What a difference a year makes.

During September 2023′s London Fashion Week, Burberry Group Plc dominated, renaming Bond Street underground station as “Burberry Street” and taking over a traditional London café. It even snapped baker and national treasure Mary Berry in the venue, Norman’s.

Twelve months on, and the picture could not be more different. Burberry has issued three profit warnings and parted company with chief executive officer Jonathan Akeroyd. It was recently ejected from the FTSE 100 index. With its shares trading at a 15-year low, its market capitalisation has shrunk to about £2 billion ($2.6 billion) from almost £10 billion in March 2023.

The company put its best foot forward at its show in London on Monday, overseen by creative director Daniel Lee. However, it was much more low key than previous events — held at the National Theatre rather than a custom-built marquee — indicative of the fact that Burberry is set to become a very different kind of luxury company.

Under Akeroyd, it aimed to be the British LVMH Moet Hennessy Louis Vuitton SE. Led by new CEO Josh Schulman, it could be more like Ralph Lauren Corp.

Schulman is poised to set out his strategy in November. But the catwalk gave us a few clues. The show was heavy on outerwear, suggesting that he will return to Burberry’s traditional heartlands of coats and jackets, particularly its classic trenchcoat, where the company still has luxury positioning. This focus would make sense as Burberry has a better chance competing with the likes of high-end down-jacket-maker Moncler SpA than with leather-goods powerhouse Louis Vuitton.

There were far fewer bags on the runway, indicating that ambitions here may be more modest after several years of Akeroyd seeking to drive the company’s growth through accessories.

Speaking after the show, Schulman said he wanted to stay the course on elevating the brand over the long term, but with a better balance on prices. High fashion styles are likely to be accompanied with more affordable items to win back core shoppers who have deserted it. This model of stretching from runway to more accessible lines, as well as operating outlet stores, is reminiscent of Ralph Lauren Corp., whose shares have been one of the few to buck the downturn in luxury.

But yet another repositioning for Burberry is not without challenges. Pricey coats and cheaper items elsewhere risk confusing the customer.

Selling more premium, rather than super-luxe products, can also be tricky. Tapestry Inc.’s Coach, which operates in the more-accessible segment, has done a good job turning around its fortunes, with Gen-Z friendly products such as the Tabby bag, but its revival did not happen overnight. Less wealthy shoppers remain under pressure. It’s worth remembering that Ralph Lauren’s success has actually come from moving upmarket. And Burberry also generated about 40 percent of its sales from Chinese consumers before the pandemic, so the luxury downturn in the country is another headwind.

Then there is the question mark over whether Lee will remain as lead designer. A less luxurious Burberry would be a different proposition to the company he joined.

One ray of hope is the reunion tour from the band Oasis, which championed Burberry in the ‘90s. In photos doing the rounds again, frontman Liam Gallagher is pictured wearing the brand’s trademark check. The accord between the Gallagher brothers is also spurring the rise of the #Britishcore TikTok trend.

Akeroyd’s strategy was all about Burberry’s Britishness. While Schulman, an American, looks likely to ditch many elements of his predecessor’s plan, he should emphasise this heritage further. So far, Burberry’s turnaround has lacked buzz. A return of Britpop could be just what it needs.

Liam’s son Lennon Gallagher is already a face of the brand, and was at the show, but Burberry should embrace Oasis fever even more.

Moncler’s Stone Island, another favourite of the band in their heyday, has signed up Liam Gallagher to be a star of its autumn winter campaign. Burberry outfitting the brothers for the forthcoming tour, for example, would be a smart move.

If such efforts fail to revive the company, then a takeover looks like the only hope. But here, the picture isn’t clear cut either.

Tapestry is a natural buyer, but it is battling the Federal Trade Commission’s efforts to block its $8.5 billion purchase of Capri Holdings. If this deal doesn’t close, then Burberry might be a consolation prize. The brand, which before its recent slump had about £600 million in net cash excluding lease liabilities, could also be appealing to private equity, which could overhaul the company away from the glare of public markets.

