strategies, such as expanding online sales channels and unconventional advertising campaigns. Additionally, there is a focus on sustainability and ethical practices, reflecting the growing demand for responsible brands.
In line with this, efforts are being made to improve customer relationships through better customer service and personalized care, such as after-sales service and customer loyalty programs.
Meanwhile, the creative director is working to redefine the brand's image, reinvigorating the brand by highlighting its British roots through refreshed collections and campaigns. The future holds the key to the success of these intensive measures aimed at repositioning Burberry in the global luxury goods market.
