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data Editor's pick sustainability technology

Cambridge Analytica whistleblower joins H&M to lead AI research

Christopher Wiley
Christopher Wylie

Christopher Wylie, the man known as the Cambridge Analytica whistleblower, has joined H&M as its director of research, where he will work on using data and analytics to drive sustainability.

Speaking on stage at the Business of Fashion’s VOICES conference in the UK this week, he said artificial intelligence (AI) can be used to reduce waste in the industry and drive efficiency through the supply chain.

“A lot of fashion companies look at the supply chain and the mechanics from production to distribution, but actually understanding consumers will help you optimize the supply chain because you will better understand what it is they want to buy or they don’t want to buy,” he explained.

That comes off the back of the fact that H&M reported it had a stockpile of $4 billion in unsold clothing earlier this year. Meanwhile, Burberry also came under fire over the summer for news it burnt $37.8 million in excess inventory last year.

But Wylie argued that turning to data is not only good for the environment, but also good for business.

“Investing in AI will allow you to not only better match your units of clothing to your customers, and therefore make more money, but be able to make more money with less units of clothing. So there’s an argument in profit and profitability to invest in AI, and also an argument in sustainability to invest in AI.” That means that being more sustainable is not only an environmental decision, but a business one, he noted.

Wiley will join the H&M Group on December 1 to bring these insights to the fast fashion giant, where he will work alongside Arti Zeighami, the company’s head of AI and advanced analytics.

“If we put this data on top of what we have, then we can be more precise. It means you can stop guessing what you can calculate. It helps you be [sharper] with decision-making,” Zeighami added.

“Tech is cool. There are amazing things you can do with data, it doesn’t have to be evil,” said Wylie.

That followed a keynote he gave earlier in the day in which he outlined the way in which Cambridge Analytica used data from fashion brands as a weapon to help elect President Trump in the US in 2016. Facebook ‘likes’ from brands including Wrangler and LL Bean were used as a primary input for the algorithms that then targeted people with pro-Trump messaging. He referred to this as repurposing technology originally designed for cyber warfare to influence politics.

Earlier this year, Wylie also gave an exclusive interview to Vogue Italia in which he spoke further about why the similarities between fashion and politics are stronger than people think.

How are you thinking about AI for sustainable innovation? We’re all about finding you the perfect partners to do so. TheCurrent is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.

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business data e-commerce Editor's pick

How data sits at the heart of Rent the Runway’s business strategy

Rent the Runway CEO and co-founder Jennifer Hyman
Rent the Runway CEO and co-founder Jennifer Hyman

With any given item stocked by Rent the Runway, the team can tell everything from who has worn it and how often they have worn it, through to whether it has stood the test of time after three dry cleans or 30 dry cleans.

That kind of data about how clothes are actually utilized is like gold dust in an industry that only otherwise has information on their sell-through rates, explained Rent the Runway’s CEO and co-founder Jennifer Hyman at NRF’s Big Show this week.

“Data is such a fundamental piece of what we do. We’re exchanging a massive amount of it [with designers] on how their products are being worn, what events they’re being worn to, and how their products or dresses last over time. The data we have in renting clothing over time is so important to the manufacturing of clothes,” she said.

The company is able to tell a designer why their sell-through rate might be high, but their loyalty is low, for instance, based on insights around quality or particular elements of their garments that should be adjusted at the manufacturing level. “We can identify problems and challenges for brands and fix them through the data that we give them,” Hyman added.

It’s for this reason her business, which sits at the center of the sharing economy, has always insisted that rental is a new business channel rather than one that cannibalizes the existing retail market.

“[In the early days of Rent the Runway], if I said I will rent your clothing at the exact same time as those pieces are on your shop floor, designers thought it would destroy their businesses. We had to overcome that huge hurdle by showing them we were getting a huge new market of customers to think about designer clothes in a new way… A lot of that was about showing them data over time so they could see we were a partner who would help them grow their businesses. They wouldn’t work with us unless we could show we could help them get bigger.”

The other thing the company is doing is starting to use data to allow designers to experiment with things outside their core business. “A designer might do dresses, but want to do sportswear. We can give them data about what their customer wants to show if it has the potential to be successful,” Hyman explained.