Then there’s Mike Ashley. His Frasers Group Plc owns upmarket boutique Flannels, and he has previously taken stakes in Hugo Boss AG and Britain’s Mulberry Group Plc — both not too far off from Burberry. Given the sharp decline in the share price, and the fact that with a holding he would be able to strong-arm Burberry into supplying Flannels with its best products, Ashley would also be a logical investor. But so far, he has failed to show any interest.

Without Cool Britannia coming to Burberry’s rescue, or a bidder checking in, shareholders risk looking back in anger, yet again.

By Andrea Felsted

The UK’s advertising watchdog has written to 17 “well-known” fashion brands advising them to review how they market sustainability claims amid an ongoing crackdown on greenwashing.

The Competition and Markets Authority concluded an investigation into companies including Boohoo and Asos earlier this year, requiring the retailers to clarify their green claims. Its latest salvo of warnings came with the publication of a compliance guide designed to help the sector ensure its sustainability marketing fits within the requirements of the law.

The letters highlight areas of concern, focused on vague or general claims that could mislead consumers. Some examples include labelling products as “recycled” when only a small proportion of recycled materials was used to make them and marketing collections or ranges as in some way sustainable without clearly stating the criteria used for such a designation.

The CMA said it has not launched enforcement action against the brands it has cautioned and declined to name them.The warnings came with a sting: a reminder that incoming regulatory changes mean the CMA will soon have the authority to fine companies up to 10 percent of global revenue if they break consumer law.

“Whether one of the 17 that got a letter or not... every business in the fashion sector should take note of the guide,” the CMA’s interim senior director of consumer protection Hayley Fletcher said. “Now is the time for businesses to reflect and get it right.”

Learn more:

Asos and Boohoo Forced to Clarify Green Claims

Major UK fast fashion retailers will change the way they promote the environmental credentials of their clothes after being accused of greenwashing by a UK watchdog.

Ermenegildo Zegna, the Italian fashion house listed in New York, is sticking with its expansion plans for China over the medium term despite uncertain timing on a possible economic recovery.

“Our 2-3 year growth strategy is not changing” even with a lack of visibility on a rebound in China, chairman and chief executive officer Ermenegildo Zegna said in an interview. “We might delay a few shop openings scheduled this year, but we’ll keep investing in marketing and made-to-measure services in the country.”

The maker of suits, blazers and mens’ accessories on Wednesday reported first-half sales of €960 million ($1.1 billion), 6 percent higher than last year. Adjusted earnings before interest and taxes fell to €81 million.

The CEO cited a “difficult” month in August, largely due to persistently sluggish growth in the key China market.

Over the medium term, Zegna is targeting growing sales for the recently acquired Tom Ford fashion business in markets where the brand is currently not a leader, including China, Japan and South Korea, the CEO said.

The company also wants to strengthen the Zegna and Thom Browne brands in the US and the Middle East, he said.

In China, the focus will be on tailor-made and personalised in-store offerings, Zegna said.

By Flavia Rotondi

Learn more:

Is This an Inflection Point for Luxury Fashion?

As the fashion industry takes a breather in August, luxury brands are grappling with creative leadership gaps, plummeting profits, and evolving consumer priorities. Imran Amed investigates whether current struggles signal a permanent shift in the market landscape.

Beauty isn’t prepared to lose its hitmaker.

Over the past few years, TikTok has become the tool for taking a beauty product from unknown to sold-out success overnight. Its ability to bring viral attention to products like the K18 Molecular Hair Mask or Cosrx Advanced Snail 96 Mucin Power Essence has fundamentally changed the industry, and with that, it has become the most important platform for beauty marketers.

