Selfless CEO keeps brand ahead of curve
Updated: 2012-01-20 10:29
By Hu Yuanyuan (China Daily European Weekly)
A Burberry shop in China Central Place, where a cluster of luxury stores are located, in Beijing. Provided to China Daily
Burberry builds on momentum in china with expansion
Angela Ahrendts, chief executive officer of Burberry Group PLC, was named as one of Forbes' 100 Most Powerful Women in the World four times in the past five years.
In 2010, her name also appeared on the list of Fortune's Businesspeople of the Year, the Financial Times' Top 50 Women in World Business, and last year she was awarded the Outstanding Leadership Award at the Oracle World Retail Awards.
The key for the success, Ahrendts says, is that she does not think about herself.
"It is not about me. It is about the company. I tell everyone in the company, 8,000 employees, don't do it for me or Christopher (Chief Creative Officer Christopher Bailey). Always do the best for the brand," she stresses.
Angela Ahrendts is chief executive officer of Burberry Group.
"The Burberry brand has been around for 155 years. Our job is to keep the brand relevant, modern and strong, so it will stay around for another 155 years. The brand will outlive anyone of us.
"I do not think of me or my success. My success is the company's success. If the company does well, then Angela gets into the magazine. If the company does not do great, then Angela is nothing."
Ahrendts became the CEO of Burberry on July 1, 2006. Under her leadership, Burberry has entered the FTSE 50 and has seen annual revenues almost double to 1.5 billion pounds ($2.3 billion, 1.8 billion euros) for the year ended March 31, 2011.
Despite the slowdown in the global economy, Burberry achieved record performance for a period of six months before Sept 30, 2011. According to the company's interim report, comparable store sales increased by 16 percent in the first six months of 2011 and retail revenues were up 45 percent as compared with the same period of 2010.
The reason for the growth, according to Ahrendts, is largely because of Burberry's focus on investing to drive growth and executing innovative strategies in product design, digital marketing and retail.
Invest heavily in digital
"We spend 60 percent of our marketing budget in digital, as we feel very strongly that digital is the new universal language," says Ahrendts, adding this is also the same in China.
Looking across the world, in all the high-growth markets such as China, India, Turkey and Latin America, the average high net-worth individual is 15 to 20 years younger than in developed markets.
"So if they are younger, they are digital, they have a smart device and they are living on that device. That is their language. So, as a brand, if that is the customer that we are targeting, we had better speak their language," she explained.
Burberry's strategies in China are no different from what the company does in other markets. It has the same products and the same content.
"But we have to market the products to the consumers in a different way and work with different partners in China," Ahrendts says.
Instead of YouTube, the company puts Christopher Bailey and Burberry Acoustic on Chinese online video site Youku. Instead of Twitter or Facebook, the company uses Sina Weibo and other Chinese social media sites.
According to Ahrendts, Burberry has 1.7 million impressions on Youku, and 230,000 fans on Sina Weibo. However, investing heavily in digital for Burberry is not just about promoting online shopping, she adds. "Online is a way for us to connect with our consumers, to engage and to entertain."
For most of the luxury businesses, around 60 percent of the consumers shop online but want to buy in-store. "So we say, Burberry World, our website, is our No 1 marketing opportunity. We have more than a million people come to Burberry World every week," she said.
So far, Burberry has about 60 stores in about 30 cities in China. Most of the stores are located in first-tier cities, including nine in Beijing, five in Shanghai and eight to nine in other top-tier cities.
"We are still investing heavily in the big flagship markets in China. In the next three years or so, we will have around 100 stores in China. But that's net, because every year, the market is evolving in China. With all the big developments, we are closing some of the smaller and older stores and opening 10 to 15 flagship stores each year," Ahrendts says.
Although some luxury brands are expanding into China's smaller cities, betting on the potential of the consumption power in these cities, Ahrendts says Burberry intends to focus on the 30 cities that the company is already in, in line with its global focus on flagship markets.
"We may open one to two 3,000 square feet flagship stores in one of those tier-two cities. We are not aggressively going beyond the 30 cities we are already in," Ahrendts says.
"In fact, we are already more widely distributed than most of the luxury brands in China," she adds.
According to Ahrendts, Burberry manages its investments on a regional basis. "The region receiving the most money is definitely Asia. China is definitely one of the top three markets globally where we are spending this year," she says.
Besides China, Burberry has also invested in London this year in preparation for the London Olympics. The United States is also one of the key markets for the company.
The biggest challenge
According to Ahrendts, the biggest challenge that Burberry faces today is how to maximize or optimize the opportunities the company has created for itself.
"We have tremendous brand momentum. The luxury sector is trending very nicely. We have teams of people all over the world. It is really how much and how fast we can move every year," Ahrendts says.
The company told its investors that Burberry will add more than 10 percent growth in real estate every year and nearly double the capital spending this year on opening new stores and investing in technology. Currently, Burberry operates in 80 different markets all over the world.
"We are spending up to 200 million pounds this year. We are investing in stores and technology. The great news is that the brand has such momentum and the sector has such momentum. The greatest challenge is optimizing this moment and uniting the team to move as rapidly as we can to secure the best locations in flagship markets," Ahrendts says. "All over the world, we are investing in flagship cities."
It is really hard to get a corner location in a flagship market, but Burberry got a corner location in Shanghai and Beijing and has had equal success in other key markets. "We have a great corner location under construction in London and also one in Chicago," she says.
Family always first
For Ahrendts, family is the most important thing even though she has been successful in her career. "I have a big family which includes my husband, three kids and two big dogs. I love to read, I love to travel and I love to shop. But it is always my family first," she says.
"As a working woman, you have to have balance. Yes, I have to keep Burberry strong for the next 150 years. But my kids are my personal legacy," she stresses.
Today, all the clothes Ahrendts wears are Burberry. "I should be Burberry's customer. I absolutely live in the product and I want to. Five years ago, my children did not. But now they love the brand, and my mother also loves the brand," she says.
"The most important thing is that the No 1 goal for Christopher Bailey and his 70 designers in London is to make the most beautiful and modern clothes.
"Sometimes when business gets so good, people do forget that, but what really drives Burberry's growth today are the great and innovative products," she says.