Title: SWOT Analysis on Burberry
Prepared by: Max Yeang
Student ID: SCKL 1900604
Lecturer: Mr Balaraman Rajendran
Course: Business Management
Course Code: 4 BMT 0801
Intake: November 2020
Introduction
This paper will present the SWOT analysis on Burberry, the international luxury brand. The
study analysed information sourced from Burberry’s websites, third party websites, Statista
and articles found online.
Company Background
Burberry Group PLC has a long history dating back to 1856 when it was founded by 21-year
old Thomas Burberry in Basingstoke, Hampshire, England. In 1879 he invented gabardine, a
breathable, waterproof and hardwearing fabric that he used for its trench coat. The invention
was patented in 1888 and became the first of a series of patents to come. Famed explorers and
aviators wore Burberry gabardine and used gabardine tents. Its apparel and equipment were
used during the First and Second World War where every detail of the trench coat was
designed for a purpose. It was also adapted to cater to the women division. When business
grew it opened its own stores at the turn of the 20th century. In 1920 it became public quoted.
It also received the Royal Warrant as tailors and as a weatherproofer. It was then acquired by
GUS PLC, the retail and business services group, in 1955. A partial IPO was arranged in
2002 to allow GUS PLC to strategically focus on fewer activities for future growth potential
and to establish a market value for Burberry for GUS shareholders while maintaining a
majority stake in the business. Since 2005 GUS PLC had divested its stake from Burberry
and today the shareholders consists of investment and asset management institutions (over
88.3%), insider ownership (under 1%), general public (11%) and others such as private and
public companies, the government and employee share scheme.
Burberry is distinctively a British brand specialising in the manufacture, wholesale and retail
of luxury goods with its headquarters in London. Today the company designs, produces and
sells products under the Burberry brand for men, women and children. Its heritage is its
trench coats and cashmere scarfs with the iconic check prints. Other product divisions include
beauty products, accessories such as eyewear, watches, bags, wallets, umbrellas and home
accessories including blankets and candles. The company retails its products around the
world through its stores which are either directly operated or franchised, online and through
wholesale partners. It has 218 mainline stores,149 concessions, 54 outlets and 44 franchise
stores. Its wholesale business is with department stores, travel retail, outlet and franchise
stores. It licenses third parties to manufacture and distribute products using the Burberry
trademark when it deems beneficial to do so to capitalise on the licensees’ expertise and
extensive distribution. For example, cosmetics manufacturer, Coty Inc. has the exclusive
global license to Burberry’s fragrance and make up brands. Burberry has operations in Asia
Pacific, Europe, Middle East, India, Africa and the Americas (Statista, 2020).
Its company vision is “To establish Burberry’s position firmly in luxury fashion. By
sharpening our positioning in the most rewarding and enduring segment in the market, we
will drive sustainable growth and higher margins over time, while continuing to deliver
attractive returns”. The mission of Burberry is to maintain its integrity and vitality of the
brand, at the same time, continue to develop the business which remains relevant to ever
evolving markets and consumer taste.
SWOT Analysis
Strengths
1. Burberry is still financially strong despite a drop in revenue and profits. It is one of
the valuable companies in the world owing to its legacy and needs no introduction as
it is an iconic brand with an identity that is deeply rooted in luxury fashion. It is well
established and widely recognised on a global scale with a loyal fan base. It knows
how to build relationships and connect with customers on a deeper level representing
a certain set of values through its products, communication and experiences (customer
service). Its activities centre around its core values which are “protect, explore and
inspire” where customers come first and products are produced creatively and
distinctively to inspire and excite them.
2. It has international access via its global network of stores and e commerce platform
which enable it to serve and interact with customers. It has come up with innovative
ways for customers to connect with it, which helps build trust and loyalty. For
example it uses Big Data and Artificial Intelligence to boost its sales and customer
satisfaction by offering personalised recommendations online and in store (Marr,
2017). Customers’s data is first collected through loyalty or reward programmes and
when an identified customer walks into a store, sales staff use tablets to offer
suggestions based on customers buying history and their social media activity (Marr,
2017). The insight it gains from this relationship helps it make better decisions.
3. Another way Burberry connects and engage with customers during this COVID-19
pandemic is by coming up with more digital experience for them. Its commitment and
heavy investment in online in recent years will help to protect its overall sales during
the pandemic. It had no choice but to close 50% of its stores due to lockdown
measures but it is leveraging on its digital platform to forge stronger connections with
customers. For instance, its summer 2021 fashion show is livestreamed via Twitch
technology, a live video service company, where customers were able to enjoy an
immersive and interactive experience of the show and where they can communicate
through Twitch chat function (Coker, 2020).
4. Burberry produces quality products as it manufactures most of its products in its own
plants (and third-party factories) in the UK and Italy, ensuring that its quality is in
compliance with its values and ethics. Its brand, iconic and seasonal designs and its
intellectual property are protected across the world.