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Comment data technology

Comment counts: If we’re going to do fashion and tech, it has to be right for the consumer

Data has a bigger role to play than the industry is yet paying attention to, writes Glenn Ebert of SapientRazorfish, pushing for a customer-first mentality from retailers.

Farfetch Store of the Future
Farfetch Store of the Future

Judging from the nonstop chatter in the trenches of nearly every digital conference and forum this year so far, much of the industry buzz stems from the potential posed by artificial intelligence (AI) and virtual reality (VR), and how big brands will leverage this next frontier of tech.

As the halfway mark of 2017 has now arrived, the fact is the world of fashion and retail still remains an incredibly fragmented, chaotic and fatigued place. While new technologies present an exciting opportunity, the retail industry (especially luxury brands) appear to be even further away from being able to engage these experiential trends, as many still can’t grasp the new fundamentals needed to survive. This is especially apparent when compared to more savvy competitors and entrant disruptors.

After all, many brands are still struggling to find effective, efficient models to overhaul subpar customer experiences and meet the needs of a more demanding and discerning digital consumer. As the retail industry continues to burn and more brick-and-mortar stores shutter, very few retailers have mastered the art of using a data-driven approach to give customers products and experiences they actually want to see.

The fact remains most of what’s currently being created in the fashion tech space is still not wearable, functional, scalable, or even applicable to the day-to-day lives of the modern shopper.

While embedded virtual reality, fitness trackers and Facebook ‘like’ sensors are pretty interesting, are they really what the customer wants? The gap in appetite and comprehension for adaption and innovation is far wider than many fashion companies are aware of; especially when compared to alignment of enthusiasm and cohesion seen in other industries.

One of the biggest voids is in how to use data and insights to provide customers with relevant in-store and online experiences. This is especially true for many luxury brands, which have been stiff and cumbersome in changing how they position and deliver their products and experiences to a younger, millennial consumer.

There’s a need therefore to step back and learn from the brands that are getting this right. Take a look at Amazon’s recent $13.7 billion acquisition of Whole Foods, for instance, which enabled it to combine data it already collects from existing platforms with Whole Foods’ customer transaction data, to create an individually tailored customer experience.

Nordstrom seems to be the biggest bright spot in the industry to crack this code otherwise. Using an effective mix of revamped eCRM-minded digital touchpoints, social media and e-commerce data, and improved in-store technology to make the customer to salesperson experience more efficient, the once in-danger “mall brand” has rebounded to the tune of 50% revenue growth over the past five years.

Luxury e-commerce juggernaut Farfetch meanwhile, added to its list of headline grabbing moments when it announced its Store of the Future back in April. Building on its purchase of London-based department store Brown’s in 2015, the retail space aims to “link the online and offline worlds, using data to enhance the retail experience”, as quoted by CEO Jose Neves.

Using everything from RFID-enabled shopping racks, augmented reality mirrors and dressing rooms, and a full integration of the shopper’s mobile app to enhance the salesperson experience, the move is bold to say the least. While it’s one of the most literal, advantageous examples of putting data at the heart of the retail experience, only time will tell if it will translate to foot traffic.

In summary, as exciting as it may be to usher in the era of the virtual cashmere sweater, there are still many areas retailers should be focusing on first; specifically, better leveraging and integrating data and insights to optimise the customer experience for a new generation of consumers. Furthermore, we should be using such insights to validate whether consumers actually want these types of products, experiences or innovations in the first place.

Glenn Ebert is a senior digital strategist at SapientRazorfish. Comment Counts is a series of opinion pieces from experts within the industry. Do you have something to say? Get in touch via info@fashionandmash.com.

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e-commerce technology

AI has yet to match its disruptive potential in retail – report

Retailers are increasingly thinking about AI and machine learning for personalisation in retail
Retailers are increasingly thinking about AI and machine learning for personalisation in retail

More than 82% of UK retailers believe machine learning, as a subset of artificial intelligence, will have an impact on the retail sector, with 48% saying they’re currently using it in their business, according to Qubit’s latest report, Catalysts of Change.

The software company worked with Retail Week to gather input from over 70 industry executives on how disruptive technologies will affect their businesses, with broader AI as well as chatbots and beyond also discussed.

