According to the article in the Economist, sales are slipping significantly, particularly in China, which had been their biggest growth market. They singled out Burberry above its competitors because when paired against other luxe retail brands (like an LVMH), the Burberry sales slump has been significantly more noteworthy.
To counteract these effects, Burberry has been turning increasingly to high tech. Fashion shows are streamed live. The new London store has a 22′ video screen and 500 speakers through which it runs fashion shows and images from the collections. Additionally, the article detailed the use of RFID tags in their clothes.
Garments are fitted with interactive screens and RFID (radio frequency identification) tags, which mean that customers can flash clothes in front of interactive screens to see how a handbag detail or raincoat lining is made. More potential buyers are browsing online, then coming into the stores to make their purchase, so it makes sense for the two platforms to have the same stock organized in the same way (an organizational feat that has defeated many retailers).
Furthermore, the company is hoping to bring about a program called Customer 360, where they keep track of every customer’s likes, dislikes, lifetime purchasing decisions, etc., and make them available to sales associates via tablet application. In an era where privacy is such a hot button topic, you have to wonder whether this will cause more harm than good. While it will allow sales associates to have information about sizes and style preferences and past purchases, enabling them to make better recommendations to customers (a big plus in the high-touch, customer service oriented luxury market), but there are some obvious drawbacks to this as well. The article mentions one of the most notable issues through this sort of customer engagement.
That could cause embarrassment, for example if a customer who has bought racy gifts for his mistress enters a Burberry store with his wife and is enthusiastically ushered to the skimpy bikinis.
Whether this reliance on high tech will pay off remains to be seen. It’s an interesting approach and definitely a dynamic option in the market. I think for many customers, these high tech concepts feed into that need for a higher level of service at the luxury level. Having this level of technological integration also works well with the principle of exclusivity which is also an essential part of the luxury market. By offering high tech features inside the clothes, presenting enormous images of the clothes and accessories featured in the stores prowling the catwalk on supermodels, you are further reminded of this high level of exclusivity.
Barring the privacy issues (and the potential for some angry spouses), it does create a certain gap between the image of Burberry, which might prove difficult to overcome. Their image is classic, timeless, and to a certain extent, static. The plaid, the trench coats, and the shapes of many of the items they sell have been part of their collection since Thomas Burberry started the fashion giant in the 1850s. By focusing so much on being high tech and cutting edge, it seems almost disjointed from their usual image and the response we have when we think about them as a brand and could backfire.
To read the full article, check it out here: http://www.economist.com/node/21563353