https://padlet.com/kovacsgenna/htnqseykfqmu Luxury Fashion Industry - The case of Burberry en-us 2018-10-15 13:00:56 UTC 2025-12-11 18:26:42 UTC hello@padlet.com https://padlet-assets.s3.amazonaws.com/icons/Bagshop.png kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785078 Fashion industry is a multi-billion dollar global enterprise business which makes and sells clothes. There could be some differences between expensive designer fashion which shown on the runways in New York or London and the mass-produced street style clothes that sold in shopping centres and markets around the world. However, the fashion industry includes the design, marketing, advertising, retailing, manufacturing, distribution and promotion of all types of apparel. In the mid-19th century clothing was mainly handmade for individuals, however in the beginning of the 20th century with the development of new technologies and factory system, the production of clothes significantly increased (Steele, Major 2017).

According to Berg (2016) the fashion industry is one of the world's most important industry which has a significant driving part in the global economy. In 2016, the industry reached around $2.4 trillion in total value. If it were ranked the global fashion industry would be the 7th largest economy on the world. However, looking back at 2016 was one of the toughest year that the fashion industry ever experienced. BoF-McKinsey Global Fashion Survey, 2016 summarised this decline in the industry in three words: uncertain, changing and challenging. Why it was the hardest year for the industry? United Kingdom voted in for Brexit, terrorist attacks happened in France and the Chinese stock market caused several shocks to the global economy.

In the meanwhile, customers changed as well. They have become more discerning, demanding and less predictable in purchasing a product or service. New technologies also helped to create this situation. This led to a decline in sales growth with 2-3 percent by the end of 2016, with the stagnation of profit margins. That year was especially difficult for the luxury and mid-market sellers. Such as watches and jewellery was the fastest growing category between 2005 and 2015 with a growth rate of 11% according to the MGFI - however in 2016 the sector only grew with 1.5-2%. Therefore it experienced significant deceleration due to the challenging circumstances.]]> 2018-10-15 13:02:57 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785078 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785328 According to Stammen (2018) to stay competitive in a uniquely crowded market not an easy job. It means retailers have to face with significant challenges such as, high competition in the market, high real estate costs and rent as well as high advertising costs. E-commerce fashion industry also rising, which can affect smaller businesses. Account Executive Austin Rindner says, “There is a ton of increased competition in apparel. High end apparel brands are facing significantly more competition from fast fashion and other cheaper alternatives. Amazon is starting to dip into the apparel space, which is another concern."

Fashion United (2016) states that the EU is the world's largest market for the textile and clothing products. The largest fashion company in the EU is LVMH (Louis Vuitton Moet Hennessy). The company's annual revenue reached 42.6 billion euros in 2017 and it has a value around 122 billion euros. The company owns fashion brands such as Louis Vuitton, Dior and Fendi, however it does not only stand for high-fashion, it also provides luxury lifestyle products like champagne and sailing yachts. Another key player in the industry is Inditex which is a Spanish company owns brands such as Pull&Bear, Stradivarius and Zara. The company valued over 75 billion euros and its 2017 annual revenue was 25.34 billion euros.

