FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 1

FACTORS CONTRIBUTING TO BURBERRY'S FAILURE

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FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 2

FACTORS CONTRIBUTING TO BURBERRY'S FAILURE

Introduction
Many retailers rely on physical contact with consumers to market and sell their
products. In 2020, many retailers registered a drop in sales mainly due to the COVID-19
pandemic (Morais, 2020, p 2). The study focused on understanding how sustainable
fashion and limitations on customer-centricity affects Burberry during and after the
COVID-19 crisis. All retail companies were affected by the COVID-19 pandemic, but
Burberry was hit hard, indicating serious internal problems.
Background
Barberry has been experiencing a significant drop in its revenue and profits since
November 2016 (Olteanu, 2020, p 779). The decline became worse since COVID-19
regulations were implemented in different countries. The retailer attributed its decline in
numbers to the pandemic. However, attributing failure to external factors is usually a
cover for internal execution issues and brand equity. The Covid-19 crisis has had
significant impacts on retail companies that rely on customers' physical contact (Silvano,
2020, p 3). However, those that have become customer-centric are not hit hard by the
crisis. Similarly, some sustainable fashion brands face declining brand equity due to
changes in the needs of younger audiences.
The impact of COVID-19 on the retail sector depends on the combined effect of
three factors. First, the effect of social distancing measures on retail businesses
depends on whether they are essential or not. Non-essential retail activities have either
been shut down or are reporting a significant decline in sales. Most essential retail
activities are still in operation but under challenging conditions, including disruption of
supply chains and working conditions, shortage of labour supply, and a spike in demand
during some seasons (Hermann, 2020, p 31). The clothing industry (especially luxury) is
non-essential. As a result, clothing retailers are facing a significant decline in the
demand for their products. For instance, the sales of clothing retailers dropped by 89.3
percent in April 2020 year on year in the US (Morais, 2020, p 35). Essential retail
activities include grocery, which is experiencing an increase in demand. For instance,
the sales of grocery stores increased by 13.2 percent in April 2020 year on year in the
US. According to Morais (2020, p 24), EU, Eurostat data shows that sales of non-food
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products dropped by 23.8% while the sale for beverages, food, and tobacco increased
by 1.2% in April 2020 year on year.
Second, lockdowns and other COVID-19 regulations affect physical stores more
than online retailers, accelerating E-commerce. According to Nielsen, in France, the e-
commerce market share increased to 10% of total consumer goods sales during the
pandemic compared to 5% in 2019 (Morais, 2020, p 14). Similarly, the Office of National
Statistics reported that the proportion of retail expenses spent online in the UK
increased to 30.7% in April 2020 from 19.1% a year before (Morais, 2020, p 14). Lastly,
the retail sector consists of businesses that coexist with strikingly different abilities to
mitigate the crisis. It is linked to access to outside finance and difference in liquidity
positions. Some recommendations made by previous studies on the impact of COVID-
19 on the retail sector include government enhancing liquidity, helping essential retailers
deal with the labour shortage, helping retailers adhere to crisis measures, and ensuring
competition remains sufficient.
Customer centricity is essential in any business. It involves having the consumer
focus on every decision in a business (Borsboom, Case and Lawson, 2018, p 13). It
transcends across consumer journey from consumer acquisition to transaction and
aftercare. Customer-centric businesses have the potential for self-disruption, invest in
technology, put the customer first, and answer customers' needs for immediacy with a
speed-to-market approach (Netek and Carbone, 2020, p 50). Examples of customer-
centric businesses include Nordstorm Cares, Glossier, and Burberry. Nordstrom has
been keeping its customers happy by ensuring that they leave better than they found. It
has friendly return policies, an app that enables customers to access products based on
images, and personalized thank you cards (Huggard and Cope, 2020, p 31). It invests in
data and analytics for smarter marketing. Glossier, with only two physical stores
globally, has managed to be customer-centric through digitalization. It engages
exclusively with customers, especially millennials allowing them to build at scale.
Burberry is also customer-centric and was the first retailer to allow customers to buy
online and pick up in-store (Netek and Carbone, 2020, p 51). Burberry's trench coat has
been traditionally marketed to the upper class, even though the target base is
FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 4

