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Burberry on how digital helped it to adapt online, on social and in-store – and to reduce the Covid-19 hit on sales

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Burberry has emphasised its luxury position in the market over the last year. Image courtesy of Burberry
Burberry has emphasised its luxury position in the market over the last year. Image courtesy of Burberry
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Burberry on how digital helped it to adapt online, on social and in-store – and to reduce the Covid-19 hit on sales

Burberry today shows how digital helped it to adapt online, on social and in-store during a year hit by Covid-19 lockdowns and falling sales.

 

The luxury retail brand localised marketing campaigns to its strongest markets, including China and South Korea, and opened a social retail store in Shenzhen. Digital leadership, it says, drove double digit growth in full-price online sales across all of its regions despite a wider sales decline.

 

Revenue of £2.3bn in the year to March 27 was 11% down on the £2.6bn reported a year earlier. Within that, sales were down by 9% on a like-for-like basis that excludes the effect of store openings and closures. Sales were down by 25% in the first half before recovering to growth of 5% in the second half of the year. And in the fourth quarter of the year alone, like-for-like sales grew by 32% on 2020, but fell by 5%. Full price sales alone were 8% ahead of the previous year as a new group of customers bought. Wholesale declined by 17%.

 

At the same time, its stores around the world were closed under Covid-19 lockdowns for an average of 18% of the time, while the impact of reduced tourist traffic also hit sales.

 

Pre-tax profits of £492.2m were ahead of the £168.5m reported a year earlier at the top line, but after one-off costs of £125m, bottom-line adjusted pre-tax profits came in at £365.7m, 12% down from £414.1m a year earlier.

 

Burberry chief executive Marco Gobbetti says: “In the last three years, we have transformed our business and built a new Burberry, anchored firmly in luxury. We have revitalised our brand image, renewed our product offer and elevated our customer experience while making further progress on our ambitious social and environmental agenda. In spite of Covid-19, we achieved our objectives for the period and delivered a strong set of results in FY21, ending the year with good full-piece sales growth. In this next chapter, supported by these foundations and the strength of our teams, we will accelerate our growth and deliver value creation while continuing to build a more inclusive and sustainable future.”

 

On social

In China Burberry commissioned a locally produced campaign film for Lunar New Year in January 2021 that met with an “exceptional” response, with around 15 times the number of new followers to its WeChat page in a month compared to its 2020 monthly average. In February the launch of its latest Autumn/Winter 2021 collection sparked engagement on Instagram running at three times the level seen for its previous seasonal collection. This has led to new and younger customers buying from the brand.

 

In-store

At the same time, the brand has used digital to support both its online and offline sales. It opened 11 new shops during the year, and has developed a new store concept that will soon start to be rolled out. Burberry says an omnichannel focus has extended to in-person and virtual appointments and client events, mitigating the effect of reduced traffic.

 

It has tested new concepts and experiences in its Shenzhen Bay social retail shop that it will roll out over the coming year in order to boost customer engagement.

 

Future multichannel strategy

Burberry plans to “supercharge” online sales through digital leadership and to invest in omnichannel experiences including the store while in building brand engagement and by focusing on its core luxury outerwear and leather categories. It will also focus on full price sales as it looks to improve its profitability.

 

Sustainability

The retailer says it continues to focus on becoming carbon neutral by 2022, and that all of its stores in mainland China are now carbon neutral. By the end of this year it expects to use 100% renewable electricity and to have a global carbon neutral footprint across its operations.

 

Covid-19

Burberry retooled its trench coat factory in Castleford, Yorkshire to make non-surgical gowns for the NHS and source masks through its global supply chain. It is working with footballer Marcus Rashford and charities that support young people in the UK, US and Asia, and has donated to Unicef’s Covid-19 Vaccines Appeal.

 

Burberry paid full UK business rates during the year and did not use the furlough scheme.

 

Brexit

Burberry says it is continuing to adapt to the UK’s post-Brexit trade and cooperation agreement with the EU in order to reduce the effect both on its operations and its customers. “We have initiated a number of actions to mitigate duty costs including collating evidence in support of claiming preferential duty rates,” it says, “streamlining product flows to minimise movements of goods between the UK and EU, and establishing a customs warehouse.”

 

As of March 27 2021, Burberry sells online and from 415 stores – including 214 shops, 145 concessions and 56 outlets. Another 44 shops – mostly in EMEIA – are run on a franchise basis. It is ranked Top350 in RXUK Top500 research.

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