In today’s competitive and strategic markets companies are having to use the most diverse and effective marketing strategies in order to gain an advantage over their rivals, and stimulate consumption in a vast number of ways. Clothing has become more than just ‘wear’; it integrates into an individual’s life and has become an extension of ones self and their beliefs and values. In doing so, the consumption of clothing, in particular segments and groups, has developed into an act of propelling yourself into the environment through the garments you chose to wear, or more importantly, the ‘names’ you chose to associate with. This is, in most cases controlled by the designers and manufacturers of such clothing, however, in some cases the consumer influence has overwhelmed certain brands affecting the brands meanings, values and standings.
The clothing industry has grown immensely in the past few years, and a large proportion of that growth has been within the designer clothing industry. It is expected the designer clothing industry will slow down in future, however strong luxury brands will continue to prosper in an economy where disposable income continues to rise. With designer clothing for ever occasion and event, and designs to fulfil any individuals’ desire and taste, this market has become a very volatile and turbulent place of trade.
The designer clothing market is worth an estimated £1.5billion in the UK, (Mintel, 2005) with Burberry, Calvin Klein and Paul Smith dominating the store presence, due to their wider market and lower exclusiveness. The structure of the overall market is in the form of a pyramid shape, the higher upon the pyramid you stand, the higher your price and the higher your exclusivity:
Haute couture – exclusive designs, made to measure services mainly for women £10,000+
Semi-couture – limited editions, customised, not bespoke
Mainline designer ready to wear
Second line designer – sub-brands or diffusions
Lower sub-brands, high street designer lines
Designer lines exclusive to certain retailers – Debenhams, H&M, oasis, at mainstream prices
The designer clothing industry has seen a slight downturn in the past year, however with continuing growth in PDI within the UK (Mintel, 2005); it is obvious that there is more disposable income available, however only the strongest, and most desirable brands will reap the benefits of such changes. Therefore the market is becoming ever more competitive and challenging, with consumers moving towards one brand over another. This will significantly affect the dynamics of the market; fortunes of designers will depend largely on whether they hold the ‘must have’ items consumers desire. This is an area largely influenced by the media; with the strongest consumer base for designers now being the 15 – 24 year olds (Mintel, 2005), who are highly fashion conscious and highly interested in designer clothing, the media message projected by designers is the key area in order to influence and bring about awareness, and also gain positive ratings amongst the ‘fashion elite’, over advertising itself.
Growth in such a market is very difficult, the balance of maintaining exclusivity and uniqueness, with the desire to grow and expand conflict immensely in a niche market. One of the turning points within the industry was the utilisation of accessories. Accessories, such as sunglasses, handbags and shoes enabled designers brands to develop and expand their market, while maintaining their exclusivity and limited but highly attractive market. Designer accessories account for almost over a third of all designer brand sales, this shows the importance of brand or product extension, while minimising, or limiting market extension.
However, the consumption of designer goods is changing everything about the designer industry. Exclusive designs and brands are becoming ever more accessible, and they are in no way exclusive to the ‘traditional smart, high-earning core customers’ (Brooke, 2005). With more and more individuals consuming luxury brands, and familiarity breeding contempt, are luxury brands really that luxury and desirable? This is the predicament facing all designer brands, who aim to grow their markets and expand their businesses, yet maintain their exclusivity and niche appeal.
With sales climbing after huge declines in profits over the past few years in the UK market, Burberry is a prime example of a designer brand being affected in this whirlwind of a market. Internal upheaval, and consumer associations, fuelled by media cataclysm Burberry has seen its high end British appeal brand scorn and transformed from right under their noses. Whether Burberry were in a process to expand their market or stimulate growth in existing markets, their story is one every designer brand should assess and ponder upon. Having seen Gucci go through similar fate in the 80’s and 90’s (Brooke, 2005), and Hugo Boss and Paul Smith still trying to climb back up after their extension strategy misfortunes (Rogers, 2003), Burberry is a designer brand that could well be eaten up by the dynamics of such a market, or claw back to more stronger and superior position. As a result of Burberry’s very present and current happenings it is valuable and beneficial to look closer at the designer brand and its market in order to, not only understand the industry better but to also gain a better understanding into the interaction of designer brands with consumers, and the roles consumers play for designer brands.
In order to understand and put value to the knowledge of how the brand is operating and change today, it is essential to gain understanding on Burberry, and its values and principals from when, and how it began.
