Reflection Bain

Reflection Bain

Burberry Looks Online for Ways to Gain Customers

LONDON — Angela Ahrendts still remembers when she bought her first Burberry trench coat. She was 21 years old, had just finished her studies in Indiana and was looking for a smart but warm coat to wear for her first job at a small men’s wear firm in New York. Ed Hardy chothing

Those raincoats, a 95-year-Old Fashion icon, remain Burberry’s best-selling item, and Ms. Ahrendts — who now runs the company — is hoping to move the quintessentially British brand into the age of the Internet to attract a new generation of shoppers.

On Monday, Burberry introduced a social networking site, artofthetrench.com, to encourage people to share their own trench coat stories. It is the latest step by Ms. Ahrendts and her creative director, Christopher Bailey, to build on the brand’s British heritage and trademark plaid with a more modern twist.

“It’s our differentiator,†Ms. Ahrendts said. “It’s not so different from what competitors do. Maybe one was born from shoes and another from luggage; we come from a coat. It’s our job to keep that category hot and cool and relevant for all ages.â€

The step reflects a broader move by luxury goods companies, which have generally failed to figure out how to sell their wares online. Indeed, many have shunned the Web, seeing it as mostly a place for bargain hunters to search for knock-offs or counterfeits.

As highly affluent, but aging, customers in developed countries cut back on their purchases of luxury goods, the Web represents the prospect for growth.

Salvatore Ferragamo announced plans for an online store in October, following its Italian rivals Prada and Bulgari to the Net. Fabergé, creator of the legendary Imperial Easter eggs, started selling its new jewelry collection almost exclusively on the Web in September.

Ms. Ahrendts, who is tall, charismatic and often dresses head to toe in Burberry, used to work at Donna Karan and is bringing an American touch to the company based in London.

Burberry has been on the upswing for much of the decade, but since taking over three years ago, Ms. Ahrendts, 49, has cut $82 million in costs, expanded in the United States and Asia, and opened separate children’s fashion stores.

She also added more shoes and handbags, including the $6,200 “Beaton†bag worn by Victoria Beckham, and took greater control of pricing by opening more Burberry stores.

As a result, Burberry has done better than most of its competitors in steering through the Great Recession. Sales rose 4.6 percent to £343 million, or $568 million, in the three months to the end of September, beating analyst expectations. The price of its shares has doubled during the past year.

For years, Burberry was seen as a limited brand, a potential takeover target for the likes of Coach, Richemont and LVMH Moët Hennessy Louis Vuitton. But the increase in its share price during the past year has acted as a good defense.

Today, Burberry faces twin challenges: to maintain momentum amid a difficult economic recovery, and to keep the expansion drive from diluting the brand.

“The biggest thing that keeps me up at night is how can we continue to evolve this organization in order to stay ahead of the curve,†Ms. Ahrendts said during an interview at the company headquarters last month. “My job is to always look two to three years ahead and look round the corner and see what’s coming.â€

The recession split luxury goods makers into different camps. Those more reliant on sales from jewelry and watches, like Bulgari, were hit harder than those selling clothes and less expensive or less ostentatious items. At the same time, companies that depended more on department stores suffered most of all, largely because they had less control over pricing and inventories. Ed Hardy chothes

After a roughly 8 percent decline this year, the $226 billion global market for luxury goods is expected to grow again next year as younger consumers and working women replace retiring baby boomers as the dominant consumer group, according to consulting firm Bain & Company.

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