Those days, however, appear to be numbered. Despite a sense of denial among US-based influencers and marketers, who still can’t seem to fathom losing access to the app that has become so crucial to their businesses, that outcome is very much a real possibility. That was on full display this week, as federal judges posed pointed questions in response to TikTok’s oral arguments appealing the ban on Sept. 16.

With TikTok comprising a significant chunk of beauty brands’ marketing budgets, its exit would require them to dramatically rethink their social strategies. To get a sense of what this would look like, they can learn from a market where a TikTok-free social media landscape has already been the reality for four years: India.

India is not the only country where the short video app is blocked, but its social media market holds some key similarities to the US. TikTok launched in both countries at similar times and hit the mainstream in 2020. The app has 170 million users in the US, approaching the number India reached (200 million) before the abrupt shutdown in 2020.

Because tech giants Alphabet and Meta have a significant presence in India, Instagram and YouTube won the lion’s share of attention from India’s former TikTok users after the ban. But TikTok’s short-lived presence in the market dramatically altered the way people consumed social media, meaning brands could not just revert back to their pre-TikTok marketing strategies.

“The shift from TikTok prompted significant changes in how brands approached social media marketing, with a greater focus on short-form video, influencer partnerships, and a diversified, localised approach to content,” said Sonalee Kumar, the director at New Delhi-based marketing agency TCC.

Instagram’s Vibe Shift

Without TikTok, Instagram has emerged as the dominant platform for beauty content in India, despite the fact that it is estimated to have fewer users in the country than YouTube — which rolled out its TikTok alternative YouTube Shorts in September 2020 in India — does. Local startups that attempted to capture a chunk of the short-video market share quickly fizzled in the country.

“Nothing comes close [to Instagram],” said Arjun Sawhney, the owner of TCC.

The switch was a relatively seamless one, because in India, TikTok was banned much earlier on in its trajectory, and beauty brands hadn’t “fully embraced it,” said Akash Mehta, the co-founder and CEO of hair-care brand Fable & Mane. “They were exploring its potential, but the shift to serious investment in marketing campaigns hadn’t reached its full momentum,” he added.

With that, Instagram’s Reels — which it rolled out in 2020 as soon as TikTok left India — became the gateway to short video for many brands. But even though the platform’s rise in India was relatively brief, it left an impact.

Like in the US, at the time TikTok was banned in India, dance and humour videos were the most popular form of content, according to Sawhney. “It wasn’t really an influencer portal in terms of product influencing,” he said.

Without TikTok in the picture, less polished beauty content made its way to Reels. According to a 2023 Mintel survey of consumers in India, humour was listed as the most popular factor driving consumers to follow an influencer at 56 percent, followed by authentic reviews at 52 percent.

India-based influencers “use Instagram a lot more casually. People in the US still use Instagram as something a bit more curated, and use TikTok as something more casual,” said beauty influencer Seerat Saini.

“When it got banned, I do think the content on Reels became a little more like TikTok, more relatable,” said Michelle Ranavat, the founder and CEO of US-based luxury skincare brand Ranavat, which distributes internationally to India via its DTC channel.

If a TikTok ban does come to the US, that shift is likely to be even more pronounced, because TikTok has become more entrenched in the culture of social media, and brands’ marketing strategies.

Lessons for the US

Still, while Instagram may have absorbed some of the TikTok style in India, experts say brands shouldn’t expect all trends to transfer from one platform to another.

When it comes to products, a TikTok shutdown could dramatically cool off the viral beauty hype cycle driven by the “TikTok made me buy it” phenomenon. In the US, it has been TikTok, not Reels, that regularly sends products to the heights of sold-out popularity, such as Dior Addict Lip Oil or the Glossier You fragrance. So far, Instagram Reels has not been able to replicate that effect in India.

“A direct sales boost from Instagram content nearly never happens on this platform. There is no equivalent to TikTok Shop for Instagram in India,” said Shamika Haldipurkar, the founder of skincare brand D’you. “Content on Instagram is largely perceived to nurture your warm audience and followers, and not to push sales.”

