An interview with CEO of

Burberry’s Digital Transformation

Transform to the power of digital Angela Ahrendts

Digital front end, back We use the end and in the stores technology to Capgemini Consulting: From our bring the brand recent research with the MIT, we found few companies that to life in our had embraced digital technology effectively to truly transform their stores. We have organization. You seem to be one of them. How did you come up developed our with this strategy? stores to showcase Digital is an extremely broad concept with our digital many dimensions. Angela Ahrendts innovations Let’s start at the front end of our business, with marketing. We decided right from CEO, Burberry the start to use digital to target our consumers. We hired a young, dynamic marketing team who in essence was the Burberry’s digital annual revenue was £740 million, with a millennial customer. This is, in part, why transformation 10-11% profit margin. We were opening we’ve been at the forefront in marketing only a handful of stores a year and couldn’t innovation in the luxury sector. Whether Capgemini Consulting: Can you afford to do much more. But we did have a that’s launching our latest fragrance on describe the company you took number of key differentiators in the luxury Facebook, or developing the ‘Tweetwalk’ over in 2006 and how you set sector we could exploit. with , or being amongst the first about convincing the teams that brands on Google+. a move to digital was the way First, we’re British. There were lots of big forward? French brands, big Italian brands, big US Then, there was the back end: one of our key strategies from day one was Back in 2006, Burberry was grossly brands. But only one big British brand. operational excellence. We wanted to be underperforming. While the overall Second, we were born from a coat. Others as admired and as respected for the back sector was growing at around 12-13% a were born from luggage, shoes, saddlery. end of our business as for the front end. year, our rate was only 1-2%. Burberry But only we were born from a coat. When I started, we had just embarked on was not keeping pace with the rapid Outerwear was just 20% of our business a business-wide rollout of SAP. We had to development in the market, back then, and we saw a huge opportunity put this in place, although it was expensive neither in terms of innovation nor in to exploit that category further. and arduous for the first couple of years. terms of products and services. We were Finally, our peers were all targeting ‘ladies In 2010, the last big country to come on up against tough competition from much who lunch’ and focusing mainly on the board was China. larger French and Italian peers, with baby boomers. There was no way we multiple brands and many times our own So we had a clear front end marketing could meet them headon with their much revenue and profit. strategy and the back end infrastructure larger advertising budgets. So we decided As a management team, we began by to target our marketing spending on the asking ourselves a fundamental question: millennial consumer, in their 20s, and with Connecting all ‘What is our vision?’ And, from very a clear focus on emerging economies, early on, we decided we were going to where the average high net worth platforms and be a design, marketing and retail-led customer is typically 15 years younger. new mediums organization. This was our high-level And we communicated and engaged vision. From there we began to develop with this younger customer using their acted as a our five-year strategy, asking: What do mother tongue: digital, which would also challenge we have that our peers don’t - other give us the greatest reach for our limited than the fact that we are much smaller, a marketing budget. That’s when the digital in digital standalone company and with little cash transformation started for Burberry. to invest? When I started at Burberry our transformation Angela Ahrendts

