SCMluxe has always insisted that production or the “make” strategy is always retained in the country of origin (Refer posts location, SCM Make ) to ensure brand recognition, quality, lead times and most of all the mindshare of the customer as a luxury product. Let us look at 3 British luxury brands which have demonstrated this in differing ways:
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| Mulberry factory - Shepton Mallet, Somerset |
1. The Flag bearer
The British fashion house Mulberry has always explored and built upon le style anglais starting from tweeds and country jackets to its more contemporary bags and leather goods (the iconic Chiltern bag being an example). This remains so even after the takeover by Singapore based Ong Beng Seng from founder Roger Saul in a $12Mn buyout – in fact the new owners have not only retained its national heritage but expanded its appeal by bringing in contemporary British design. They quickly realized that the leather goods and bags market was independent of culture and body type. For instance no matter if you were a size 0 or 10 or were from a culture that dressed conservatively, if you had the money, you could always show it off with an expensive handbag. So Mulberry invested heavily in the design and launch of its bags collection but also poured money ($8 million and counting) into its production facilities in Shepton Mallet, Somerset. The factory now produces almost 30% of all Mulberry bags and employs more than 300 in the area. Each of the 300 will be specialized artisans skilled in cutting and processing leather. With over 140,000 bags being supplied to the world market from British shores, the brand retains its value and quality in the customers mind
2. The Status Quo
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| Jaguar assembly plant - Castle Bromwich, Solihull |
When India based Tata Motors took over an ailing Jaguar from Ford in 2008, the easiest way to cut costs and bring the company back to black would be to shift or outsource production to Tata’s expansive factories in India. However assembly of a Jaguar continues to remain in Castle Bromwich, England. Instead the company focused on bringing in new processes, improving efficiencies in sourcing and assembly as well as broadening the Landrover’s appeal in the market. Retaining the Landrover’s British heritage paid off this year with the division registering a profit of $1.7 billion after years of being in the red or barely breaking even
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| Burberry HQ - Horseferry Square, London |
3. The Prodigal returns
The success of Burberry’s iconic check pattern spurred the company into luxe status and as a symbol of British design and quality. However the pressures of being a public limited company and quarterly forecasts the company started selling licenses to manufacturers across Asia to produce and sell the plaid pattern on perfumes to purses to underwear. A resulting drop in quality, excessive volumes flooding the market and lack of control of display and distribution meant the brand lost its luxe appeal in the mind of the customers. It was now a mass market brand (very much like Pierre Cardin today) with large volumes, low prices and low margins. A price war meant customers were not willing to pay a premium for the product but expected it to compete with price and quality with other generic products. Shareholders finally saw sense in 2006 when the company started buying back the licenses under the stewardship of CEO, Angela Ahrendts. The cost of these buybacks were high but the company has managed to stay afloat by retaining its British tag – it now needs to build and restore customer confidence in its luxe status….all over again
Emphasizing national heritage helps established Western brands to retain existing markets and grow in the emerging markets of Asia and the Middle East. However what will their response be when Asian customers mature and demand their own heritage brands – will this be a competition to existing Western brands or will they simply open up an altogether new market?