Shop Direct, whose main sales channel was catalogues for 80 years, is an example of a business successfully shifting its strategy to become a pure-play e-tailer focusing on personalisation and artificial intelligence for growth. “We’ve made big strides, but there’s a lot more to play for. We believe that artificial intelligence can change the game for us in data and personalisation,” Alex Baldock, CEO of Shop Direct, says in the report.

However, a majority of retail executives questioned are slower to embrace change, as 62% don’t currently use broader AI in their businesses. Retailers are still struggling with data collecting, which prohibits effective use of AI, says the report. A third of those surveyed say their data remains in silos across their business, preventing AI and a single view of the customer, while only a third have a strategy to collect and analyse data across all channels.

Of those who are deploying AI, the focus is on machine learning, with half of respondents saying they are using it to drive sales and anticipate demand, while 46% are utilising it to personalise offers and understand consumer behaviour. More than a third (38%) of those surveyed use machine learning to target customer segments, while just 4% use it to assess their competitors in the industry.

The major challenge is cutting through the noise of innovation to decide which truly transformative technology to invest in. Investment remains modest on that basis, with four in five retailers planning to invest less than £1m to introduce new tech, and almost a quarter investing less than £50,000.

One way to investigate whether innovative technologies will ‘stick’ is observing outside your direct category and spotting where disruption is taking place, the report suggests. Shop Direct’s Baldock admits to looking at the gaming and gambling sector, which are perfecting customer personalisation. Ladbrokes, for instance, has developed an engine that identifies when the user has placed more than five bets on the same type of sport, prompting them to then personalise the homepage to their favourite sport.

Similarly in 2015, ShopDirect’s Very.co.uk platform personalised its banner menu to display merchandise categories according to what the shopper had viewed the most.

Artificial intelligence is an increasing focus in the tech sector, and was the main theme at SXSW this year.

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data social media

Melissa Shoes launches interactive in-store social hubs to gain customer insights

The M-ND Matter display at Melissa Shoes in Orlando
The M-ND Matter display at Melissa Shoes in Orlando

Brazilian footwear brand Melissa Shoes is launching interactive experiences in two of its US locations in a bid to drive engagement and gain customer insights.

Teaming up with social experiential technology company, M-ND, the retailer will introduce digital displays in both Orlando and Miami, this week. The M-ND Matter displays allow shoppers to explore and share seasonal lookbooks, upload and print branded social media photos, and access special deals, giveaways and loyalty rewards.

“We’re always exploring new innovations that extend the in-store experience to digital channels,” said Michele Levy CEO of Ilhabela Holdings, the exclusive distributor of Melissa Shoes in the US.

“M-ND is unique in that it introduces a new interactive element to the in-store shopping experience – encouraging customers to engage with our digital lookbooks and tell the world about the shoes they love over social media – while simultaneously generating widespread word of mouth. Our goal is to learn from the insights we’ll gain about customer preferences, and put those to use to continually improve our loyal customers’ experiences.”

The M-ND Matter display at Melissa Shoes in Miami
The M-ND Matter display at Melissa Shoes in Miami

The aim is to then use that data around in-store customer preferences, social media influence and behaviour (the displays provide the brand with direct access to profile data, based on customer permission). The team suggests that such a steady stream of engagement analytics will help inform current and future business planning around styles. They will also use this data for remarketing.

The initiative is attached to social media otherwise with the hashtag #melissashoesusa and a geotag of the store’s location. By printing any pictures taken, the user gets access to discount coupons and Melissa Shoes tote bags. They also get entered into a contest to win free membership to the exclusive Melissa Plus Club loyalty program for VIP customers, which usually costs $50.

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business data

This company is helping fashion brands make smarter product decisions via predictive analytics

Lucky Brand's user experience with Makersights
Lucky Brand’s user experience with Makersights

Brands including Ralph Lauren, Sperry, Lucky Brand, MM LaFleur and True Religion are turning to a predictive analytics platform called Makersights to help inform their product design and development.

Think of a traditional focus group where learnings are high, but costly and slow, and then tip it into the digital, mobile or indeed machine learning age and you’re on the right page. This is a business that pulls information at scale from customer insights, then applies actual sales data and machine learning to that feedback. They call it “actionable product intelligence”.

