PESTLE Analysis

Sources for use with Section A

Extract A

Selected figures from Burberry's Statement of Comprehensive Income, 31 March 2018

Extract B All change at Burberry Group plc

Burberry is a 162-year-old British luxury fashion house with its headquarters in London and has a market capitalisation of £8.3bn. It sells trench coats, outerwear, fashion accessories, fragrances, sunglasses and cosmetics.

Growth slowed after Christopher Bailey became its Chief Executive Officer (CEO) in 2014. Profits dropped and the shareholders lost confidence in him. In July 2017 Marco Gobbetti replaced Bailey as CEO. Christopher Bailey then became the Chief Creative Officer until his resignation in November 2017. This was followed in March 2018 by the appointment of a new Chief Creative Officer, Ricardo Tisci.

As expected, Tisci has shaken things up at one of Britain's best-loved brands. He has already changed the brand's iconic logo. The red, black and beige pattern that has been the brand's most recognisable trademark for over 20 years has now been altered into a more contemporary stripe. The rebranding indicated a major change for the British luxury brand.

Extract C

Can Ricardo Tisci reinvent Burberry?

The figure below shows Burberry's share price from September 2017 to September 2018. It identifies Christopher Bailey's departure announcement following Marco Gobbetti's appointment as CEO, Bailey's last Burberry collection at London Fashion Week, and Ricardo Tisci's appointment as Chief Creative Officer.

Extract D

Burberry's digital presence

As one of the first businesses to use technology, we have an outstanding digital reach with over 51 million followers globally, across 13 platforms and 11 languages. Our Burberry app, now available in 33 countries, is our customers' gateway to the world of Burberry. Customers can explore and buy from the new collections while managing all their orders in one place.

In China, over 80% of online shopping is done on a smartphone or tablet. Burberry customers can now book in-store or online appointments with a salesperson via WeChat, China's number one multipurpose social media mobile application.

Extract E

Burberry to stop burning unsold inventory

Burberry came under severe criticism in July 2018 when it admitted to destroying £28.6m of unsold luxury goods in a year to prevent them being sold at below market prices and devaluing the brand. Burberry, whose coats sell for more than £2\,500 and handbags sell for £1\,500, said it would stop this practice and expand efforts to reuse, repair, donate or recycle its unwanted products and work to develop new sustainable materials.

Burberry also said it would follow the likes of Gucci and the leader for ethical fashion, Stella McCartney, in removing real fur from its ranges.

“Modern luxury means being socially and environmentally responsible. This belief is core to us at Burberry and key to our long-term success,” said CEO Marco Gobbetti.

This has come at a time when customer attention to sustainability has increased, with 66% of global consumers willing to pay more for sustainable goods.

Extract D

Burberry's digital presence

As one of the first businesses to use technology, we have an outstanding digital reach with over 51 million followers globally, across 13 platforms and 11 languages. Our Burberry app, now available in 33 countries, is our customers' gateway to the world of Burberry. Customers can explore and buy from the new collections while managing all their orders in one place.

In China, over 80% of online shopping is done on a smartphone or tablet. Burberry customers can now book in-store or online appointments with a salesperson via WeChat, China's number one multipurpose social media mobile application.

Assess the extent to which the external technological environment will help with Burberry's growth in China. (Extract D)