In the UK market, there are also important key competitors. The biggest company in fashion is the Burberry Group plc which have been valued over 10 billion dollar and had revenue of 3.8 billion. The second is Next Plc which is a fast-fashion retailer with a market value of 7.16 billion pounds. This company mainly operates in the UK and makes 4.0 billion pounds of annul sales and only 2% of revenue comes from international retail. The third is the Marks and Spencer with over 7 billion pounds of value and 10.3 billion pounds of annual sales. However, its fashion and general merchandise sales have been declining in the past years therefore it also has to face with a downfall in market value (Fashion United, 2016).]]> 2018-10-15 13:03:19 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785328 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785374 Power of Buyers
In the case of fashion industry, individual customers have a very little to nearly non-direct bargaining power, however, nowadays customers are well informed, therefore there are many alternatives to shop clothes which gives them indirect bargaining power.  Therefore, customers as a group can be an influential force. In this case companies are employing strategies as discounts and memberships to retain customers as well as influence them in the best possible manner. Technology and online sales become very attractive for customers which can be a very beneficial source for companies (Pratap, 2017).]]> 2018-10-15 13:03:24 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785374 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785406 In conclusion, the fashion industry nowadays is a very attractive market. People like to choose between different clothes, brands and styles to look different as well as show their status in the community via luxury brands. However, this industry is already very overcrowded therefore it is very hard to entry for new companies if they are not unique. Also, to achieve the luxury level they might not going to be able to compete with other famous luxury brands such as Burberry and Louis Vuitton because these brands are already achieved brand loyalty from their consumers. In recommendation, new entrants need to show something new and unique as well as invest more money in marketing. For companies who already in the market to be profitable in the future, need to make sure they always provide quality fashion as well as excellent customer service for their customers.]]> 2018-10-15 13:03:28 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785406 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785437 Back to the 1856 a 21 years old man, Thomas Burberry established Burberry in Basingstoke. Burberry's main idea was to design clothes to protect people from the British weather. Therefore, Burberry invents gabardine which is a breathable, weatherproof and hard wearing fabric revolutionizing rain wear. Burberry's trench coat was invented during the First World War (Burberry, 2018). Today, Burberry become the UK's one of the most luxury fashion brand. It has over 10.000 employees worldwide and their strategy aims to provide long-term, sustainable shareholder value by delivering revenue growth. According to Burberry Annual Report (2017/2018) the brand revenue reached 2,733 million pounds however compared to 2017 it declined with 1%. Furthermore, its store sales grew with 3% and its adjusted operating profit reached £467 million in 2018 which grew with 5% compared to 2017. The luxury fashion brand focuses on and distributes trench coats, ready-to-wear outerwear, fashion accessories, sunglasses, fragrances and cosmetics.]]> 2018-10-15 13:03:32 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785437 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785537 According to Burberry Annual Report (2017/2018) implemented six pillars based sustainable strategy to re-energies the brand. The first four are revenue drivers (Product, Communication, Distribution and Digital). The new product driver going to be transforming leather goods which will be the key area. Also, the company will create full outfits for the consumers as well as adding different price point to gain new customers. On the communication side Burberry going to use social media, pop-ups and place its products there to engage consumers with the brand. With the distribution network the company aims to consistent luxury positioning. In this case, stores going to be refurbished to give a new and better customer experience and service. Burberry also going to change its digital proposition by adding various product selections and editing the official website to increase consumer engagement. Also, improving on its payment and delivery options to allow customers to be able to switch easily between physical and digital. As well as making digital partnerships with brand appropriate partners to grow and strengthen the brand.

The other two pillars are strategy enablers such as operational excellence. To gain sustainable growth the company must increase its agility and efficiency, it will enable them to give better respond to the rapidly changing industry. The aim is to adapt their supply chain to deliver luxury products, power the organisation via technology and work in an efficient and simple way. To reduce significant waste the company already stopped burning unsold clothes, bags and perfumes as well as going to stop using real fur. According to Kollewe (2018) Burberry destroyed unsold £28.6 million worth of products in 2017 to protect the brand from unwanted stock being sold at lower prices. Therefore, with this new strategy programme the company going to reuse, repair, donate and recycle all unsaleable products. Marco Gobbetti, Burberry's chief executive, said: "Modern luxury means being socially and environmentally responsible. This belief is core to us at Burberry and key to our long-term success. We are committed to applying the same creativity to all parts of Burberry as we do to our products.” The last pillar is inspired people, which is a programme designed for the organisation and for its people. This programme generates an inclusive culture to engage employees, empower leaders, strengthen capabilities and expand its plans, to simplify how the organisation works and provide positive sustainable change across every part of the company.]]> 2018-10-15 13:03:42 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785537 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785572 In a way Burberry has already reached its temporary competitive advantage through its brand loyalty from the customers as well as with its old history that represents British Identity. With the new established strategy, Burberry going to re-energies the brand to achieve its sustainable competitive advantage, however it is not going to be easy in this overcrowded industry where consumers can get many other similar apparels as Burberry. Therefore, the brand needs to ensure that they are very unique in this market and offering always new, eye-catching and unique products to the consumers. To reach that level, Burberry needs to always come up with new ideas, refurbish stores for seasons as well as keep up with the price range which always targeting high-income consumers.]]> 2018-10-15 13:03:46 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785572 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785606 Amed I., Berg A. (2016) The State of Fashion. Available at: https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion (Accessed: 15/10/2018)

