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'Innovative' social media helps Burberry to sales and profits growth

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Innovative use of social media, including the ‘Tweetwalk’ launch of a fashion collection on Twitter, is helping luxury brand Burberry connect with its customers, driving them online to research the brand before buying in store or over the internet, the company said today.

Announcing a 29% rise in sales and a 24% rise in pre-tax profits in the six months to September 30, Burberry said its use of social media and its investment in improving its ecommerce website, burberry.com, were part of the key strategies that had helped it boost its performance in the period.

As well as broadcasting its spring/summer 2012 runway show to millions through worldwide media partnerships, the company also premiered the collection on Twitter, in what it has dubbed a ‘Tweetwalk’. Women’s fragrance Burberry Body was launched on Facebook and through a YouTube homepage takeover as well as through outdoor advertising.

The company, which has nine million Facebook fans and eight million views-to-date on YouTube, says it also has a “significant presence on key Chinese social media platforms.”

Meanwhile investment in burberry.com including improved functionality, product images and information, and social media links. “The number of visits to the site increased significantly in the first half,” Burberry said in its half-year statement, “as luxury customers researched online and bought online and in-store.”

Burberry said half-year revenues rose 29% to £829.6m, from £641.1m at the same time last year while pre-tax profits, after exceptional items, grew by 24% to £158.7m from £128.0m at the same time last year. It put that down to strategies that also include a global focus on the brand, including in emerging markets, product innovation, investment in people and processes, and the use of enterprise management software to deliver a global view of the business, allowing decisions to be made more quickly.

The company, which makes its money from retail sales, wholesale and through licensing, said its strongest growth came in its retail sales division, made up of website sales, 198 mainline stores, 210 department store concessions and 44 outlets in Asia Pacific, Europe, the Americas and the Middle East and India. Retail sales were up by 45%, when the effect of currency fluctuations was discounted, thanks to the acquisition of stores in China and increases in selling price which, said Burberry, reflected continued design innovation in all its collections. The company said: “Fashion sales were driven by a more disciplined process optimising monthly flow of product, with synchronised marketing and high impact digital and in-store initiatives,” adding: “Flagship markets around the world were among the strongest performers, buoyed by the travelling luxury consumer.”

Chief executive Angela Ahrendts said: “Burberry has delivered a strong first half, reflecting our continued investment in innovative design, digital marketing and retail strategies. This consistent performance, balanced across channels, regions and product divisions is enabled by our closely connected global teams and creative thinking culture.”

She said Burberry was seeing the initial returns from five years of investing in infrastructure, and added: “We are confident that this solid foundation will enable us to optimise both our strong brand momentum and the luxury sector’s opportunities, especially in high-growth flagship and emerging markets.”

Our view: In an economic climate where customers are often looking for the discounts that retailers can offer, it’s interesting to see how the other half live. Seen as ‘chav’ uniform just a few years ago in its home UK market, in recent years Burberry has successfully reinvented itself as it has expanded further worldwide. One way it’s done that is through its use of ecommerce and social media. To get a measure of its success, which other UK fashion brands can claim nine million Facebook fans, not to mention the eight million YouTube views? By targeting itself at customers such as “the travelling luxury consumer,” it’s now enjoying spectacular growth around the world and, even more unusually, successfully raising its prices at the same time.
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