was under development. At this stage, Digital is all about Benioff at Salesforce.com, he understood we began opening 20 to 30 new stores this immediately. He told me: ‘You want a year and asked ourselves: how can change and we to create a social enterprise’. And so we we use digital innovation to engage our decided at that first meeting to deploy his customers more effectively in our physical told our teams CRM modules across the entire business. real estate, as well as online? We were early on to “fall in doing all these innovative things in digital A burning platform marketing – livestreaming our runway love with change shows, partnering with social media Capgemini Consulting: You seem because we’re to be keenly aware of technology. players, relaunching Burberry.com - but This is not intuitive in the world of how could we link this to the customer going to need . Is it a result of your past in our stores? This is where the ‘retail to evolve every experiences? theatre’ concept came in to play. My Chief Technology Officer asks me the We began to partner with technology year same question every week! I think one companies to make the ‘retail theatre’ explanation is that I’m not a traditional concept real, enabling us to broadcast CEO. I am passionate, present, and very our multifaceted content to our stores engaged with the company. I am very globally, and to create a modern and handson. My office door is always open. I pure brand environment. We use the our e-commerce platform, we were get to listen to thousands of people every technology to bring the brand to life in our doing some great things on Twitter and day through various channels. stores: from the to the rich video Facebook, and we wanted to invest in new technologies from multiple companies, content on giant internal and external Our Chief Creative Officer, Christopher but none of it was connected. All this screens to the carried by all our Bailey, is also passionate about the technology needed to be linked up so that sales associates that give access to the possibilities of digital and we have built we could have a single customer view that full global collection, regardless of what great teams across many departments, we could use across channels, mediums is available in-store. It also enables us who work in partnership to come up with and platforms. to share the energy and excitement of the most innovative ideas. I also think that key brand moments with our customers We began sharing the vision of our having three teenage kids at home helps around the world. For example, by ecosystem with our technology partners, me to understand. I see them watching inviting them to watch our runway shows including Salesforce.com. We told them: the best of YouTube in bed every night. live in stores and enabling them to shop Burberry is global, dynamic and has a They don’t watch TV on weekends, they the collection on iPads immediately clear vision. We have an amazing CTO and want YouTube on a big screen and they live afterwards, for delivery in 6-8 weeks. In an IT team that’s nimble and fast. So our on Facebook on their . this way we have developed our stores to proposal was: ‘Let us be your R&D. Let’s showcase our digital innovations. experiment together.’ But it has also been about building a creative thinking culture. When we set The real challenge: We asked them to help us join up all our existing platforms and to layer on connecting the channels new communication and analytic tools. Then came a new challenge in our digital Our vision was that any person, any If you want to transformation: connecting all platforms constituency, needing to interact with attract and retain and new mediums. We had relaunched Burberry would come on to Burberry.com and enjoy exactly the same experience as the best of this an in-store customer. We wanted them to come into our world – Burberry World – wave of Digital has been and be able to visit all the different parts talent, you need of the business as they would do in our HQ, a catalyst for just like customers experience every facet to speak their everything in the of the brand on Burberry.com. Everything language: should be as connected digitally as it was company in reality. When I first met with Marc digital Angela Ahrendts