According to the team, the aim is to help brand partners develop more accurate sales plans, de-risk new product introductions and measure how customers respond to product attributes like fabrics, colours and price. It’s already seeing a 2-4% gross margin lift for its partners based on minimising markdowns and doubling down on big winners.

As Bryan Fogg, VP of global customer intelligence and experience management at Ralph Lauren, says in a press release: “MakerSights allows us to better understand how design details and product attributes resonate with our customers to help inform our product decision making. Our goal is to create products our customers love, and MakerSights helps us to do that with more confidence by engaging our customers directly.”

The interesting thing is what all that says for the role of data and creativity in today’s design businesses, and just how much the future really can be shaped by data science.

I sat down with Matt Field, co-founder and president of MakerSights, to find out more. Head over to Forbes to read the full story.

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data film social media

John Frieda creates bespoke user films based on Instagram algorithm

John Frieda's Shades of Me campaign
John Frieda’s Shades of Me campaign

British haircare brand John Frieda is focusing on personalisation in its latest campaign; using an Instagram algorithm that analyses hair colour and social media expressions to generate custom video stories for its fans.

A collaboration with creative agency Brave, the bespoke “Shades of Me” films aim to show what individuals’ hair colour and Instagram feed say about them.

“Your Instagram feed is a curated, beautiful visual depiction of your unique style and self expression. Colour is a powerful part of this; from the pictures you take and filters you use, down to the locations you take them in – the colours you gravitate toward are what makes you, you,” reads the write-up from the team.

John Frieda's Shades of Me campaign
John Frieda’s Shades of Me campaign

To achieve it, users simply select their hair colour and grant the site permission to its Instagram or Facebook photos. The site then highlights two key colours the user associates with the most and relevant John Frieda products for that lifestyle.

The custom film alongside also picks out keywords that relate to them: “You are a bold, cool, original, warm ombre,” for instance. Or: “You are a deep, refreshing, admirable, rich brunette”… Those words are laid over footage of both their own shots and

It also then provides them with footage of both their own shots and a selection from over 100 video close-ups of lifestyle, fashion and beauty moments created by the company.

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business Comment Events fashmash

Redefining legacy: why fashion brands need to focus on meaning and values to win

FashMash Live
#FashMash Live

The way the fashion industry approaches innovation today is akin to leaving the house without trousers, said Pia Stanchina, former industry manager for fashion and luxury at Google, now independent start-up advisor and consultant, at the inaugural #FashMash Live discussion held at Huckletree in London last week.

It’s an oft-used analogy, but one that seems highly appropriate to a market primarily driven by PR headlines over lasting returns. To explain it in more depth, Stanchina said: “Most fashion brands think of innovation the way that women think of earrings – they do the sort of things that are really jingly and sparkly, offering short term wins, when what they need to do is think of the sort of strategy that’s like the trousers of the outfit – the long term business objectives. The point is, you can leave the house without earrings, but you can’t without trousers.

“Most brands are leaving the house without trousers… they’re saying look at this amazing campaign that we have, but actually there’s no real meaning to it and it’s not unlocking any sort of value for the brand.”

Of course the fashion industry is not alone. A recent study from the Institute of Practitioners in Advertising showed that campaigns with a short-term goal grew from 7% to 33% between 2006 and 2014. This idea of short-termism, where the aim is to activate sales over less than six months, is considered significantly less effective than those with long-term, brand-driven growth in mind.

Coupled with that increasingly narrow view is the advent of ad blocking. Nowadays, consumers are increasingly able to tune out and turn off. The most recent survey from the IAB UK, for instance, shows 22% of British adults online are currently using ad blocking software – a rise from 18% in just late 2015.

In other words, advertising at large is currently focused primarily on quick wins and doing so in such a saturated market that the audience is increasing looking for ways not to have to receive them.

The average consumer sees 6,000 brand messages per day, Wendy Clark, CEO of DDB Worldwide North America (and former CMO of Coca-Cola) said at this year’s Cannes Lions. “If that’s the case,” she added, “more [content] is not an option. It needs to be more good.”