millennials. The transformational shift that began in 2016 is still in the trenches.
Recovery is slower than expected and is attributed to COVID-19.
Sustainable fashion involves contributing to the well-being of the planet. The
clothing industry involves producing environmentally friendly fashions using organic
materials, minimizing pollution, and using renewable energy. Examples of sustainable
brands include Burberry and Cano Water, among others. Burberry's sustainability rating
is good for the planet and people categories but is poor in the animals' category
(Borsboom, Case and Lawson, 2018, p 2). It is rated four out of five on the planet, and
people since the leather working group audits its tanneries. It is a better cotton initiative.
It monitors healthy and safety issues and traces most of its supply chain. However, the
animal rating is two out of five since it uses exotic animal skin, leather, and exotic
animal hair. Cano Water Start-up was started in response to the environmental impacts
of plastics. It offers plastic alternatives that are environmentally friendly and have fewer
hazards involved in drinking water from an aluminium can than from a plastic bottle.
Aims and Scope
The study's main aim was to determine internal and external factors that
contribute to Burberry's failure. Thus, the research question was; How do sustainable
fashion and limited/poor customer-centricity affect Burberry's performance after the
COVID-19 crisis? Burberry has been experiencing declining sales since 2016, and it
became worst when COVID-19 struct (Hermann, 2020, p 26). The question was broken
down into three specific research objectives.
Research objectives
1. To determine whether COVID-19 worsened the already poor performance of
Burberry.
2. To determine the effects of limitations on customer-centricity on Burberry's
performance
3. To determine whether sustainable fashion contributes to Burberry's poor
performance.
Methodology
The study adopted a positivism research philosophy where a survey was
conducted using a structured quantitative data collection method. The study was cross-
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sectional since data was collected at a point in time. A sample size of 15 friends and
classmates was used, and data analysis was done using excel and SPSS. Besides,
business analysis was conducted using SWOT.
Analysis
Demographics
One demographic variable (Gender) was considered in the study. Figure 1 below
shows the frequencies of both genders out of the fifteen respondents. Females were
six, and the remaining 9 were males.

Figure 1 Gender

Impacts of COVID-19
Respondents were asked to select impacts of the COVID-19 pandemic, and six
options were provided. It included job cuts, closure of some offices, the decline in
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customer visits, decline in production, and increased discount rate, as shown in figure 2
below. The impact that many respondents selected is job cuts followed by a decline in
customer visits and an increase in the discount rate. Burberry closed one in ten offices
globally through cost-saving initiatives (Netek and Carbone, 2020, p 24). It is the reason
why most respondents chose job cuts as the main effect of COVID-19 on Burberry. The
second most selected choice is the decline in customer visits, so a cost-saving drive
was initiated. 40% of Burberry customers are Chinese (Huggard and Cope, 2020, p 13).
Since COVID-19's outbreak in Wuhan, China, Chinese visits dropped significantly,
lowering Burberry's customer visits. As a result, the retailer's sales dropped by over
45% in the first quarter of 2020 (Morais, 2020, p 35). The third most selected choice is
increase in discount rate. Burberry raised its discount rate to 50% in some markets as a
way of attracting customers. The high discount rate is associated with poor brand
equity, which is not desirable in any business.

Figure 2 COVID-19

Customer Centricity
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The study focused on one section of customer-centricity (Communication) that

appears to be limited in Burberry. Despite having high-tech technologies and using big
data, it is meaningless if storytelling is insufficient (Borsboom, Case and Lawson, 2018,
p 12). Respondents were asked to give features or characteristics of Burberry's
communication. Four main selected features include brand history, brand position,
design, and experience, as shown in figure 3 below. According to Netek and Carbone
(2020, p 76), storytelling that focuses on the history, experience, and brand position fails
to give brand value and how it uniquely solves consumer problems.

Figure 3 Communication/Storytelling

Sustainability Brand
Even though most businesses are shifting to sustainable production, it seems
Burberry got it wrong. Respondents were asked to give the features of Burberry brands,
and only three features were chosen. They include old-fashioned, easily recognizable,
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and memorable, as shown in figure 4 below. The most chosen feature, which was
chosen by over 50% of the respondents, is old-fashioned. All respondents were either
generation zs or millennials, and most of them perceive the Burberry brand as a brand
for their parents (Hermann, 2020, p 13). It shows that being sustainable does not
guarantee customer satisfaction since a rand should have appropriate values that meet
the target customers' needs. Memorable and easily recognizable features show that the
Burberry brand is eye-catching, which is desirable.