Weaknesses
1. It’s premium pricing limits its customers to the rich. Aspirational shoppers who
splurge on luxury goods but lack the income to indulge in expensive items as often as
they would like are not targeted.
2. Burberry was one of the first global luxury brands to resort to big discounts during
the Covid-19 pandemic. Its move to discount its products may give the wrong
message to its wealthy loyal customers, impacting negatively on its brand equity.
3. It is dependent on the Chinese market (apart from others) in view of its sheer volume
and scale. If there’s a recession that affects growth and brings about restrained
consumer spending, sales will be greatly affected.
4. High turnover of staff due to management problem, discrimination, low pay and lack
of opportunities for progression. This can eat into profits from training new
employees and gather bad publicity from discrimination
Opportunities
1. If there is a cooling off in purchasing expensive luxury goods by high end
consumers, maybe it is time for Burberry to get out of its comfort zone and
additionally target the aspirational shoppers who would like to buy more frequently
but cannot afford the really expensive items. It can introduce a slightly cheaper range
to tap into this niche market and grow its customer base.
2. Burberry could try and target Millennials and Gen Z better than its competitors such
as Gucci, Off-White and Balenciaga who have succeeded in connecting with young
consumers and making their brand relevant. As statistics reveal that most luxury
purchases worldwide come from Millennials, there is great opportunity to tap into
this target market and not just into Gen X. In China, it was discovered that 80% of
luxury spending comes from Millennials. Since Millennials are the ones who are
purchasing a lot these days Burberry should not neglect them but to connect with
them more creatively and digitally. Gen Z also should not be neglected for the fact
that they will join the market soon. This is the time to get connected with them
because even though they may not be Burberry’s target group now they will be in the
future. It is easy for a brand to become irrelevant even if it has heritage and
craftsmanship, design and exquisite material if it cannot connect with the main
purchasers of luxury goods. Studies have revealed that Gen Y and Gen Z (especially
the young women in China) usually like to move away from the brands that their
parents use unless they find the brand relevant and see something in it for them.
Older generations in contrast like to emulate the younger generations. And Burberry
has the digital capabilities (Artificial Intelligence and Big Data) to help create value
for its customers and to support personalised customer interaction. Purpose and
meaningful connections are what customers crave.
3. In view of increasing green consumer demand Burberry could tap further into its
green collection by designing with more material that is made out of recycled waste.
Focusing on sustainability, it can repurpose all their unsold clothes, which they used
to burn to prevent counterfeiting until they were criticised for it. For example if their
trench coats are in good condition they could be made into fabric bags. Or Burberry
can use them as special gifts to social influencers to collaborate with them to break
bad habits and encourage green habits. It is about being more active in building a
sustainable future through science and innovation to make the world smarter,
healthier and safer. And luxury can set the standard for what is desirable behaviour.
4. Burberry can have more collaborations with very talented fresh designers to
continue modernising its brand and to be seen as a trendsetter. It is also a way to
help young, aspiring designers as a contribution to society. Along this move, it can
reinvent its classic coat or outerwear and include functionalities such as smartphone
charging capacity by using a thin wireless charging pad. Or add a neck pillow in the
hood that inflate when you blow into it. For its winter coat, there could be an
attached pair of heat tech gloves that one can pull out from the bottom of the
sleeves. These added functionalities are practical and useful when travelling or on
the move.
Threats
1. The ongoing Covid-19 pandemic continues to be a threat as Burberry’s revenue
dropped drastically by 48% from £498 million in June 2019 to £257 million in June
this year (Yeung, 2020). The lack of foreign visitors to Europe and the UK due to
Covid restrictions will have a negative impact on its stores’ revenues which typically
would have generated approximately half of sales around this time of the year
(Arnett, 2020). The course of the pandemic and the longer lasting economic effect
could hamper sales further before the most dire consequences of the pandemic are
over with the introduction of the vaccine. Before that, tourism may not revive.
2. Another threat is the higher cost it will encounter if the UK fails to reach a trade
agreement with the European Union (EU) because a no-deal Brexit would result in
Burberry paying additional duties trading under the World Trade Organisation rules
in the EU (Rovnick, 2019).
3. According to Julie Brown, Burberry’s chief operating and financial officer, a no-deal
Brexit would also cause disruption to the supply chain in the form of logistical delays
as Burberry imports and exports considerable volumes of raw materials, samples and
finished goods between the UK and the EU (Rovnick, 2019). She further added that
what normally takes a day or two to send orders to stores in the EU for instance could
result in delays due to border checks. The disruption will ultimately affect Burberry’s
design process, product development, manufacturing and customer fulfilment. In
addition, the UK government will do away with tax-free shopping for foreign tourists
which could cause tourists to flock to EU cities where they could get a refund on the
VAT. This move will affect sales in the U.K.