FashMash Live
Rachel Arthur, Nicolas Roope and Pia Stanchina speaking on the #FashMash Live panel

In an age of too much noise, marketers need to be thinking about the sort of long lasting messages that achieve cut through, she added. They need to be building legacy in order to create brand equity. So they need to be thinking about trousers, more than earrings, to return to Stanchina’s reference.

And if trousers are strategy and legacy, then the belt to them has to be relevancy, and that’s also something often missing in fashion marketing.

“Most people in luxury brands today haven’t really thought about what makes them relevant anymore, it’s always harking back to where they came from, and not to what people who buy from them actually care about today,” Stanchina explained.

She used the example of heritage – something that many brands have latched on to in order to try and achieve storytelling. We see countless videos of craftsmanship in the ateliers of big fashion houses, showcasing the little hands, or “les mains”, at work for instance, she explained. But this is becoming a tired view, not to mention something that doesn’t work for digital as much as the industry seems to hope it will.

Take Chanel’s couture show in Paris just last week, which was set inside its atelier, showcasing the couturiers as they constructed the garments. “It was probably an amazing experience if you were there… really magical,” Stanchina commented. “But if you were watching it on Instagram, it was really dead. It was a complete anti-climax. It didn’t translate well to digital at all.”

Stanchina also talked to the idea that luxury has long traded on friction in order to create desire – from limited distribution to high price points. Both of those things would have once been considered pillars of the industry (along with craftsmanship), she said, but they’re crumbling away; they’re not relevant anymore. What is, of course, is still that sense of desire, but it has to be done in a way that is more meaningful, she added.

When it came to meaning and value, Nicolas Roope, who joined the discussion from creative agency Poke, where he serves as both ECD and co-founder, said this has to be baked in from the start in order to be successful with digital today.

“The reason [brands like Ted Baker, Reformation and Redbull] are digital first is not because they sat down and decided they were going to be digital first, it’s because they have that natural spirit and they’ve built their business and the way they operate around it. They were perfectly ripe for becoming digital because they were already clear about what they stood for from the start,” he explained.

Indeed the technology, or setting the platforms up to enable full digital integration, is the easy part, he added. “The hardest thing is to help [brands] to understand being digital first is about having clear direction; something to offer that’s really valuable and that’s defensible.”

Stanchina agreed, adding for those just starting out in the industry: “We’re in a very specific moment in time when starting a company is easier than it ever was before, but it’s also the most competitive time it’s ever been to do that. [Success] is about understanding what it is your company is doing, what you create, what makes you defensible and different in the marketplace, why there’s a need for your company in the first place, and then really going after it.”

For those back in established brands, Roope noted how difficult it can be to drive change or indeed value tied to digital if there isn’t yet full leadership support internally behind it.

In a bid to seek a pair of trousers that have long lasting value, over that pair of sparkly earrings, he advised brands to try and find a middle ground – a low risk environment and some steady gains to prove the change you can effect through innovation done in the right way. “Most organisations are very respectful of success, so how do you get to success in the smallest, cheapest, most risk free way is your aim, and once you have it think about how to celebrate it and build momentum around it to move it upwards,” he added.

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Comment Editor's pick

Comment counts: Human insights should drive both fashion trends and brand communications

Understanding changing human behaviour is the surest way to create a trend in fashion today, but such attitudes need to be reflected in our communications and not just products, argues Frances Docx of 18 Feet & Rising.

beyonce-ivy-park
Ivy Park

In the past, the fashion trend trajectory was simple: from fashion houses to magazines, consumers copying celebrities. Everyone knew their rightful place in the fashion food chain, and the clothes would remain on the high street until those in power decided a new season was ready to launch.

Cut to the internet and this online world has hastened and devolved the traditional fashion process entirely. Now trends can emerge from anywhere at any time – the high street, teens on Instagram… a Wikihow page with a seven-step illustrated guide to starting your own.

In a world of microwave-minute attention spans and a ‘buy now’ impulse control disorder, fashion brands have to look beyond short-lived trend sources towards something that endures and evolves as their brand does.

So where should they turn for inspiration to create fresh and enduring work? Where we’ve always looked: to people. The surest way to predict a trend is to create one. And the most effective way to create a trend is to study and predict human behaviour and attitudes.