It also remains to be seen whether influencers would be able to migrate their audiences to a new platform. Most of TikTok’s top US beauty influencers have not been able to build equally sized audiences on Instagram despite years of efforts to diversify their platforms. But in India, rising TikTok beauty stars were able to gain prominent followings on Instagram after the ban. According to Kumar, these include Komal Pandey, who has 1.8 million followers on Instagram and no longer operates on TikTok, as well as Kritika Khurana (1.8 million Instagram followers; 264,000 on TikTok) and Aashna Shroff (1 million Instagram followers; no active TikTok account).

Brands must also consider what the loss of TikTok would mean for their budgets. Skincare brand Plenaire’s founder Namrata Nayyar-Kamdar, who has been planning her UK-based brand’s expansion into the Indian market, said that customer acquisition costs on Instagram are about ten times as much as they are on TikTok. Putting it at the centre of your marketing strategy will require either a bigger investment, or less impact.

“Meta is so, so expensive,” she said. “And really, unless you have a very big following, you’re not going to get traction.”

For beauty brands in India, that has led to a strategy focused on niche, regional and smaller micro-influencers on Instagram. For Sawhney, his agency has shifted from spending on campaigns with five large influencers to 30 to 40 smaller influencers. If US brands are faced with the same choice, it may force them to diversify their own marketing, embracing new channels and spreading out their spend among a variety of levers, rather than focusing on one app.

“For the high-end beauty brands, the more niche, the more quality influencer is more effective for us,” he said. “We are now actually in this whole struggle to find those niche beauty influencers across the country who have 50,000 followers or 60,000 followers … using a whole bunch of them is less expensive,” he said.

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Chanel bought a building on avenue Montaigne, a high-profile shopping destination in Paris, as European luxury players swoop in to secure prime real estate for their boutiques.

The fashion label known for its tweed jackets and skirts purchased the property at 42 avenue Montaigne, about a block away from the Champs-Élysées, according to a statement, which didn’t disclose the transaction terms.

Chanel is already present in the building with a boutique, and there’s another of the brand’s stores on 51 avenue Montaigne. Italian insurer Generali was the seller, according to people familiar with the matter, who asked not to be identified discussing private information.

The acquisition of 42 avenue Montaigne follows other real estate purchases last year in Paris and in cities including London and Biarritz, Chanel said in the statement.

Owning a store can protect a retailer from ever-increasing rents and make it easier to justify the significant expense required to fit out boutiques and turn them into destinations that big-spending customers want to spend hours shopping in. Luxury players, notably LVMH Moet Hennessy Louis Vuitton SE, have invested heavily to transform boutiques into art and food destinations.

LVMH opened its Christian Dior flagship store at no. 30 avenue Montaigne over two years ago, and it houses a museum, restaurant, guest suite and gardens. It worked with renowned architect Peter Marino, who’s also handled retail projects for Chanel.

The company “would never have done a boutique like 30 Montaigne for Dior in Paris had it been renting the location,” LVMH Chief Financial Officer Jean-Jacques Guiony told Bloomberg earlier this year. “If we’re a landlord, it allows us to have a different vision.”

The avenue Montaigne is a top destination for luxury shoppers, with some staying at the high-end Plaza Athénée hotel, where nightly rates run as much as €2,500 ($2,780) and higher.

Chanel’s current property portfolio’s value is more than $7 billion, with a significant portion having been bought over the last 10 years, a company representative said. The firm plans a major renovation for the 42 avenue Montaigne boutique beginning in 2029, a person familiar with the matter said.

Groups from Gucci owner Kering SA to Prada SpA have also made splashy property acquisitions over the past year.

Learn more:

Luxury’s Latest Battleground: Real Estate

Top luxury groups are buying real estate to secure landmark store locations with serious implications for second-tier players who are already struggling to stay on key luxury streets, writes Luca Solca.