4. Apart from competitive rivalry from Louis Vuitton, Prada and Gucci etc. there is also
the threat of counterfeit goods which can affect its growth, brand loyalty and brand
equity. Consumers of luxury brands want to be associated with the elite of social
classes and counterfeit goods will only allow anyone to appear like they belong to a
certain class which is against the core of luxury brands.
Bibliography
Burberry, 2020. Company History. [online] Available at:
< [Link] [Accessed 12 December 2020].
Coker, J., 2020. Burberry to livestream show using Twitch technology. Essential Retail,
[online] 14 September. Available at: < [Link]
livestream-fashion-show/> [Accessed 14 December 2020].
Comparably, 2015. Burberry Mission, Vision & Values. [online ] Available at:
< [Link] [Accessed 12 December
2020].
Glassdoor, 2020. Burberry Employee Reviews about “high turnover”. [online] Available at:
< [Link]
EI_IE13011.0,8_KH9,[Link]> [Accessed 15 December 2020].
Glossy, 2019. Burberry is successfully steering sales into its own stores. [online] Available
at: < [Link]
its-own-stores/> [Accessed 12 December 2020].
Gyekye, L., 2019. Burberry unveils new collection made from recycled waste. Bio Market
Insights. [online] Available at: < [Link]
collection-made-from-recycled-waste/> [Accessed 15 December 2020].
Investegate, 2002. Burberry Partial IPO. [online] Available at:
<[Link]
[Accessed 14 December 2020].
Langer, D., 2019. Should Luxury Brands Target 25-Year-Olds? Think Younger. Jing Daily,
[online] Available at: >[Accessed 14 December 2020].
Langer, 2020. Why Burberry’s Problems Should Scare All Luxury Brands. Jing Daily,
[online] Available at: < [Link]
should-scare-all-luxury-brands/> [Accessed 14 December 2020].
Marr, B., 2017. The Amazing Way Burberry Is Using Artificial Intelligence And Big Data To
Drive Success. Forbes, [online] Available at:
< [Link]
using-artificial-intelligence-and-big-data-to-drive-success/?sh=2a1fc8db4f63> [Accessed 14
December 2020].
Rascouet, A., 2020. Burberry Warns No Deal Brexit Would Lead To Higher Duty Bill.
Financial Times, [online] 12 November. Available at:
<[Link] [Accessed 14
December 2020].
Rovnick, N., 2019. Burberry warns on impact of no-deal Brexit. Financial Times, [online] 23
January. Available at: < [Link]
46fc3ad87c65 > [Accessed 14 December 2020].
Sandle, P., 2017. Burberry strikes USD225M fragrance, cosmetics licensing deal with Coty.
BNN Bloomberg. [online] Available at: <[Link]
225m-fragrance-cosmetics-licensing-deal-with-coty-1.713485/burberry-strikes-us-225m-
fragrance-cosmetics-license-deal-with-coty-1.713485> [Accessed 12 December 2020].
Simply Wall St, 2020. Here’s what Burberry plc’s (LON:BRBY) Shareholder Ownership
Structure Looks Like. Yahoo!Finance [online] Available at:
<[Link] [Accessed
12 December 2020].
Statista, 2020. Brand value of Burberry worldwide from 2010 to 2019. [online] Available at:
< [Link] [Accessed
14 December 2020].
Statista, 2020. Burberry’s global revenue from 2005 to 2020. [online] Available at:
< [Link] [Accessed 12
December 2020].
Statista, 2020. Burberry’s number of stores worldwide by outlet type and region 2020.
[online] Available at: < [Link]
stores-worldwide-by-outlet-type-and-region/> [Accessed 12 December 2020].
Stockdill, 2020. Burberry sales growth was solid until—Covid-19 hit. Inside Retail, [online]
Available at: < q[Link]
covid-19-hit/> [Accessed 14 December 2020].
Triggle, N., 2020. Covid: How close is the light at the end of the tunnel? BBC News [online]
Available at: < [Link] [Accessed 14 December 2020].
WARC, 2020. Burberry teams with Tencent for ‘social retail’. [online] Available at:
< [Link]
retail/43927> [Accessed 15 December 2020].
Yeung, J.,2020. Burberry Sales Down 48% in Q1 2020 as Revenue Drops By £241 Million
GBP. Hyperbeast [online] Available at: < [Link]
financial-report> [Accessed 15 December 2020].
Bibliography
Burberry,
Comparably, 2020. Burberry Mission, Vision & Values. [online] Available
at:<[Link] Accessed 14 December
2020]
Link Humans, 2020. How Burberry Reinvented Its Employer Brand. [online] Available at:<
[Link]
%20establish,continuing%20to%20deliver%20attractive%20returns.
%E2%80%9D>[Accessed 14 December 2020]
