Burberry announces digital improvements as cost savings boost profit

There were several digital announcements from UK luxury fashion brand Burberry as it announced its full-year results on Wednesday 16 May.

Burberry also unveiled a new share buyback of £150 million, as it posted a 2% year-on-year increase in operating profits for 2018 to £467 million but flat annual revenue. The bottom line growth was driven by various cost-saving measures during the year.

Like the wider retail market, Burberry is undergoing a major shift in strategy as it looks to navigate new headwinds impacting consumer spend. In November 2017, the company set out its multi-year plan to improve products, customer communication and experience, and much of the roadmap is underpinned by new technology and IT investment. 

The brand reported progress on its retail excellence programme and the roll-out of a new digital clienteling tool, which it said has supported increased conversion. Burberry has also refreshed its websites in recent months, with more curated and editorialised content reportedly generating increased engagement.

Lots of work is going on behind the scenes at Burberry from an IT perspective, with the brand recently opening a Business Services division in Leeds, bringing together shared service teams from procurement, finance, and HR, to customer service and IT roles.

As it looks for procurement efficiencies, it has piloted SAP Ariba’s digital catalogue-based procurement system which it says is speeding up invoicing and other related processes.

The next two years will also see Burberry move from a single set platform to a combined solution for both retail and wholesale, supported by SAP HANA Enterprise Cloud.

Other key strategic moves include the evolution of the Burberry product to attract new customer demographics, and the start of the transformation of its leather goods with new handbag launches from Spring 2018 and a roadmap of launches to come.

A key part of Burberry’s new manufacturing strategy is related to this week’s announcement that it will acquire a luxury leather goods business from longstanding Italian partner, CF&P. The plan is to use this new operation to create a “centre of excellence” for the company’s leather goods, which will cover prototyping, product innovation and engineering to the coordination of production. 

Similarly to many of the global luxury fashion houses, which have been acquiring suppliers in recent years, there is a push for greater control of the supply chain at Burberry.

Burberry also highlighted how its direct-to-consumer offering delivered good growth, with particular strength shown in Asia. Mobile transactions represented 40% of direct-to-consumer revenue, while a recently-announced collaboration with luxury online marketplace Farfetch has extended the brand’s reach to more customers and over 150 countries.

A host of senior personnel changes are supporting the new Burberry strategy with Gavin Haig now in his role as chief commercial officer and Riccardo Tisci starting as chief creative officer – they are working under CEO Marco Gobbetti, who replaced Christopher Bailey earlier this year.

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