Burberry's CEO streamlines merchandise to focus on Core Products

Implications: Burberry's CEO, Angela Ahrendts, is putting together an effective plan for the brand to sustain the sales of its heyday. The highlights of her plan include focusing Burberry's merchandise on core items and fostering quicker and more frequent deliveries to stores.

Analysis: I believe that in order for Burberry to sustain itself as a successful global fashion brand it is necessary for the company to implement the changes recently highlighted by the brand's CEO, Angela Ahrendts.

The brand will reduce its products by a third (from approximately 6,000 to 4,200 units). This is in response to the fact that 80% of revenues were coming from 20% of products. The company's reaction to such a statistic is the right one- I would be worried if the company didn't readjust its strategy based on such an imbalance.

Sometimes brands feel that they need to "wow" their customers by creating as many SKUs as possible, but in reality, this can often just confuse customers by giving them too many options. Also, in categories such as ready-to-wear and shoes, creating many SKUs can prove complicated because stores would then need to have backstock in various sizes of that given product. Having bacstock of sizes is not issue with such items as leather goods, umbrellas, hair accessoires, sunglasses, etc.

Based on the article, Burberry is also switching its delivery schedule such that instead of delivering two big collections a year, now it will deliver five smaller ones, shipping new merchandise to stores every 10 weeks. I think this is a great idea and more inline with the strategy of a luxury fashion brand. Fashion brands with sophisticated ready-to-wear design and production are used to creating 4 collections a year (Pre-Fall, Fall/Winter, Cruise/Resort, Spring/Summer).  Introducing items with more frequency will keep the customers coming back to Burberry stores more often to see what the "latest and greatest" product offerings are.
 
Finally, as cited in the article, I think it is wise for the brand to start opening smaller shops in secondary US markets such as Tampa, FL. These customers are already familiar with the recognizable Burberry plaid, thanks to aggressive marketing campaigns and a strong wholesale and DFS/Travel Retail presence.

In summary, I think Burberry's CEO is on the right path and the changes she plans to implement are important ones. Let's just hope the execution of her plans is flawless!