Figure 4 Burberry brand

SWOT Analysis
From the collected data, some characteristics of Burberry were collected, as
shown in Table 1 below. It consists of factors faced by the retailer internally and
externally. For instance, 20% of the respondents claim that Burberry has a strong brand
portfolio which is a strength, while other 20% claim that the company has poor
FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 9

communication, which focuses on its history. Secondary research using online materials
was conducted to determine Burberry's strengths, weaknesses, opportunities, and
threats. The results are summarized in Table 2 below.
Table 1 Burberry characteristics

Burberry characteristics
Frequenc Percent Valid Cumulative
y Percent Percent
Automation of
2 13.3 13.3 13.3
activities
High attrition rate in
1 6.7 6.7 20.0
the workforce
Ineffective storytelling
3 20.0 20.0 40.0
centered on history
Intese competition 2 13.3 13.3 53.3
Valid
Lack of regular
supply of innovative 2 13.3 13.3 66.7
products
Rising cost of
2 13.3 13.3 80.0
production
Strong brand portfolio 3 20.0 20.0 100.0
Total 15 100.0 100.0

SWOT
Table 2 SWOT

Strengths
 An iconic fashion brand with a long
history of over 157 years
(Borsboom, Case and Lawson,
2018, p 12).
 Instantly recognizable brand due to
its distinctive check pattern
 Global presence. It operates in
over fifty countries with over five
hundred stores.
 Received royal warrant twice, once
by Queen Elizabeth II and once by
Price Charles (Huggard and Cope,
2020, p 27).
 Social media engagements.
Burberry engages extensively with
customers through social media
Weaknesses
 Premium price
 Even though high pricing is
associated with quality and
desirability, Burberry's pricing is
reachable by few customers.
 Limited product line only consists
of beauty products, apparel, and
accessories (Netek and Carbone,
2020, p 45). These products are
limited in the luxury and fashion
sector.
 Poor communication tactics.
Burberry relies more on its history
than its value (Morais, 2020, p 16).
 Old fashioned perception among
young audiences. The younger
FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 10

(Hermann, 2020, p 31) generation feels that the brand do

Opportunities
 Changing lifestyle due to
saturation of developed economies
which can increase the demand for
premium goods and services
(Borsboom, Case and Lawson,
2018, p 23).
 Developing emerging markets
such as Thailand, Egypt, Turkey,
and Mongolia (Huggard and Cope,
2020, p 27).
 Expansion of product line which
can open a new set of
opportunities (Morais, 2020, p 25).
 Young target customers which can
increase the survival of the retailer.
not meet the current taste.
 Reliance on Asian markets. Over
50% of its consumers are from
Asia, which puts the retailer at risk
in case of social, economic,
political, and regulatory changes in
Asia (Huggard and Cope, 2020, p
26).
Threats
 Intense competition from Gucci,
Prada, and Louis Vuitton
 Changing customer lifestyle which
makes products have a short life
cycle
 Imitation or fake products can
affect brand equity

Conclusion
Burberry is experiencing a decline in sales more than its competitors during
Covid-19 due to its customer centricity and Sustainability limitations. The covid-19
pandemic struck when Burberry was under transformation to revamp its brand. It is still
in trenches since it has not recovered from the transformation. The delay in recovery is
due to the impacts of the pandemic. The retailer initiated a cost-cut drive which saw
several offices closed, and many employees lost jobs. Similarly, travel bans reduced
customer visits significantly, which lowered sales. It attempted to mitigate the situation
by increasing the discount rate, but sales did not improve. Thus, the Covid-19 pandemic
worsened Burberry's transformational poor performance.
Customer centricity prioritizes customers in any decision. Burberry has adopted
the use of big data and advanced technologies to understand consumers more for
better services. However, poor communication is affecting the effectiveness of customer
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centricity in Burberry. The results show that Burberry is riding on its history and
experience and focuses on brand design, value, and how it uniquely solves customer
problems in its storytelling. It is desirable to have appealing history, but it should not be
heavily relied on if it does not significantly contribute to company performance. As a
result, storytelling limitation in customer-centricity contributes to poor performance since
target consumers who are the younger generation do not receive product value, design,
and uniqueness through the communication.
Sustainable fashion is preferred over fast fashion due to its concerns on the
environment and society's overall well-being. However, a sustainable fashion brand
such as Burberry should have design, value, and uniqueness that best solves a
customer problem. Burberry also is partially sustainable since it uses animal products
such as hair and leather. As a result, it has a poor sustainability rating concerning
animals. Due to its limitation in adopting modern designs that meet future customers'
needs, younger audiences perceive it as an old-fashioned brand. Thus, getting
sustainability wrong has made sustainability fashion in Burberry less effective in
lowering performance.
Recommendations