1856 – Burberry was founded in 1856 when 21 year old Thomas Burberry, a former apprentice to a country draper, opened an outfitters shop in Basingstoke, Hampshire, England
1870 – Business thrived and by 1870 Burberry became known as an ‘emporium’ with an increased focus on the development of outdoor wear for local residents and visiting sportsmen who frequented the store
1880 – Thomas Burberry invented gabardine – a breathable fabric made using an innovative process where the yarn was waterproof before weaving. This fabric was not only waterproof but also extremely durable. A patent was taken out in 1888
1891 – Thomas Burberry opened his first shop at the Haymarket, now the site of Burberrys corporate headquarters
1895 – The officers Tielocken Coat, designed by Burberry in 1890’s, was the forerunner to today’s trench coat
1911 – The Norwegian explorer, Captain Roald Amundsen was outfitted in Burberry when he became the first man to reach the South Pole on December 14th 1911. Amundsen left a Burberry gabardine tent to inform Captain Scott of his successful mission
1914 – In 1914 Burberry was commissioned by the War Office to adapt their earlier design of the service uniform for British Officers to the military needs and equipment of the time
1920 – The Burberry Check, registered as a trademark, was introduced as a lining to the trench coat in the 1920’s. Soon the red, camel, black and white check became synonymous with Burberry
1955 – Burberry was first awarded Royal Warrant from Her Majesty The Queen in 1955
1989 – A further Royal Warrant was awarded 1989 by His Royal Highness The Prince of Wales
2002 – Burberry launched its exclusive ‘Art of the Trench’ made to order trench coat service
2006 – Burberry celebrates its 150 year anniversary
Over Burberrys 150 year history, it has seen itself become an integral part of British society and heritage. Its relations with the monarchy, and historic associations, have helped build a luxury brand which thrives on its distinct British sensibility, strong international recognition and differentiating brand values that resonate across a multi-generational and dual-gender audience, (Burberry, 2006).
Having made its mark in 1880 with the development of the revolutionary fabric, the Gabordine, Burberry soon enhanced its image and brand qualities with valuable associations with explorers and the military. This led to Burberry gaining a reputation for high quality, and a prestigious reflection on its brand. This exclusiveness and high-status recognition helped Burberry open a store in London and Paris, taking the Brand to an international audience. At this time Burberry was in a very unique and niche market, there was very little competition, and the brand Burberry was seen as being the utmost quality and status. This was reflected in its target market and the folk who consumed such a product. Having high associations with the British royal family and the British autocracy it was evident that one had to be ‘someone’ in order to be dressed in such clothing. The target market was very well established, high-status consumers, with wealth and desire to project their standing within society, put simply it was the Rolls-Royce of the clothing industry.
Burberry soon progressed into the global market having seen the opportunities available, and the rewards of having such a niche, high end product. Soon Burberry span across Europe, Asia and the US through supply chains and wholesale agreements. This internationalisation of a niche brand, which began as a small shop in Basingstoke, took one very large step in order to become truly global. In 1955 Burberry was taken over allowing the expansion of retail networks in the UK and abroad, this gave way to licensing to third parties for products and designs. However, this delegation of rights and control had considerable implications for the brand and its image. As a result of the licensing, inconsistencies become more and more apparent in design, quality, and pricing throughout Europe, and the world. This damaged Burberry’s image and brand qualities resulting in sharp falls in profits, sales, reputation, and their stronghold in the designer goods market (Strategic Direction, 2005).
The brand began to lose is prestigious qualities as well as its core customers, who no longer saw Burberry as an ‘elite’ brand for the wealthy ‘honourable’ folk. Competition from the Gucci group, and Versace became more and more intense, they were consistent, high quality and very much design led and customer focused, therefore redefining the designer brand and taking the term ‘elite’ to a new forefront.
Today Burberry is essentially a middle-of-the-road designer brand (Ritson, 2005); it is not the elite brand such as Gucci or Versace. This is primarily due to its limited design led clothing lines and lack of presence of the global catwalks (Ritson, 2005). There core customer today differ from those in their early years.
Burberry offer designer clothing at a lower strategic level of those from Gucci and Versace (Strategic Direction, 2005), this is obviously reflected in their target market, and is positioned towards the middle of the designer market pyramid (Mintel, 2005). Their target market are still wealthy affluent consumers, however it runs through many socio-economic groups from ABC1’s, 2’s and D, making it a less exclusive and admirable brand. However over the past few years Burberry has addressed this factor are in a process of adapting and changing their brand and move to a more exclusive and elite nature. This change in their appeal and offering has been a direct reaction to the recent consumption patters of their products, and the association of their brand and products with less desirable consumers. This has seen direct effects on Burberry’s overall sales, with global underlying sales up by 10% to £715.5 million, and operating profits increasing further by 16% to £165.5 million in 2005. in terms of product categories, Burberry’s strongest division is womenswear with 34% of total sales, and not surprisingly menswear and accessories take up and even 27% each, representing the importance of accessories to Burberry, and all designer brands. The remaining sales are split between licensing (11%) and other (1%) (Mintel, 2005). It is essential to state that these figures represent the overall picture for Burberry, however, within the UK, Burberry have suffered and have seen a slowdown due to environmental factors and the market.
