British luxury brand Burberry is making a concerted effort to reach out to high net worth individuals (HNIs) in India and China, even as investors have hammered the company’s stock 30% since July due to its expansion plans in Asia.
Angela Ahrendts, the American CEO of the 155-year-old firm, said the company is relying on social media to connect with Asian HNIs who are on average 15 years younger than their counterparts in the developed economies. She said the company is also aligning its product mix for these markets.
“In India, there is a very strong male market, as in China, so we have had to relook at our men’s offering. We are listening to our customers here, and have started our accessories business,” Ahrendts said. Asia contributes a third to the revenues to the company, which sells trench coats, scarves and umbrellas with a unique tartan pattern, besides fragrance and fashion accessories.
Ahrendts said Asia’s share is set to rise further, with countries like India and China producing more billionaires than the rest of the world. “China is one of the fastest growing markets in the world…growing at the same rate as India.
But it has a 30-year headstart,” Ahrendts said, comparing the firm’s 60 stores across China with the seven in India. “We have a five-year plan for India, of which we have barely covered half. But we expect India to be a big market.”
In India, Burberry already has more than half a million Facebook fans. Apart from its Facebook and Twitter campaigns, in China the company is using four local social media sites. Burberry has changed its global product as well as marketing strategy in accordance with the demographic changes in these growth markets.
In the last two years, the company has added new product categories to its catalogue like menswear, men’s accessories and fragrances. The products have been added to the global portfolio as a lot of Burberry’s buyers travel around the globe and make purchases there.
“These buyers will look for the same products, though their counterparts in some other markets may be looking for something else,” she explained. Ahrendts said she expected the key markets within China to outperform the country as a whole.
“We are not focused on China the way everyone is perceiving right now,” she explained, “I have told investors that just because they see that the growth in China is dipping from 9% to 8%, does not mean everybody needs to panic. It is a big country. Those are aggregate numbers.
The big flagship markets that people are migrating into like Beijing and Shanghai are typically in a higher growth than the country is.” The CEO said she was confident that the flagship markets would continue to grow. “That is one reason we decided in the beginning to target the millennium consumers,” she said.
“Our experience is that the HNIs the world over are recession-proof. We don’t have 80% of our products in one division. That would scare me. We are also very balanced by product and region.” However, she added that the company was well prepared for a downturn if there is one.
Originally published in the Economic Times dated October 11th, 2011, the Economic Times Bureau, New Delhi.