out to build our strategy, we said that we from the bottom-up. Was this your didn’t just want to be a great brand - we Today’s reality is experience? wanted to be a great company to work for, that a marketing We’re a 156-year-old company but a to empower our young, digitally native very young team. The average age in our workforce. We tell the team constantly department can’t marketing department is probably 25. that the bigger we get, the closer we have They all understand this new language to work and the more connected we have execute without a and this new world. You look at their to be – and technology is a key connector. strong technology screens and they are on Burberry Chat, So strategy has something to do with it Facebook, Twitter, multiple screens. This too. We had to find our white space - to partner next generation speaks a new language: do something different from our peers. digital. They live digitally. So as a company, You might say we had a burning platform if you want to attract and retain the best around which to unite the team. of this next wave of talent, you need to speak their language. The digital tsunami But to be honest, it’s not as simple as Capgemini Consulting: When got everyone on board with this concept age. It’s about having a young, open mind you started talking about this new they were clamouring to become even and being curious. It’s also about letting culture, how did you engage more connected. So while the vision starts people develop their own way of working. with your teams? Was it about at the top, the groundswell is organic. We’re an Apple-based company, but some communication or was it more Digital is all about change and we told our of our executives are more comfortable about governance? Did you teams early on to “fall in love with change, with their Blackberrys. That’s fine. But we appoint a digital tzar? because we’re going to need to evolve also have executives in their 60s who are It was all three! It’s interesting that you every year”. We’ve created three new often more digitally savvy than some of use the word ‘tzar’. I took this job in part departments in the last two years: a social the young directors who work for them. because of Christopher Bailey, now our media department, a mobile department, Chief Creative Officer. We had worked an insight and analytics department. We together at Donna Karan many years recently brought in an SVP of Customer Technology drives ago. We knew and trusted each other. Six Insight. The company has not only the bus months after I arrived, we both took part in embraced him, but hands go up from our people saying: “Great, can I go into Capgemini Consulting: The three a global webcast where we told the teams barriers we found in our research that department?” I think that’s different that we were not about to write another were skills, culture and IT. You seem from most companies but a big part of the novel, but an exciting new chapter - the to have successfully dealt with the most innovative in our history. culture here - being fast, flexible, dynamic first two. What about IT? and open to change. I introduced Christopher as the ‘brand I didn’t work as closely with our CIO initially tzar’ and told the team that anything the Governance also played a part and we put as he was driving our infrastructure consumer sees will go through his office. in place a dozen new governing councils. building and he reported to our CFO. He We said we would no longer do what was One of the most innovative was the was busy travelling around the world best for a person or what was best for a creation of a strategic innovation council, implementing SAP and evolving our region. We would do what was best for chaired by Christopher. This council service and support functions. So when the brand. includes our youngest and most forward- we promoted him about a year ago to thinking directors, and their remit is to We talked about the ‘digital tsunami’ the new position of CTO and he began dream. Through this council they are coming, and used this to drive home reporting to me, it was a new experience empowered and their dreams are heard. why and where we needed to focus, and for both of us. It is then the job of the council of more how united and pure our global brand experienced, senior executives to put After our first, slightly tense, meeting, I expression had to be. We explained how these dreams into action. told him I needed him to move from the digital would dictate and drive many of back of the bus, where IT traditionally the big decisions we needed to make. sits, to the front of the bus. I wasn’t sure Capgemini Consulting: It is often This depersonalized it and enabled us to he realized how serious I was, so I texted assumed that if you have a lot make all the changes that were needed him afterwards saying: “Have you seen to enable Burberry to thrive in this new of generation Y employees it is so much easier to switch to the movie Speed?” Because he’s not just context. Digital has been a catalyst for digital because you have this at the front of the bus, he’s driving the bus everything in the company, and when we groundswell of change happening – and it’s travelling fast. Angela Ahrendts