In the UK market, the iconic Burberry check and some items of clothing/accessories have been consumed by a style tribe called the ‘Chavs’. This demographic is young, male and female, working class, and widely publicized in the media as wearing designer labels but with little taste, and allegedly causing trouble. The influence that these groups of individuals have had on Burberry is immense, they have undoubtedly changed the brands image and meaning in ways Burberry never imagined possible. This has obviously affected Burberry’s core customers, who to some degree find it undesirable to consume the brand which is now visibly worn by such individuals, and therefore are disassociating themselves with the famous check’. The effect can be very negative and some UK retailers dropped the brand as their up-market customers do not want to be associated with Chavs.
“Yes it negatively affected Burberry sales across the UK – just like Hackett was affected when it started being worn by (alleged) football hooligans. But Hackett has come back and Burberry will be fine because they are downplaying the check and moving the collection on.”
– Director, department store
“I don’t think it has really affected Burberry. There is the working class/nouveau riche market and the aficionados market. Burberry has a strong business in its own market that transcends a lot of barriers. Ralph Lauren is worn by loads of middle-aged overweight Americans but it still has designer associations and doesn’t put off young fashionable people buying it.”
– Menswear consultant (Source: Mintel 2005)
The key fundamental problems and weaknesses that Burberry had were that it was a very visible brand. The Burberry check is recognizable all over the world, and yes it may be a great asset, however, the check is instantly recognizable; and visibility of the brand led to a direct association with chavs. A more subtle and intimate feature would play a stronger and more intelligent role as a communicative device with its core customers. The second weakness is that due to Burberry’s positioning it is very much accessible in the high-street, and has a low couture presence. This makes Burberry a middle of the tier in the luxury market. The final weakness Burberry failed to address is their relations with the media. They failed to counter any threat chavs had on the brand, or comfort existing customers who were well aware of the chav phenomenon taking place. They let the ‘phenomenon’ runaway with itself, and by the time they wanted to react, some would say it was too late (Ritson, 2005).
At present Burberry is in the process of re-inventing their brand and image through a more design led focus, and developing a more up-market, elite brand. This has been complimented by Burberry stopping production of certain products which are predominantly consumed by ‘chavs’, and the decrease in the use of the visible check on their clothing. New advertising campaigns and distribution networks are allowing Burberry to evolve their brand into what they feel is best for the brand, with the use of certain celebrities, and the imagery and meanings they depict.
This is being led by the arrival of a new leading designer, a bespoke range for the ultra exclusive clientele, and the introduction of Burberry to the catwalk. They are hoping these changes will help develop a brand that will attract premium buying consumers through an elite brand and design-led portfolio, and also a somewhat price diffused range to help maintain a level of growth while sustaining exclusivity.
“It was definitely a negative influence on Burberry and now it is affecting Dior that the Chavs are also wearing (the J’adore Dior T-shirt and logo prints). It has a negative effect on retailers selling the mainline because, rather like an item being counterfeited, it will have less appeal to the up market shopper. Having said that, Louis Vuitton bags are copied everywhere but they still sell. Burberry is getting over it now because the brand is about a lot more than just checks.”
– Consumer fashion journalist (Source: Mintel 2005)
From looking at the designer industry and the changes it has gone through recently, and the influences and overriding dynamics facing the designer brands it is clear to see that this is a volatile market, and one in which the dynamics of the market are very different to any other. Changes in demand can have obscure results for an organization in this market, to an extent one could argue it is very much a niche market, and most consumers of this market would like for it to be kept that way. However, changing consumer behavior and shifting consumption patterns constantly transform and alter the market, but more importantly, they effect the positions and perceptions of the designer brands themselves. This has been clearly seen and identified in many brands over the past 20 to 30 years, and most recently in the case of Burberry. A high quality, sought after brand has seen its image transformed by the association of their brand and products with certain social groups within the UK, whether their able to move on from this problem as a designer brand will be determined in their ability to regain their elite consumer, and distinctiveness as an exclusive, limited designer brand.
The most important element to understand is that growth in such a market may not be the most valuable or attractive proposition or strategy to move the designer brand forward, exclusivity and uniqueness are key to maintain the notion of a ‘designer brand’.