Burberry’s turnaround strategy reveals the power of emotional connection

When I worked in the luxury sector, it was synonymous with exclusivity and the unattainable, but in recent times, it has been undergoing a clear and fundamental shift.

As it becomes harder to navigate uncertain markets and the ever-evolving consumer sentiment, Burberry’s recent turnaround offers valuable lessons for those seeking good sustainable success in 2025 and beyond.

We live in a world where consumers expect way more than a mere status symbol and it was Burberry’s resurgence that highlighted a crucial insight: luxury brands win not by chasing the highest price point, but by staying clear and true to their emotional default, the core emotional experiences they promise to deliver.

So, let’s explore how Burberry rediscovered its identity, the mistakes it corrected, and what every brand can learn from this remarkable reset.

The problem: Overextending for ultra-luxury status

Burberry’s ambition to elevate itself into the ultra-luxury sphere began with aggressive conviction and determination in 2022.

With a target of £5 billion in annual revenue, it raised handbag prices beyond £2000 and adopted a positioning that aimed to compete with the highest and most elite fashion houses. At first, this strategy appeared super promising. Burberry gained a lot of traction with high-net-worth, fashion-forward clientele.

But cracks soon appeared.

By 2024, the luxury industry had shed 50 million customers globally. The strategy of courting only the ultra-luxury segment proved limiting, as Burberry’s core audience – those who valued the brand’s British heritage and iconic outerwear, began to feel alienated and left out of their equation. At this stage, the company reported an operating loss of £53 million.

The problem was clear: in its pursuit of exclusivity, Burberry had drifted away from its anchor and north star, its emotional default. The brand had always been famous for a sophisticated yet authentic connection rooted in craftsmanship, heritage and accessible elegance. Now the feeling it sold had changed

The reset: What luxury customers truly want

In July 2024, Burberry appointed Joshua Schulman as CEO, and with him came a renewed focus on brand fundamentals. His guiding inquiry: What do luxury customers actually want and what’s the question our brand answers?

Burberry’s research pointed to three key desires:

Authenticity
Heritage
Smart luxury pricing (neither ultra-luxury nor mass-market)

This then informed the core pillars of Burberry’s turnaround:

1. Reconnecting with core products and experiences

Burberry’s success had long been built on its iconic outerwear and scarves, emblems of British sophistication. Recognising this, Schulman changed and pivoted Burberry’s focus back to these hero products:

It revitalised the in-store experience: It ceated a “Scarf Bar” at the New York City flagship store which exemplified this shift. Customers could explore customisation options, immerse themselves in the tactile craftsmanship of Burberry’s scarves and rediscover the brand’s legacy.
This in turn led to the global rollout of the “Scarf Bar” concept: This initiative is being expanded worldwide to reinforce the brand’s emotional connection with customers through physical retail experiences.

2. Reimagining the pricing architecture

Pricing is much more than a financial decision; it reflects how a brand is perceived. Burberry adjusted its pricing strategy architecture by creating tiered price points to appeal to a broader spectrum of luxury consumers without diluting its prestige position in the market:

Strategic “good, better, best” pricing tiers: We used this structure during my time at Nike. It allows for differentiated entry points across product categories, ensuring aspirational customers can engage with the brand while maintaining exclusivity and aspiration for high-ticket items.
Recalibrating handbag prices: Burberry lowered prices from £2000 to a range of £1500-£2000 – a sweet spot that balances luxury appeal with accessibility.

3. Amplifying authenticity through storytelling

A brand’s emotional reinforcement is often built through its ability to tell meaningful stories. Burberry leaned into its authentic British identity and long-standing customer relationships with the “Wrapped in Burberry” campaign:

Featuring real customers: The campaign showcased couples who had worn Burberry for over 20 years, showing the love, loyalty and emotional connection to the brand.
Highlighting those enduring relationships: By celebrating customers’ personal stories, Burberry triggered and reminded its audience that it is more than a luxury brand, it is a cultural icon woven into life’s milestones.

Why emotional defaults matter

Burberry’s turnaround illustrates a vital truth that many brands still get wrong or forget to absolutely solidify. Every brand is built on an emotional promise. For Burberry, that promise is tied to heritage, craftsmanship and understated sophistication – certainly not the fleeting allure of ultra-luxury pricing.

This concept of emotional defaults is critical in today’s competitive landscape. Brands like Mercedes-Benz demonstrate how luxury players outside of fashion can maintain emotional relevance and engagement by combining innovation, performance and timeless elegance.

Mercedes-Benz’s emotional default is built on trust, prestige and technological excellence. Whether through its advanced safety features, luxurious interiors or cutting-edge electric vehicles, Mercedes-Benz ensures that its cars are not just modes of transport but symbols of success and sophistication, creating lasting emotional connections with its customers.

Lessons for all brands

Burberry’s recovery offers actionable lessons for all brands looking to maintain relevance:

Know your brand’s core emotional default. Whether it’s craftsmanship, innovation or heritage, understand what emotionally differentiates your brand, understand the feeling you are selling and ensure it’s reflected across all touchpoints.
Balance aspiration with accessibility. Luxury does not always mean ultra-high prices. Thoughtful pricing architecture can broaden your audience while preserving your place and position in the market.
Leverage physical retail for emotional engagement. The in-store experience is a powerful tool for nurturing long-term loyalty. Burberry’s Scarf Bar demonstrates how brands can create immersive spaces that reinforce their emotional connection with customers. It’s your most manageable and tangible marketing tool today so treat it like a studio.

Conclusion: The future of sustainable luxury

Burberry’s return to form and place proves that success is not about chasing the highest price tag but about understanding and honouring the brand’s DNA. By realigning its products, pricing, and storytelling with its emotional default, Burberry has shown how luxury brands and any brand can remain resilient in the face of many market disruptions.

As the retail industry evolves, brands that root their strategies in authenticity, emotion, and meaningful customer connections will continue to survive and better yet thrive. For those seeking long-term growth, the lesson is clear: Emotional defaults are not just strategic tools, they are the heart of any sustainable business.

The post Burberry’s turnaround strategy reveals the power of emotional connection appeared first on Inside Retail Asia.

February 7, 2025 at 02:05AM
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Nick Gray