How David Beckham is ruining Burberry.

Commentary about business and finance.
July 12 2006 5:13 PM

To Chav and Chav Not

Can Burberry save itself from the tacky British yobs who love it?

Illustration by Rob Donnelly. Click image to expand.

American fashion brands have long looked across the pond for inspiration. Ralph Lauren made his fortune by providing an English country look to American burghers, and Brooks Brothers aspires to Bond Street. And there's an old garment industry motto: "Dress British, think Yiddish."

But the admiration goes the other direction, too. Burberry, the venerable British outfitter, has just hired its second American CEO in a row, Indiana native Angela Ahrendts. Last week the new boss said she plans to introduce the plaid-based luxury brand to flyover territory. As the Financial Times reported (subscription required), "Burberry is planning to take the brand into the heartland of Middle America, opening stores in Kansas, Indiana and Ohio as part of a big push into the US." (The FT seems to have gotten this slightly wrong: Burberry is planning to open a store in Kansas City, but on the Missouri side of the city, not the Kansas side.) * The Americanization of Burberry is one response to the company's curious crisis back home. It's looking to the New World to save it from the down-market yobs who've hijacked the brand in England.

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Burberry has a long and distinguished history. Started in 1856 by Thomas Burberry, the company developed gabardine in the 1880s and introduced the modern trench coat. (The famous checkered pattern was introduced as a lining to the trench coat in the 1920s.) Rose Marie Bravo, a graduate of the Bronx High School of Science, Fordham University, and the retail universities of Macy's and Saks, brought New York retailing savvy to the old brand when she was hired as CEO in 1997.Bravo hired designer Christopher Bailey from Gucci, planted the famous check on bikinis, and generally endowed the staid brand with sex appeal. The turnaround won plaudits from Business Week and led Time to dub her the most powerful woman in fashion in 2004. A portion of the company was sold to the public in the summer of 2002, and the stock has done reasonably well, as this chart shows.

As part of an orderly transition, it was announced last October that Ahrendts, a senior executive at Liz Claiborne responsible for brands like Ellen Tracy and Juicy Couture, would join the company in January and succeed Bravo in July. Ahrendts' task is to consolidate the gains, improve operations, and push the brand further into new markets. These are good times for luxury brands, as rising wealth in Asia, Russia, and the Persian Gulf boosts demand for Western luxury marks like Burberry. The company reported today that quarterly sales were up 19 percent from last year.

Amid the growth, however, Burberry has faced a crisis on its home turf. For some reason, a few years ago, a group of undesirable customers—known in the United Kingdom as "chavs"—latched onto Burberry as their favored brand. Who, or perhaps what, are chavs? The FT describes them as "members of a sub-culture prone to drinking and anti-social behaviour." (Here are definitions from Urban Dictionary and Wikipedia.) They're tough guys, skanks, soccer hooligans, lower-class unsophisticates, and cheesy celebrities. The king and queen of the chavs are soccer star David Beckham and his wife, not-so-Posh Spice, Victoria Beckham. Chavs, who are defined by class, not race, listen to hip-hop music, wear lots of jewelry, hang out in fast-food joints, and drink in public. (Here's a funny animated bit: "The Chavs—In Me Burberry.")

In the United States, some brands have experienced spectacular growth after being adopted by people on the fringes of polite society (see Timberland and hip-hop). But it doesn't quite work that way in Britain. The Financial Times noted that "wearing the brand became cause for exclusion from pubs, clubs and football grounds because it had become the uniform of troublemakers." Things got really bad when Danniella Westbrook, an ultra-chavvy former soap star, appeared in photos with her child, clad entirely in Burberry. More trouble came last fall, when Kate Moss, who featured prominently in Burberry's marketing campaigns, went into rehab.

Burberry has certainly been damaged by its walk on the "chav" side. But the British market represents only a small part of total sales. And so it makes perfect sense for the new CEO to be targeting the wealthy, deep, and comparatively underpenetrated U.S. market, which accounts for about a quarter of Burberry's revenues. Still, I can't help but wonder if Ahrendts's geographical strategy within the United States is sound.

Burberry has 32 outlets in the United States. (Here's the U.S. store locator.) The stores are mostly in the Arugula Belt—really upscale suburban and urban locales where you're likely to find Asian fusion restaurants, not all-you-can eat buffets; Tiffany's, not Annie Sez—places like Wilshire Boulevard in Beverly Hills, South Coast Plaza in the O.C., Cherry Creek Shopping Center in Denver, Newbury Street in Boston, and even Vegas.

In building up a retail presence, Burberry has clearly followed a strategy mapped out by luxury retailers like Neiman Marcus and Tiffany. But Ahrendts has different plans. She told the Financial Times that the company's expensive belted coats would find a welcome audience in the Corn Belt. "The brand resonates as being very democratic," she said. "It is aspirational to the typical American who has never been to London. But is not as intimidating."

This Midwesterner isn't so sure. This morning, I visited Burberry's flagship store near the corner of 57th Street and 5th Avenue in Manhattan.The six-story emporium stands just off the greatest shopping axis in the Western World—Louis Vuitton, Tiffany, Bergdorf Goodman, and Bulgari are all within a stone's throw. There's plenty of nice-looking, high-end merchandise here: coats of course, but also handbags, shoes, and casual wear. The salespeople are nice. Not a chav in sight to intimidate buyers. But the prices are rather intimidating. The 1921 men's trench coat, made of Egyptian cotton with a heavy lining, goes for $1,495. Are the practical, sober-headed burghers of Kansas, Indiana, and Ohio really prepared to pay $1,500 for a raincoat that looks a lot like the one you can buy at Brooks Brothers for a lot less, or at Target for a whole lot less?