Berg A., Brantberg L., Zaharieva L. (2016) The British luxury market: Growing sales from £5 million to £500 million) Available at: https://www.mckinsey.com/~/media/McKinsey/Locations/Europe%20and%20Middle%20East/United%20Kingdom/Our%20Insights/The%20British%20luxury%20market%20Growing%20sales%20from%205%20million%20to%20500%20million/The%20British%20luxury%20market%20Growing%20sales%20from%205%20million%20to%20500%20million.ashx (Accessed: 15/10/2018)

Bush T. (2016) Five Forces Analysis of the Fashion Retail Industry. Available at: https://pestleanalysis.com/five-forces-analysis-of-fashion-retail-industry/ (Accessed: 21/10/2018

Burberry Annual Report (2017/2018) Available at: https://www.burberryplc.com/content/dam/burberry/corporate/Investors/Results_Reports/2018/Burberry_AnnualReport_FY17-18.pdf (Accessed: 24/10/2018)

Burberry (2017) Strategy. (Available at: https://www.burberryplc.com/en/company/strategy.html (Accessed: 15/10/2018)

Burberry (2018) Our History. Available at: https://uk.burberry.com/our-history/ (Accessed: 24/10/2018)

Culclij (2016) Burberry Porter's 5 Forces. Available at: https://culclij108.wordpress.com/2016/10/25/burberry-macro-environment/ (Accessed: 15/10/2018)

Deloitte (2018) Global Powers of Luxury Goods 2018. Available at: https://www2.deloitte.com/global/en/pages/consumer-business/articles/gx-cb-global-powers-of-luxury-goods.html (Accessed: 24/10/2018)

Fashion United (2016) UK fashion industry statistics. Available at: https://fashionunited.uk/uk-fashion-industry-statistics (Accessed: 21/10/2018)

Gulberti G. (2018) 3 Reasons the Supply Chain in the Fashion Industry is Changing. Available at: https://www.launchmetrics.com/resources/blog/fashion-industry-supply-chain (Accessed: 15/10/2018)

Kollewe J. (2018) Burberry to stop burning unsold items after green criticism. Available at: https://www.theguardian.com/business/2018/sep/06/burberry-to-stop-burning-unsold-items-fur-after-green-criticism (Accessed: 15/10/2018)

Martin M. (2018) Porter's Five Forces: Analyzing the Competition. Available at: https://www.businessnewsdaily.com/5446-porters-five-forces.html (Accessed: 15/10/2018)

McKinsey&Company (2016) The State of Fashion (2017). Available at: https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20state%20of%20fashion/The-state-of-fashion-2017-McK-BoF-report.ashx (Accessed: 15/10/2018)

Pratap A. (2017) Fashion Industry Five Forces. Available at: https://www.cheshnotes.com/2017/07/fashion-industry-five-forces/ (Accessed: 15/10/2018)

Schmidt S. (2017) 5 Top Apparel Industry Trends in 2017. Available at: https://blog.marketresearch.com/5-top-apparel-industry-trends-in-2017 (Accessed: 21/10/2018)

Stammen L. (2018) The four trends impacting the global fashion industry in 2018. Available at: http://blog.bazaarvoice.com/2018/03/22/global-fashion-industry-trends-2018/ (Accessed: 21/10/2018)

