China, e-commerce bolster Burberry’s sales growth
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The mobile and e-commerce news from Burberry is an indication that luxury fashion brands can succeed in the space, despite initially struggling to do so. Luxury brands have historically avoided e-commerce due to the demands of building and managing online operations, preferring to outsource those functions whenever possible.
However, Burberry’s movements show that these high-end brands can successfully build a strong digital presence. Fellow luxury brands such as Hugo Boss and LVMH’s Fendi and Dior are starting to develop their own e-commerce capabilities as growth in China becomes sluggish, according to a report.
Meanwhile, China’s economic uncertainties haven’t hit Burberry too hard, but the brand was not immune to the slowdown. While traffic at its bricks-and-mortar stores slowed significantly (20%) in the former protectorates of Hong Kong and Macau due to a decrease in tourism, consumers in Mainland China continued to buy outerwear, scarves and apparel from the luxury brand. China accounts for about one-third of Burberry’s global revenues, according to estimates.
Burberry will find out if that renewed momentum in Asia can spread to Hong Kong and Macau during the upcoming Lunar New Year celebrations. Burberry will focus on cost controls and mobile to meet analyst expectations.
Questions & Answers
Q.Which specific product categories did Chinese consumers continue to purchase from Burberry despite economic uncertainties?
Which specific product categories did Chinese consumers continue to purchase from Burberry despite economic uncertainties?
Consumers in Mainland China continued to buy outerwear, scarves, and apparel from Burberry. This resilience in specific product areas helped to mitigate the impact of broader economic concerns.
Q.What percentage decline in store traffic did Burberry experience in Hong Kong and Macau, and what was the primary reason for this drop?
What percentage decline in store traffic did Burberry experience in Hong Kong and Macau, and what was the primary reason for this drop?
Burberry's bricks-and-mortar stores in Hong Kong and Macau experienced a significant 20% decline in traffic. This slowdown was primarily attributed to a decrease in tourism within these former protectorates.
Q.What proportion of Burberry's global revenues is estimated to come from China?
What proportion of Burberry's global revenues is estimated to come from China?
China is estimated to account for approximately one-third of Burberry's global revenues. This highlights the significant financial reliance the brand has on the Chinese market.
Q.Which other luxury brands are developing their e-commerce capabilities in response to sluggish growth in China?
Which other luxury brands are developing their e-commerce capabilities in response to sluggish growth in China?
Fellow luxury brands like Hugo Boss, and LVMH's Fendi and Dior are also beginning to develop their own e-commerce capabilities. This move is a response to the slowing growth observed in the Chinese market.
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