Today’s reality is that a marketing and basic achieving the perfect balance between department can’t execute without a instinct creative and commercial is vital for us. strong technology partner. They couldn’t make Tweetwalk happen without IT, or Capgemini Consulting: Tell us a little about how your leap of faith launch Body on Facebook without IT. If The mouse and the based on instincts actually works we’re a digital marketing driven company, in practice. elephants we need our CTO, in partnership with our Capgemini Consulting: Looking Very early on we needed a couple of quick Chief Creative Officer, to drive the bus. forward, what are the biggest The message was quite blunt, but he and wins in order to gain the trust of the teams. challenges Burberry faces? his team fully understood the opportunity One of the first things Christopher and I and embraced it. did was to put together a small collection It’s less a challenge and more an of handbags for the 150th anniversary opportunity. Consumer data will be the We have reorganized the IT team and of the company. The Icon Collection biggest differentiator in the next two to created new roles. They now go to San was the opposite of what the teams three years and not just in our sector. Francisco with the marketing team a wanted. They wanted the Burberry check Whoever unlocks the reams of data that couple of times a year and work hand in and everything under £500. The Icon we’re all collecting on consumers and hand with the Creative Media team. We Collection was different: more innovative, then uses it strategically, will win. Soon are in the process of merging marketing, younger, cooler, an impulse buy for the when you get off a plane and it’s pouring IT and creative media under one finance luxury customer. The first month’s sales rain, you’ll get a message saying: ‘There’s and operations executive with a team were stellar, all regions reordered and all a Burberry store with new raincoats of project managers, in order to further of a sudden, everyone was asking: ‘What’s around the corner.’ The technology is accelerate our ability to seize these new next, give me more’. We did this without rapidly evolving to link it all together. opportunities. Finally, it’s all starting to be any data, just on pure instinct. And then you need the skills on top of the connected! technology to optimise it fully. We hire EQ and instinct over IQ every day. I don’t know how else you drive innovation. Listen to the customers Capgemini Consulting: Does growth scare you? If tomorrow or Capgemini Consulting: You are Capgemini Consulting: This is the day after Burberry doubled in used to controlling every element counterintuitive to what one reads size, would that be a problem in of the brand. Social customers, on analytics and data. Is it specific terms of culture? however, enjoy a degree of to the fashion world, or to any control themselves. Has opening company? We’re not scared at all by growth; we are up to a more connected customer very excited by it. We were the underdog led to any cultural conflict? It’s not specific to our industry, but to in the sector six years ago and no one was all innovative companies. Apple is what betting on us. We are still small but are It hasn’t up to now, but we are a very open it is today in part because of ’ and transparent company. We have more now nudging into the top five. The mouse intuition. My view is that you need both. is now scaring the elephants a little bit. than 10 million fans on Facebook and And we have both. Once we have a Christopher talks to them every week. He vision of what we want, then we confuse The good news is that we have stayed true shows them videos, takes them inside the ourselves with the facts. We also talk a lot to our strategy throughout this time and design studio, counts down to the runway about getting the balance right. We talk a we know precisely what we need to do shows, and more. We are engaging with lot about the concept of balancing the left to continue on this trajectory and where our customers and allowing them to come brain analytical and right brain creative. we need to invest across the business. into our world. Of course, if someone In digital, we are ahead of most of our is saying something negative we try to Take our annual employee Icon awards, competitors because we have been on respond and resolve it. We have made a sort of internal Academy Awards. this journey for the last six years. We a big investment in customer services Everyone votes for stellar performance are beginning to blur the lines between teams and now, with the new Burberry. across multiple categories. But the most physical stores and the digital experience. com website, you can click to call or click coveted prize is the one Christopher and I More people see the brand via digital to chat with them, 365 days a year, 24/7 hand out. It’s called the art and commerce than any other medium. In luxury, 60% and in 14 languages. It will be 25 by the award and is given to the two people of people shop online and pick it up in a end of the year. And of course if you walk who have best exemplified this balance store. So if the store doesn’t look or feel into a store you get the same great level in achieving something exceptional. Our the same as it does online, are you truly of service. business is not all about innovation and behaving like a great brand? creativity. We are a FTSE company and so Angela Ahrendts CEO, Burberry

Since her arrival as Chief Executive Officer of Burberry in 2006, Angela Ahrendts has been acclaimed for her highly successful turnaround strategy. In just a few years, together with Chief Creative Officer Christopher Bailey and their senior team, she has established the 156-year-old British company as probably the most truly digital luxury brand in the world. From in-store technology to social media, Burberry has been a forerunner in adopting digital technologies to connect its channels, creating a new, rich brand experience for consumers.

Angela Ahrendts explains why and how she introduced digital transformation into Britain’s iconic luxury brand.

About Capgemini

Capgemini Consulting is the global strategy and transformation With around 120,000 people in 40 countries, Capgemini is one consulting organization of the Capgemini Group, specializing of the world’s foremost providers of consulting, technology in advising and supporting enterprises in significant and outsourcing services. The Group reported 2011 global transformation, from innovative strategy to execution and with revenues of EUR 9.7 billion. Together with its clients, Capgemini an unstinting focus on results. With the new digital economy creates and delivers business and technology solutions that creating significant disruptions and opportunities, our global fit their needs and drive the results they want. A deeply team of over 3,600 talented individuals work with leading multicultural organization, Capgemini has developed its own companies and governments to master Digital Transformation, way of working, the Collaborative Business ExperienceTM, and drawing on our understanding of the digital economy and draws on Rightshore®, its worldwide delivery model. our leadership in business transformation and organizational change. Learn more about us at www.capgemini.com. Find out more at: http://www.capgemini-consulting.com/

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Contacts Didier Bonnet, [email protected]

Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group. The information contained in this document is proprietary. © 2012 Capgemini. All rights reserved.