A topline example: UK gym membership spending is up by 44%. What’s the consequence for fashion? You can’t move for box-fresh Adidas Stan Smiths, endless versions of the ‘athleisure’ trend and the likes of Beyoncé’s newly launched fitness line, Ivy Park, crashing the Topshop website.

Looking good has become so synonymous with physical fitness that by a series of cognitive leaps everyone is wearing tennis shoes – with no intention of playing tennis. And we don’t care either, by the way. We only care if the white on our kicks stays bright.

And what else? We only wear 20% of our wardrobe on a regular basis and we throw away over one million tonnes of clothing and other textiles in the UK each year. It’s not because we don’t like the rejected 80%; generally we do, but maybe the fit isn’t quite right, the neckline is a bit low and we’d rather wear one of our old favourites.

Meanwhile, instead of the buy-it-cheap-pile-it-high Primark mentality, we also see disrupters such as Tom Cridland entering the mass market with his 30-year sweatshirt. Or designers such as Vivienne Westwood that encourage shoppers to choose well so they only choose once.

Everyday people are changing the face of retail. Brands must realise, respect and pay attention to this. And the impact must be reflected not only in the product on their shelves but in the way they communicate to consumers.

Insights (the behaviour and perceptual mapping of trends) have long been the bread and butter of brand communications. But up until now they have retreated behind the “Advertising Idea” like a hungover mollusk.

Communications today are firmly driven by the “we understand you” mantra; capitalising on emotionally charged purchasing. We see this in the UK with personalised discounting like the MyWaitrose scheme, through to the advent of Memevertising such as with House of Fraser’s “My Face When…” 2015 campaign (as above, by 18 Feet & Rising).

To those in fashion scratching their heads over the latest trend reports working out how to make SS17 and beyond fresh – put down that colour palette, stop looking at what your fashion forefathers have done and consider applying these rules of thumb:

  • Be more human
  • Listen more
  • Watch more
  • Copy

Don’t predict fashion trends, predict behaviour change.

Frances Docx is a planner at creative agency 18 Feet & Rising. Comment Counts is a series of opinion pieces from experts within the industry. Do you have something to say? Get in touch via info@fashionandmash.com.

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business

Burberry’s brave new world: Think digital, think bags, think scarves

burberry_scarfbar

Given the tough time being faced by the luxury sector at present, predictions around Burberry’s results for the year to March 31 ranged from bad to downright awful. So now that the figures are out, what did we actually get?

Well, not bad in the circumstances, with plenty of focus on the future, ranging from a simplified product offer, to a greater focus on accessories and moves to increase its clear lead in digital.

First, let’s get the boring bits over. Pre-tax profit fell 6.5% to £416m with underlying adjusted pre-tax profit down 10% to £421m. Sales only fell 1% on a comparable basis, but the larger profits dip isn’t good news as luxury shoppers in general tighten their expensive purse strings and the all-important Chinese and Russian shoppers react to circumstances at home and tighten them even more.


Ch-ch-ch-changes

What was more interesting was Burberry’s plan to answer the challenges it’s facing. For a start, it’s going to look at its product offer (which is wider than that of many peers) and simplify it. It will also “give greater visibility to fashion and newness, while tailoring [the] offer more effectively for local needs”.

That means fundamentally changing its ways of working “by introducing end-to-end category management for key products, from design to retail sell-out. Delivering narrower and better balanced assortments, more centrally-directed, improving both global consistency and local relevance. And rebalancing marketing from brand towards key products”.

Following the successful relaunch of its heritage trench coat and cashmere scarves, the next area of focus is bags, where it refers to itself as under-penetrated compared to its peers.

So it’s introducing the new category management approach, “reinventing” the collection around a new pillar and shape strategy, cutting the number of options, and targeting marketing around the patchwork and banner bags and the rucksack ahead of major new product launches in FY 2018.

With retail now accounting for 73% of group revenue, it’s focusing on this area in a big way. Omnichannel is obviously key but Burberry is also putting a greater focus on local customers than before: “driving loyalty by leveraging our customer insight capabilities, with investment prioritised in selected cities. Improving sales densities, conversion and customer retention will be among the key measures of success”.

It’s developing an improved digital selling tool for sales associates too and increasing by 20% the number of private client sales associates, whose productivity is significantly above-average.


