Burberry and Marks & Spencer, two household names at very different ends of the market, have both announced strikingly similar turnaround plans centred on streamlining product, reshuffling buying and cutting jobs.
Christopher Bailey and Steve Rowe
Fashion retail is tougher than it has been in years, with unseasonal weather, high rent and rates, heavy discounting, changing consumer behaviour and a slowing global economy all contributing to an unprecedented squeeze. This is the environment in which luxury label Burberry and high street stalwart M&S are trying to stem a slump in sales.
Despite the obvious discrepancies in target markets, both firms claim they are putting the customer at the centre of their new strategies. These strategies involve streamlining their fashion ranges, reorganising their buying and merchandising practices and taking a hard look at their senior management structures.
Cleaning up the product offer is a wise move for both Burberry’s Christopher Bailey and Steve Rowe at M&S. Bailey said the brand’s collection will shrink by between 15% and 20% this year while M&S is getting rid of duplicated items across its in-house brands. A reduced offer gives shoppers a simpler view of the brand’s identity, making it easier to shop, and of course narrower but deeper buying will help margins - a key focus for M&S in particular.
The change in product will also be reflected in the way both firm’s merchandise the collections, with a formulaic, top-down approach across all stores being implemented to drive consistency and inspire shoppers to outfit build. At Burberry, all stores around the world will feature the same key trend pieces, core staples and a smaller section of local product to suit the climate or culture. At M&S, the merchandising will no longer be done in brand-specific silos.
Also essential for sorting out product is restructuring the buying teams and processes. Both Burberry and M&S are encouraging a more overarching view of product categories, to encourage a greater sense of responsibility and better continuity in categories.
At M&S the womenswear teams now focus on product type rather than brand. Similarly at Burberry one team will now be responsible for each category end-to-end, rather than having different teams working on design, sourcing and merchandising, to improve “consistency and responsiveness”. The aim is to breed a more coherent range that ultimately sells better.
With price and value for money top of most shoppers’ agendas, M&S has vowed to “significantly reduce promotions” in an effort to retrain shoppers to pay full price. The retailer is instead going to focus on a first price right price strategy, and will continue to cut the prices of core ranges, having dropped the prices of 300 products for autumn 15. While Burberry said it will not be changing its prices, it is looking into expanding its entry price collection in order to convert more of its young social media followers into customers.
In today’s turbulent market retailers need to adapt to the shifting environment to boost sales and drive customer loyalty and both chief executives look to be embracing change. However, as Rowe said in his strategy update, these changes will not happen overnight and it will take time for the turnaround plans for both companies to bear fruit. With anxious shareholders to please one thing is certain: the clock is ticking.