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Burberry's new era of corporate austerity threatens its relentless audience focus

Revamping its brand and communications, and building excitement through social media are also critical if it’s to reach this next level. The shadow hanging over all of this however is the cost-cutting programme that is scheduled to deliver £100 million annualised savings by 2019, in part to be achieved through the relocation of staff from London to Leeds. It undoubtedly has strong points to play to, not least that Bailey’s collections just keep getting better, but helping a new audience understand what they’re buying into is an issue. Tastes have changed and the world’s young and wealthy have changed. Is Burberry genuinely talking to the older market – the forgotten Gen X-ers who are probably the ones with the money and the inclination to buy into the brand. The brand’s broader strategy seems sound. It has placed an emphasis on products such as bags and other leather goods that are selling well and its plan to divest control of its beauty products through a proposed £180 million partnership with Coty (also entering into an ambitious new phase of its existence) should allow it to focus on its fashion business. One of Burberry’s main issues will be maintaining its reputation for quality and unadulterated luxury when it’s entering a new era of trimming costs. The last thing a customer wants to think about, as she’s choosing between a £2,000 Burberry or Mulberry handbag, is that the brand is cutting back. Quality and craftsmanship are intrinsic to the brand so Burberry has to be careful that the investor story does not impact on its perceived quality and damage its reputation with its audience. No one wants to be seen wearing a failing luxury brand.

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