Digital diva

And digital will continue to be a major focus, of course. “We plan to ensure that digital remains the clear point of differentiation for Burberry but have scope to be even more ambitious commercially. We will grow Burberry.com through increasing conversion, especially on mobile, driving the penetration of e-commerce particularly in Asia, while integrating and improving customer experiences across online and offline,” it said.

The company also wants to actively grow with third party digital players, while always retaining control over the brand. The majority of e-commerce growth for the sector is expected to come from these physical retailers, pure play e-tailers and, increasingly, new channels such as social commerce.

So expect to see a relaunched Burberry.com, the introduction of a customer app (facilitating among other things mobile checkout and customer connectivity), and further investment in localisation of sites in Asia, following the China relaunch in April 2016.


That’s the future, now the past…

Back with those annual results: sales were £2.5bn in total (so while sales dipped, it’s not as if people are actually shunning Burberry goods), and on a comparable basis they would have been up 3% if Hong Kong and Macau were taken out of the mix. Those two weren’t the only troublesome markets as mainland Europe also had a tough time on the back of fears over terrorist attacks and general economic uncertainty.

It’s no surprise then that Burberry is promising cost savings (of around £100m), and has raised the dividend it pays to shareholders to keep them sweet.

“While we expect the challenging environment for the luxury sector to continue in the near term, we are firmly committed to making the changes needed to drive Burberry’s future outperformance, underpinned by strong brand and business fundamentals,” CEO and creative supremo, Christopher Bailey, said.

The company said demand slowed in many markets for both cyclical and structural reasons but against this backdrop, “brand momentum remained strong and innovation around product, digital and marketing continued”.

It continued to partner with digital big-hitters, including Google, Apple and DreamWorks for interactive and personalised marketing campaigns over the past year, and it created bespoke content for its social media platforms, including shooting and publishing the SS16 main advertising campaign live through Snapchat. These activities supported an increase of about 30% in its followers globally to over 40m across all its social media platforms.

No surprise then that digital outperformed during the year, delivering growth in all regions. In the second half, it rolled out the single pool of inventory model, tested in China in FY 2015, to stores across the US and EMEA. This allows digital transactions in all 44 online countries to draw on inventory in regional distribution centres and then store networks, with 75 stores now live. The rollout of this fulfillment approach has improved stock availability by around 5% and also contributed to digital growth.

The Scarf Bar initiative that launched both online and in-store in September 2015 helped scarves outperform other accessories, with double-digit percentage growth.

In beauty, it continued to focus on building its fragrance pillars, including product extensions for My Burberry throughout the year. Only last month it launched Mr Burberry, a new male fragrance, with the marketing campaign also highlighting men’s tailoring and outerwear. The halo effect from this alignment of fashion and beauty marketing was a key driver for bringing beauty in-house, Burberry said.


Luxury in focus

Burberry’s results also gave us some interesting insights into just what’s been happening in luxury generally and what it means for future growth.

The company said that since 2010, the personal luxury goods market has grown on average by about 7% per annum at constant exchange rates, largely driven by the emergence of the Chinese luxury consumer, space growth and price increases.

Looking forward for the next five years, the luxury market is expected to grow on average by a low single-digit percentage annually at constant exchange rates, with accessories marginally outperforming apparel and beauty and continued double-digit percentage growth in e-commerce.

Most sector growth is expected to come from new and existing Chinese consumers, both when travelling and, increasingly, at home.

Luxury customer behaviours are also changing, Burberry said, as shoppers seek experiences, newness, greater authenticity and storytelling, while desiring more service-driven personalised contact with greater use of technology, particularly mobile.

Burberry feels it can answer all these new luxury shopper’s needs saying: “Our brand strength is driven by a blend of heritage and innovation. We have over 40m followers on social media, demonstrating the extent of our brand reach, [and] based on customer research, Burberry is among the top five luxury brands globally for unaided awareness.”

“For the Chinese consumer, our research shows brand recognition and desirability entirely consistent with our core luxury peers,” it continued. “Looking ahead, we see opportunity to enhance this existing brand strength through greater consistency and clarity across customer groups and markets, including, for example, the United States.”

This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday