Mulberry’s F/W 2014 London Fashion Week presentation enlisted the collaboration of famous British model Cara Delevingne in hopes of breathing new life into the brand after a third profit warning and confirmed reports of a 27 percent market price loss.
With almost half its stores in Asia, the company is looking East as it stages its comeback with China in the front row. In addition to its new iconic brand ambassador and its search for a new creative director to fill the shoes of Emma Hill, the company is in the midst of a China store expansion plan as it pursues leadership in the Chinese luxury market.
On February 17 at Mulberry’s London Fashion Week presentation at The Dorchester, a luxury hotel in Mayfair, London, Jing Daily spoke with Mulberry CEO Bruno Guillon to discuss how China factors into the brand’s current transitional period as it evolves from humble British heritage to global luxury.
What qualities are you looking for in the new creative director?
This will be Mulberry’s fourth change in creative director, and although it is a big change, it will also be a good opportunity for the brand and we hope to be able to announce in the next one or two months. A key factor to remember is that we have a very strong internal Design team for accessories and ready-to-wear, many of whom have been with the company for close to a decade. It is important to find someone that will work well with the teams and fit in with the Mulberry family.
What has shown Mulberry success in engaging with your Asian audience to date? What is the key future strategy to market yourselves to the Chinese consumer?
There is a lot of potential in China, and at the moment we only have five stores in Beijing and Shanghai, and there is potential beyond these cities as well. We plan to secure a flagship store in Shanghai for 2015; our brand positioning is key to us and it is important we are situated in the right location. We need to accelerate our brand awareness in Asia, and greater visibility with flagships in key cities such as Shanghai and Paris will help to achieve this.
Our heritage of UK craftsmanship and dedication to quality reinforces our brand values, which in turn consolidates our authenticity as a luxury British brand. Customers in China and all over the world are demonstrating great maturity in the choices they make when purchasing luxury products. They want great products with beautiful leather and finishings, that are practical and able to last a lifetime—something that we at Mulberry are committed to delivering.
In regards to our social outreach we actively engage with our customers through our Weibo platform and we have plans to launch a Mandarin-language website along with other international languages.
With almost half the Mulberry stores placed in Asia but only a handful in China, what overall role does the Chinese buyer play in the future for the brand?
The Chinese consumer has a powerful, global impact at home and as an international tourist, which is why it is important for us to be in key locations such as Paris, and have a strong store there. We have a historically strong British customer base, which we love, but we must be less dependent on the UK market and increase our presence globally.
To what does Mulberry attribute the recently reported 27 percent market share price loss?
We were disappointed by Christmas trade in the UK and our wholesale accounts in Korea reduced their order because of domestic conditions in the market. We are still expecting to make pre-tax profits of around £19 million and have invested in our new factory, The Willows, allowing us to employ over 600 craftsmen and women.
We need to talk about the brand more, amplify our core messages and our great heritage story; this is very important for the authenticity and global storytelling of the Mulberry brand. Our investors understand the importance of the long-term strategy and the ongoing process to transform Mulberry from a domestic to a global luxury brand, which is demonstrated in the continued growth of international retail sales.
The average Mulberry product in recent months has sharply increased above line of inflation. Where is the justification in the price increase? Is it to align yourselves to competition in the Chinese luxury market?
No. We have made significant investments in quality and a major part of our recent investment has been in our new factory, The Willows, close to our flagship factory in Somerset. With both factories, this means that we now make 50 percent of our leather bags in the UK. There have also been considerable increases in the raw costs of materials such as leather and quality, and the grade of leather is very important; we want to ensure our products are to be cherished for a life time so we must choose the very best leathers even at a higher price.
After three profit warnings, is there concern that too much effort is being spent repositioning the brand for the Chinese market, moving away from “affordable luxury”?
One of our key strategies has been to reinforce the brand’s luxury positioning through our quality, heritage and craftsmanship. This is a long-term strategy and we must communicate these values globally for a strong brand for the future. We still have 60 percent of products under £1,000; we have a number of entry level price points to satisfy our customers after affordable luxury.