Burberry and Ralph Lauren are often lauded for being the luxury industry’s most digitally forward brands. While other traditional fashion houses get cold feet in the face of e-commerce, these brands embrace buzzy movements like see-now-buy-now and new platforms like Snapchat.
But, almost depressingly for an industry so digitally stunted, going all-in on digital efforts hasn’t tangibly boosted sales for either brand, as recent earnings show each fashion house facing slipping sales.
“Brands that are synonymous with digital innovation are struggling,” said Maureen Mullen, chief strategy officer and co-founder of digital think tank L2. “As the industry is taking shape digitally, and organizations are figuring themselves out, they will point to examples like Burberry and Ralph Lauren and say ‘How much should we really invest ahead of the curve here?’”
Burberry and Ralph Lauren’s sales depict a dismal retail landscape across the board. Burberry reported its first half trading update on October 18, and revenue was down 4 percent over last year, to $1.4 billion. Ralph Lauren’s first quarter results of its fiscal year 2017 also showed sales slipping 4 percent, to $1.6 billion. In North America, sales were down 11 percent.
Burberry’s sales slump (in 2015, annual sales fell 8 percent) comes during a period of transition for the brand. Christopher Bailey, currently the company’s chief executive and creative officer, will be replaced as the brand’s CEO in 2017 by Marco Gobbetti. Bailey, who has championed the brand’s digital efforts, will stay on as creative director. Under him, Burberry has received a reputation as a brand known for its digital “firsts”: It’s tested new spaces for luxury like Apple TV, Apple Music, Line, Kakao, WeChat, Snapchat and more, seemingly fearlessly.
However, the company made it clear earlier this year that it didn’t know how to make money off of the 40 million social media followers it had accrued, signaling that the brand didn’t have a grasp on the role social played in its online strategy.
“Social is incredibly important in terms of branding, relevance and desirability, and all those things are going to have an affect on sales,” said Rob Fitzgerald, U.S. president of global social media agency We Are Social. “But saying you’re going to monetize your following, that’s not going to turn around overnight.”
Burberry was also one of a few brands to put its full seasonal men’s and women’s collections immediately on sale following the September runway show. But catering to a presumed customer urgency didn’t really move the needle in terms of sales. The runway collection is about 5 percent of Burberry sales globally.
“I wouldn’t say it had a meaningful impact on the sales number in the quarter,” said Carol Fairweather, Burberry’s CFO during the company’s first half trading update, adding that the show also happened toward the back end of the sales quarter. “I do think that we were really pleased with the response to the show across every dimension, be it brand reach, be it share of voice, magazine covers.”
Ralph Lauren also went fully in on see-now-buy-now this fashion season. Soon after its runway show paraded down Madison Avenue, the company promoted Ralph Lauren’s son, David Lauren, to chief innovation officer on October 7. The 44-year-old, who also serves as vice chair of the board, is leading the company’s digital and e-commerce efforts, which have in the past included a roll out of QR codes, touchscreens in stores and a “4D runway.”
David Lauren’s new title is part of Ralph Lauren’s restructuring plan to bring it into the future and turn around sales results. In 2015, revenue fell 2.8 percent to $7.8 billion, and net income sales were down 43.6 percent. The restructuring strategy also included plans to shift the brand’s retail calendar to be consumer-facing and improve mobile and e-commerce channel capabilities.
While the companies’ digital efforts haven’t yet sent sales skyrocketing, they’re not responsible for their misfortunes, either. According to Jason Goldberg, svp of content and commerce at Razorfish, digital luxury is so far behind that skilled companies are the “tallest dwarf,” not without their own challenges. Other brands, like Coach and Gucci, have demonstrated strong recent results by improving product offerings as well as digital strategies.
“It would be very interesting to see where Burberry and Ralph Lauren would be if they hadn’t invested in digital,” said Mullen. “Maybe virtually irrelevant.”