Burberry banks on growth from digital channels and APAC amidst COVID-19 disruption

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Following the release of Burberry figures for Q3 FY2020/21 in January 2021; Gemma Boothroyd, Associate Retail Analyst at GlobalData, a leading data and analytics company, comments: “Burberry’s increased digital sales and impressive performance in APAC softened the damage from store closures and decreased tourism throughout Q3 FY2020/21, with retail revenue only falling by £31m to £688m. The brand is pushing full steam ahead with a full price strategy to strengthen its gross margins as it continues to focus on driving online demand, particularly from new, younger consumers. Burberry’s increased emphasis on online sales is also paying off, as digital full price sales growth was greater than 50%. With store closures averaging 7% throughout Q3, and this percentage set to be higher in Q4 (currently 15%) as most markets tighten restrictions even further, Burberry’s online capabilities will prove vital for its ability to navigate the uncertainty of COVID-19.

“Burberry’s digital-centricity has set the standard for other luxury players, with its introduction of features ranging from augmented reality shopping tools leveraging Google Search, to a virtual try-on capability on its mobile app. The brand is also harnessing digital platforms to drive engagement, through influencer partnerships targeting younger consumers, most notably its highly successful festive campaign with renowned footballer and philanthropist, Marcus Rashford MBE, which yielded the brand’s most liked Instagram post yet. Burberry’s partnership with the prominent athlete is well aligned with its change in design direction to incorporate more streetwear and leisurewear— a move which has protected the brand throughout the pandemic as these categories have come even more into focus. Such initiatives will continue to be crucial in Burberry’s attempts to strengthen its appeal amongst a younger demographic.

“A decline in international tourism has undoubtedly hurt Burberry, with EMEIA sales suffering a fall of 37% in Q3 FY2020/21, due to less travellers and an average of 19% of regional stores being shut during the period. With international shoppers no longer able to claim VAT back from purchases made in the UK as of 31 December 2020, the UK will become a less attractive destination for luxury shopping, meaning that Burberry will suffer from weakened demand from tourists who usually prefer buying the British heritage brand in its home market. While the impact of this legislation is only expected to hit in the longer term once travel has recovered, Burberry is already trying to lessen the blow by focusing on the strength of APAC sales, targeting local Chinese shoppers through dedicated collections, such as its recent Lunar New Year campaign.”

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