Burberry bounce back from a damaged brand

Fashion is one of the UK’s premier exports: according to a recent article in The Economist newly prosperous foreigners will probably want at least a few things that Britain supplies better than most: higher education, financial services, popular culture and fashion: the country boasts influential street stylists and vibrant chain-stores (such as Top Shop), plus some coveted luxury brands, such as Burberry.

Yet a few years ago the Burberry brand looked catastrophically damaged – but it has bounced back with a 27% jump in revenue to £480m for the last quarter of 2010. How has it managed the turnaround?

Demand in emerging markets is a big part of the story. Burberry recently bought 50 shops in China that had previously been run by its franchise partners, and would like to open more there. Many luxury-goods manufacturers are profiting from the rise of the Asian rich. Latin America is another important growth area; new outlets have recently been opened in Brazil and Mexico. Even in Britain, where there are just a handful of stand-alone Burberry shops, the company’s best customers are foreign tourists. And that’s the interesting bit: the firm has had to fight to preserve its reputation for exclusivity back in the UK.

In the UK the brand was adopted by a new customer group - the stereotypical white working-class bloke. Often unfairly, bouncers and taxi drivers turned away young men sporting Burberry baseball caps and jackets. When Daniella Westbrook, a soap actress, was photographed with the Burberry check adorning herself, her daughter and her pushchair, the brand’s elite reputation seemed to be lost. Snobbery is still alive and well in Britain (especially in relation to ‘luxury’ brands).

Burberry quietly fought back. The check pattern began to appear less and less on its garments. The company cracked down on vendors selling counterfeit versions of Burberry clothes at discount rates. The brand recovered in Britain, whilst overseas the ‘undesirable’ trend was not spotted - which is as well, as the damage to the brand could have been significant.

An interesting example of a way in which a firm may inadvertently reach out to the ‘wrong’ market segment.