Steele V., Major J. S. (2017) Fashion Industry. Available at: https://www.britannica.com/art/fashion-industry (Accessed: 15/10/2018)]]> 2018-10-15 13:03:48 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292785606 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292875853 2018-10-15 15:20:18 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/292875853 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/295164842 This padlet wall is aimed to analyse and critically evaluate the structure and nature of competition of the luxury fashion industry. It will identify Porter's 5 forces as well as how this industry is changing and what kind of strategic opportunities are available. Furthermore, it will critically analyse Burberry as the chosen company. In that section, it will outline its key financial metrics as well as consider its key organisational resources and capabilities which might provide sustainable competitive advantages in the market.]]> 2018-10-21 11:00:10 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/295164842 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/295170721 2018-10-21 12:16:02 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/295170721 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296337205 2018-10-24 09:04:44 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296337205 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296337645 Power of Suppliers
Supplier power is not a significant force in this case. Firstly, many bigger brands are manufacturing its products by themselves, secondly, the market is full of fashion material suppliers which allows brands to switch between suppliers easily. However, in the case of Burberry have a long partnership with Peru who provides unique materials as cotton yarn to be able to make coats, causes a higher bargaining power for the brand (Culclij, 2016).

Threat of Entry
Threat of new entrants is another weak force in the luxury fashion industry. It is such an overcrowded industry for a new brand to find success, therefore they need to find a very unique way to be popular, successful and be able to compete with other brands. Therefore, for luxury brands who already in the top market such as Burberry the threat of entry is very low and it is very difficult to compete with it directly (Bush, 2016).

Threat of Substitutes
The threat of substitutes come from within the industry from competitors. In this case this force can be very intense. In the case of high-end fashion, customers can choose other brands such as Zara for less money. Therefore, luxury brands are mainly targeting people with high-income to make sure they do not change the brand easily. However, the number of fake luxury products are increasing which can affect brands in the future even more (Culclij, 2016).

Competitive Rivarly
In the fashion industry, there are a large number of retailers who sell very similar, nearly the same products. Therefore it makes the competitive rivalry very intense. However, some brands are able to charge more money for certain products because it's features and quality. Also, luxury brands such as Burberry are achieved brand loyalty from the customers especially from people who would like to show their status through the brand (Pratap, 2017).

]]> 2018-10-24 09:06:53 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296337645 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296338394 2018-10-24 09:09:46 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296338394 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296340018 According to Global Power of Luxury Goods (2018) Burberry Group Plc is the 18/100 top luxury brand on the world.]]> 2018-10-24 09:18:32 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296340018 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296340475 2018-10-24 09:20:56 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296340475 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296356037 Source: Burberry Annual Report (17/18)]]> 2018-10-24 10:25:44 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296356037 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296377458 Burberry has got resources which enables the company to be different from others in the market.  First of all, Burberry is the 6th most valuable brand in the luxury industry by Interbrand 2017; also it has a 162 year old history with distinctive British identity with its unique brand label. Secondly, the brand has got strength across multiple categories and offering a well-balanced mix across apparel and accessories for men's, women's and children's wear; and beauty. Thirdly, Burberry has got a strong global, directly operated distribution network with a presence in all major fashion cities and in 3 regions: Asia Pacific, EMEIA and the Americas. The brand directly operates 449 stores and 46 franchises. Furthermore, Burberry's other resources includes its digital innovation such as Burberry official website available in 47 countries in 11 languages as well as 51 million followers globally across 13 different social media platforms and it has been ranked number 1 digital luxury brand in China by L2. The company globally has 10000 employees and  87% of Burberry's employees are proud to work there (Burberry Annual Report, 2017/2018).

On the capabilities side, the company has been implemented a new strategy in 2017 to re-energies its product and its customers experience of their brand to deliver a long-term sustainable value. This strategy is aimed to deliver profit growth and continued strong cash generation. The company set up 6 strategic pillars how they going to achieve this. These pillars includes: product, communication, distribution, digital, operational excellence and inspired people. ]]> 2018-10-24 11:46:33 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296377458 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296389699 2018-10-24 12:19:58 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296389699 kovacsgenna https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296832862 2018-10-25 09:21:23 UTC https://padlet.com/kovacsgenna/htnqseykfqmu/wish/296832862