Burberry can turn around by mitigating COVID-19 impacts, enhancing customer-

centricity by changing what they communicate and how they communicate and aligning
sustainability with the needs and tastes of target customers. First, Burberry should
intensify online. It was the first retailer to enable customers to order products online and
pick them in store. Due to COVID-19 guidelines, the retailer should ensure that
customers can order and pay for products online and get them delivered. All product
features, including size, design, colour, and price, should be made readily available for
customers to choose from and make payment. Second, Burberry should change what it
communicates to product design, values, and uniqueness in solving customer problems
rather than brand history, experience, and position. Instead of telling millennials that it
has won received a royal warrant twice, it should tell them the design of and uniqueness
of childrenswear designer.
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Third, Burberry should improve its sustainability rating on the use of animal
products and revamping the brand to meet the needs of youngsters. One would not
want to wear a brand that was worn by his or her parents unless changes have been
made to suit changing needs. Changing needs make products' life cycle short, and
Burberry need to adapt by designing new products periodically. Lastly, Burberry should
use its strengths to take up opportunities and minimize threats. For instance, due to its
global presence and instantly recognisable brand, Burberry can diversify its products by
adding some cosmetics products. Similarly, it can use its global presence to set up
stores in countries showing significant economic growth and a rising number of luxury
consumers.
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References
Borsboom, L., Case, B. and Lawson, N., 2018. Burberry Jousting for Redemption.
LBMG Corporate Brand Management and Reputation-Masters Case Series.
Hermann, A., 2020. Ensuring Brand Activism in Integrated Marketing Communications
Campaigns Resonates with Millennial Consumers.
Huggard, E. and Cope, J., 2020. Communicating Fashion Brands: Theoretical and
Practical Perspectives. Routledge.
Morais, J.R.P.B.D., 2020. Burberry (Doctoral dissertation).
Netek, K. and Carbone, F., 2020. Drinking from the Fountain of Youth? Brand
rejuvenation in the case of heritage luxury fashion brands.
Olteanu, L., 2020. Rebranding strategies and their boomerang effect—The curious case
of Burberry. The Journal of World Intellectual Property, 23(5-6), pp.777-797.
Silvano, MDCLF, 2020. Playing against the rules: how a digital strategy can enhance a
luxury business: the case of Burberry (Doctoral dissertation).
FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 14

Appendix
Questionnaire
I am a student at xxxxxxx University conducting a research project on Factors
contributing to Burberry's failure. The data collected during the study will only be used
for academic purposes and destroyed when not needed. The data will be kept
confidential, and no personal information will be shared with a third party. Kindly fill the
questionnaire honestly since the study will contribute to the existing knowledge of
Burberry. You will be asked questions concerning COVID-19 impacts, brand equity, and
brand storytelling associated with Burberry. Kindly take your time to understand each
question and provide an appropriate answer. Feel free to withdraw at any point
whenever you feel uncomfortable with the questions.
Tick [] the choice that applies to you.
Part One: Demographics
1. Gender
Male Female
2. Level of education
Basic
High school
College
Undergraduate Degree
Postgraduate degree
3. Age
4. Below 20 years
5. 20-29 years
6. 30-39 years
7. 40-49 years
8. 50-59years
60 and above years
Part Two: Impacts of Covid-19
4. From the list below, choose statements that apply to Burberry during COVID-19.
Closure of some offices
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Job cuts

Increase in discounts rate

Decline in customer visits

Decline in Production

Decrease in Sales

5. Select appropriate characteristics for Burberry

Successful track record
Automation of activities
Strong brand portfolio
High attrition rate in the workforce
Inefficient financial planning
Poor product demand forecasting
Poor marketing
Intense competition
Currency fluctuations
Rising cost of production
Lack of regular supply of innovative products
Effective communication of brand values
Ineffective storytelling cantered on history
Part Three
6. Do you think Burberry is focusing on being customer centricity?
Yes No
7. How customer centric would you say Burberry is?
Extremely customer centric
Very customer centric
Somewhat customer centric
Not sure
Not at all customer centric
8. Burberry's communication (storytelling) consists of? Select all that apply.
FACTORS CONTRIBUTING TO BURBERRY'S FAILURE 16

Craftmanship
Experience
Bespoke
Design
Brand history
Unique value created
Brand's position
How it is inspiring customers
Part Four: Sustainability
Rate burberry’s sustainability from 1 to five (1- not sustainable, 5- highly sustainable on
the following categories.
Overall rating

Environment (Planet) rating

People (employees and customers)

Animal’s rating

9. Select all that apply to the Burberry sustainable brand.

Easily recognizable
Memorable
Superior
Old fashioned brand
10. What is your gender
Male…………….. Female …………….