The marketing and digital strategy needs a refresh, argued retail consultant Robert Burke. “I’ve found the marketing is a little old, the styling is speaking to an older customer and it’s still in this in between area (between big designer brands like Balenciaga, and the new cheaper Instagram-friendly competition),” said Burke. “They should consider lowering their prices, upping their social media presence and converting to a more fashion-led brand.”
LONDON, United Kingdom — Anna Wintour sat front row for Emma Hill’s Mulberry Autumn/ Winter 2013 show, when a slouchy vintage-style satchel named after British "It" girl Alexa Chung was a fashion favourite at one of the most buzzing shows at London Fashion Week. Six years later, the brand isn’t staging a catwalk show, sales are middling at best and the label, which once had a market capitalisation of £1 billion, is valued at around £187 million ($232 million).
Mulberry has been making leather handbags from its rural English base in the Somerset countryside — where half the products are still handcrafted today — for close to 50 years. The brand's offering was high quality at an affordable price, positioned mostly between £500 and £800. In 2013, former chief executive Bruno Guillon attempted to establish the brand as a luxury player, pushing handbags over £1,000, offering exotic skins and promoting its "Made in England" credentials. The perception of the brand as an affordable one was hard to shift, and luxury shoppers stuck to established brands while Mulberry's core and mostly British customer base felt alienated by the price hikes resulting in several profit warnings. In 2015, the company drafted Thierry Andretta, former chief of luxury jewellery and watch brand Buccellati who had previously worked for LVMH, to rebuild the brand and return to its affordable luxury roots.
But, more than three years later, Mulberry announced a widening operating loss of £8.2 million in the first half and revenue declines of 8 percent due to weak UK demand, fewer tourists and the fall into administration of department store chain House of Fraser, where it runs concessions. The shares are hovering at a near five-year low, which is a sharp contrast to the strong growth of larger rivals like LVMH and Kering, and comes amid a push by them into price points approaching Mulberry's. Take Gucci’s Dionysus GG Supreme super mini-bag at £570 or Balenciaga's triangle shaped clutch at £535, while a raft of Instagram-ready, direct-to-consumer handbag brands with more affordable pricing like Wandler, Mansur Gavriel, Danse Lente and Cult Gaia add to the fierce competition.
Andretta’s focus has been on the Asia-Pacific region, taking control of its franchisees and pushing digital. Meanwhile, Johnny Coca, the Spaniard who worked with Phoebe Philo at Celine, was hired to refresh products including today’s best-selling Amberley satchel — popular among young female shoppers but not as ubiquitous in the fashion press as the Alexa once was — and expand its offering in shoes, ready-to-wear and jewellery.
“We are quite pleased with our progress in a difficult UK market,” Andretta told BoF, sitting in his showroom at the brand’s Kensington headquarters in West London amid the Autumn/ Winter 2019 collection of chunky gold and pearl earrings, eyelet embellished purses and faux-croc leather cross-body bags. “We have a bright future internationally.”
But luxury analysts say fixing the brand's awareness in a crowded marketplace is a Herculean task. "To move the perception of a leather accessories brand when it loses momentum is very difficult and requires time and a big communication investment,” said Mario Ortelli, managing partner at luxury advisors Ortelli & Co. Even Prada, with a strong ready-to-wear business, big marketing budgets and one of the most respected creative directors, took time and hard work to reaccelerate its leather business from a lack of innovation and overpricing a few years ago, Ortelli added. “So, when you haven’t got as many levers, like Mulberry, it’s a very tough exercise."
The brand’s reliance on the UK is another key strategic issue. 68 percent of sales are domestic including concessions in over 30 department stores, where discounting is high and nervous British consumers are curbing spending amid Brexit concerns. However, according to Andretta, international can be 50 percent of sales by pushing further into northern Asia, particularly China.
But international is proving difficult. They have dropped franchisees in favour of majority-owned partnerships in China, Japan and Korea to better control the branding, stock and omnichannel offers. The brand now only has four stores in China, one in Hong Kong and another in Taiwan, although it has joined powerful Chinese e-commerce platforms like Tmall, Secoo and JD.com’s Toplife, where tech-savvy millennials do their shopping in the fastest-growing luxury market globally. Luxury goods purchases in China rose to 142 billion yuan ($20.79 billion) last year. And a £1.8 million marketing investment re-launching Mulberry's business in Seoul with a Spring/ Summer 2018 catwalk show a week before New York Fashion week, helped them stand out on social media and prompted a triple-digit online sales increase in Korea where it has 19 stores, Andretta said. Asia-Pacific sales have barely shifted, reaching £11.5 million last year, a decline from £11.65 million a year earlier, thanks in part to the closure of 7 franchise stores.
“We started really late, and we don’t want to make any mistakes on the network. The network is small for a reason, firstly we would like to play our digital game based on omnichannel. And China has everyone [opening stores], some big brands had overdone it and are closing [stores]. We want to be relevant for the younger generation,” Andretta said.
Staying relevant doesn’t come easy. It has taken two years to shift to the “see now, buy now” model needed to keep up with the demands of a younger audience, Andretta said. Strong digital sales after the shoppable Seoul catwalk show suggest it is working — they had an "incredible amount of reach" with Asian influencers and local celebrities. Digital sales are now 17 percent of revenue, up from 14 percent last year, which compares well with rivals like Kering at 6 percent.
But this London Fashion Week there is no “see now, buy now” catwalk show. After shifting to Seoul last September, this week they are back in London offering a free pop-up installation called #MulberryReflections in a space adjacent to their new Regent Street flagship to launch their new sunglasses and optical line inspired by the Mod liberation of the sixties with their Spring/ Summer collection, including chunky acetate cat-eye sunglasses in sorbet pink from £190. Will it be enough to resonate?
The marketing and digital strategy needs a refresh, argued retail consultant Robert Burke. “I’ve found the marketing is a little old, the styling is speaking to an older customer and it’s still in this in between area (between big designer brands like Balenciaga, and the new cheaper Instagram-friendly competition),” said Burke. “They should consider lowering their prices, upping their social media presence and converting to a more fashion-led brand.”
Another option is taking the brand private to cut its exposure to UK department stores more quickly and push overseas without short-term profit concerns. “Its easier to turnaround a private [company] than a public [company],” said Ortelli. “For sure, any mid-size brand like Mulberry is an acquisition target for industrial and financial investors.” But with 93 percent of the stock privately held, much depends on the Singaporean husband and wife billionaires, Ong Beng Seng and Christina Ong, who, together with their daughter Melissa Ong, hold 56.17 percent of the company's total voting rights. They invested in the company in 2000 and have held a majority stake since 2003. The Ong family could not be reached for comment.
Aligning Mulberry's marketing and product with the expectations of millennial and Gen Z consumers will be key for a turnaround. A catwalk show might not be what consumers require, but making hit styles, building a community online and working with social media will be key.
“Mulberry has had a strong brand history in the affordable luxury sphere. Strengthening the brand will be about carrying forward their core strengths, investing in craftsmanship and their British roots, product innovation and collaborations,” said branding expert Rebecca Robins from Interbrand.