When Angela Ahrendts became Burberry Group plc’s chief executive officer in 2006, she had some big shoes to fill.
Her predecessor, Rose Marie Bravo, had revitalized the once-dusty British outerwear brand and, in tandem with creative director Christopher Bailey, turned it into one of the hottest names in fashion. In the process, Bravo set a gold standard for a ceo, and surely one that was daunting to follow.
Two years later, however, the Liz Claiborne and Donna Karan International alum has proven she is up to the task. Since her arrival, Burberry has continued to grow, expanding categories such as accessories and children’s wear, further tapping into emerging markets and breaking through the $1 billion barrier in the first half of this year.
It took a clearly defined strategy by Ahrendts to pave the way for such successes. “The first choice we made was to create and clarify our vision for Burberry the brand, and Burberry the company,” Ahrendts said.
Just 10 years ago, the 152-year old brand was largely a licensed business, driven by distributors worldwide. The product focus was men’s trenchcoats, and industry veteran Bravo transformed Burberry into a global business, with half the company’s sales coming from freestanding stores and the other half from wholesale partners; licensing, and a diversified business that’s equally divided among men’s wear, women’s wear and accessories.
But that’s not to say Ahrendts wasn’t facing challenges when she joined. The luxury industry was trending upward, leaving Burberry in a more accessible positioning. Companies were aggressively going after the handbag business, which was not one of the brand’s core competencies. And the iconic check, and versions of it, were flooding the market, creating the danger the pattern would lose its desirability.
As a result, Ahrendts said that the industry growth was outpacing Burberry’s, and she had to act fast to minimize any potentially damaging impact.
“While the business had been reassembled, it had not been fully integrated,” Ahrendts recalled. “In some ways, we were a bit like a $2 billion start-up. This allowed many versions of the Burberry brand and company. [Two years ago] the brand lacked clarity and unity. We were not truly focused on our greatest asset. We were merchandising rather than design-driven and concentrating on the front of the business, versus being operationally oriented.”
It’s something Ahrendts knew a thing or two about. Before Burberry, she was executive vice president of Liz Claiborne Inc., where she is credited with bringing in the Lucky Jeans and Juicy Couture deals. Prior to that, she was executive vice president of Henri Bendel, and before that, president of Donna Karan Collection.
Within three months of her arrival, she had a clear vision for Burberry. “We said that Burberry’s vision is to be a global, high-growth, modern classic, democratic luxury brand with a British sensibility,” she said. “‘Global’ reminds us of how broad we need to play; ‘high growth’ means double-digit gains annually; ‘modern’ in that we had to let go of many old legacy products; ‘democratic luxury’ defined our approach and positioning in the luxury arena. ‘British’ was the key differentiating attribute we wanted to leverage with a new energy and attitude, and ‘brand’ the new way we wanted to focus, unite and drive the business.”
To do that, she sought to create a unified message across all sectors of the company.
“As a purist in this cluttered Internet and emerging-market age, we believe that the best brands are pure,” she said. “The more pure the message, the more compelling it is to consumers. The more consistently it is communicated across all mediums, the greater the brand equity created. Anything that did not fit the brand vision would be left behind. This was a fundamental change for Burberry.”
One of her first moves was to elevate Bailey’s role, essentially making him the “brand tsar,” she said.
“We shifted all design and product underneath him, and we kept it simple and told the teams that anything the consumer sees, Christopher and his team would control centrally,” Ahrendts said. “Equally important, we set them free to create the new modern brand for Burberry, the freedom to achieve a more coherent, consistent and compelling message that would touch all constituencies.”
Bailey set out to bring the British attitude that defines Burberry to all categories that bear the label, honing in on the aristocrat-with-the-street-edge aesthetic across the runway to weekday and weekend lifestyle divisions.
“These large segments have been operating largely autonomously almost as separate businesses, often competing against one another,” Ahrendts said. “In putting the brand fi rst, these segments were crated together, becoming distinct expressions of the same brand rather than their own individual lines. By empowering and trusting the creative director to express that brand vision, Burberry is much clearer in the eyes of consumers and employees today, contributing greatly to the recent momentum and consistent results these past two years.”
In the process, Ahrendts made outerwear and the check — two defining factors of the Burberry DNA — key areas of focus for the brand.
“As our heritage [the outerwear] needs to wow, and exceed every consumer’s expectation,” she said. “It simply must be the best thing that we do, so we made this a key priority throughout the company. Christopher enhanced the outerwear presence on the runway, both in terms of quantity and design.
“In sourcing, we dedicated a team exclusively to outerwear. Marketing and in-store visual teams brought a new intensity and excitement to the category [and] the store,” she added.
Bailey has also been reengineering the check. “I tell the teams we have the honor as well as the challenge of working with this iconic check,” she said. “Upon my arrival two-and-a-half years ago, it was in some ways, I think, very overexposed, but it was also underappreciated and therefore undervalued. But it was also the highest volume, most recognized brand icon we had. Everybody had an opinion about it, but we needed a pure laser vision to authenticate, elevate and further innovate this icon.”
It also meant eliminating the check from categories where it served little or no purpose to the image or the bottom line of the business.
“Did we really owe it to the consumer to have it on dog collars and coffee cups and a lot of ancillary products?” she elaborated while taking questions. “We basically said that if we are a billion [British] pound company, anything that couldn’t be a certain size over a certain time would just need to go away. We had a certain vision of who the customer was and who we were serving, and if it wasn’t something that was going to add significant luxury value to their lives, it made the decision easy. We initially canceled about 35 product categories that at one time carried the check.”
Beyond the design, Ahrendts also set out to reinvigorate the company culture, creating a fl exible, dynamic, responsive and accountable environment.
“We openly shared the vision and strategy with the entire organization — no secrets, full transparency,” she explained. “Individuals could themselves see the need for working in totally new ways. To further define, engage and solidify our culture, we also set up the Burberry Foundation. The aim of the foundation is to empower young people to use their intellectual creativity, which will help them to imagine and now achieve their life goals.”
Other initiatives include roundtable discussions with senior employees in each region to hear their thoughts, issues and concerns twice a year, and an annual Icon award dinner that recognizes top employees. Ahrendts said that, as ceo, one of her most important jobs is to motivate, develop and retain the teams, and ensure they are challenged continuously with projects “that interest and inspire them.”
“Through it all, I constantly recall the advice of my father, and one of his favorite quotes,” she added. “‘Hear everything, overlook a great deal and correct a little.’ The point is that you have to give entrepreneurial executives plenty of room to operate within the context of the big business drivers.”
Asked how she would position the outlet business, Ahrendts said, “In these economic times, you thank yourself that you have an outlet business, and we have a very solid business around the world. We have a very simple motto that for every 10 mainline stores, it’s appropriate to open up one to two [outlet] stores to be a natural service center for the excess inventory in mainline [stores]. It’s been interesting to watch the traffic flow these last three to four months. The consumer still wants to buy, but I think he and she just want to say they maybe got a better deal on it. [Outlets] are not part of the overarching strategy but I will say it’s a safer way to clear through our own inventory in a way that we can control it, more so than going through a third party.”
Through it all, Ahrendts is hopeful that the weather continues to be as it was on the day of her presentation — dull and rainy.
“We call this Burberry weather, whenever it rains around the world,” she said. “For those of you who forgot their coats, there is a lovely little store up on 57th Street.”