Our Burberry PESTLE Analysis highlights the political, economic, social, technological, legal and environmental factors affecting the luxury fashion brand from the UK.
Are you a fashion freak who likes to follow fashion brands? If yes, then you must be aware of the British fashion brand Burberry.
Burberry is one of the most renowned fashion brands in the UK. However, It is famous for luxury products. However, it also offers an affordable clothing and accessory range, and due to this, it has a broad customer base.
In this article, first, we will discuss the history of Burberry so that you guys get familiar with the brand. Then we will proceed further and conduct a Burberry PESTLE Analysis.
Earlier, we conducted the Burberry SWOT analysis. However, the reason for conducting a PESTLE analysis is to see how different external factors impact the operations of Burberry.
So, let's proceed further and discuss the history of Burberry and see how it evolved over the years. Burberry is a brand that has a history of more than 150 years. The brand was established in 1856 by a young boy named Thomas Burberry.
Initially, the brand used to sell outdoor clothes, such as fishing and hunting clothes. Very quickly, the brand gained popularity due to the quality of its products.
Soon, the clothing brand developed durable and waterproof clothing fabric in 1879. This fabric became the reason for Burberry's popularity. Burberry used this fabric to make trench coats, which their customers widely loved.
In the early 1900s, the brand manufactured trench coats for the soldiers participating in World War I. However, these coats also became famous among civilians, and wearing these coats became a trend across the country.
As Burberry's popularity kept growing, the brand decided to focus on its branding. Burberry introduced a knight logo that gained popularity and got recognized by everyone in no time.
In the 1990s, the brand restructured its operations and established Burberry as a luxury brand by incorporating modern styles. That's when the brand targeted a different customer base.
In the coming years, the brand introduced its iconic check pattern. It got really famous due to its unique style and celebrity endorsements.
Besides selling clothes, the fashion brand diversified its products and started selling accessories, fragrances, makeup, and shoes. By doing so, the customer base of the brand increased.
Moreover, it also increased the revenue streams of the brand. Hence, Burberry's budget for marketing and R&D increased, and the brand started generating more revenue.
Burberry is one of the most popular and recognized brands in the UK and other parts of the world. Currently, there are more than 418 stores across the globe.
Burberry provides employment to more than 9,201 employees of different ethnicities. In 2022, the brand managed to generate revenue of $3.86 billion.
Now that you are aware of what Burberry is and how it evolved over the years to become one of the most renowned fashion brands in the world, let's discuss what PESTLE analysis is.
PEST analysis is a tool businesses use to analyze what external factors affect the operations of a business. PESTLE analysis analyses how various political, economic, social, environmental, technological, and legal factors affect a business.
Let's proceed further and conduct the PESTLE analysis of Burberry. The following section will discuss how different political factors impact Burberry.
Political Factors Affecting Burberry
Political factors are the factors that are linked to the political environment or the policies set up by any government. Let's discuss how different political factors affect Burberry.
The tax policies adopted by any government have a significant impact on businesses. For example, if any government adopts a tax policy in which high tax rates are imposed on businesses. Such a tax policy will make businesses suffer.
Similarly, Burberry is a huge brand. Suppose the government decides to impose high tax rates on the fashion industry. In that case, the profits of Burberry will be minimized, due to which the fashion brand will suffer financially.
Moreover, the global political scenario also impacts Burberry significantly. Burberry is originally from the UK. However, it is a multinational brand with branches across the globe. In any global conflict, Burberry may be forced to close its operations in some parts of the world.
This would cause the brand to suffer since a huge customer base would be lost if it closed its operations in a few countries.
Other than that, political stability in the country where the brand operates is very important. In case of political turmoil, the demand for products of Burberry will fall as uncertainty prevails.
Moreover, due to political riots and protests, stores of Burberry can get damaged. Hence, political instability has a very negative impact on the fashion brand.
Furthermore, Burberry is a fashion brand that imports raw materials such as cotton, leather, etc. Similarly, the brand requires machines for manufacturing processes. Suppose the government imposes a ban on the imports of any of these products. In that case, the brand will suffer big time as it won't be able to continue its production.
Economic Factors Affecting Burberry
Economic factors are the factors that are linked with the global economy or the economy of a country. This section of the PESTLE analysis will examine how different economic factors impact Burberry.
Global economic conditions impact Burberry significantly. For example, if there is a global recession, in that case, the demand for luxury products will go down since the paying power of people may fall.
As a result, the sales of Burberry will decrease, and the brand will suffer. However, in times of economic booms, the sales of Burberry will go up. Moreover, income inequality also has a great impact on Burberry.
In countries with high-income inequality, only a small fraction of the population is rich, and only they can afford brands like Burberry. Whereas in countries where the income inequality is less, more people can afford the products of Burberry.
Furthermore, a country's interest rate also greatly impacts Burberry. In a country with a high-interest rate set by the state bank, people limit their consumption and start saving their money in banks to get high returns.
On the contrary, when a country's interest rates are low, people start consuming more. For Burberry, the most suitable period is when the interest rates are low because that's when the sales of Burberry rise.
Social Factors Affecting Burberry
Social factors are the factors that represent social and cultural factors that impact the operations of businesses. Let's discuss how different cultural aspects and social values impact Burberry.
Fashion trends are never constant; they are always changing. These changing trends and consumer tastes impact Burberry significantly. Burberry may launch a product line according to the existing fashion trends. However, due to the change in fashion, that product fails.
Burberry should be sensitive to consumer tastes and the fashion trends in the industry. Other than that, the demographics of the country where Burberry operates also impact the brand significantly.
If the fashion brand operates in a country where the majority of the population is above the age of 65, the demand for Burberry's products would definitely be low in such a country.
Moreover, religious and cultural values and the dressing style of societies also impact the fashion brand. If Burberry starts operating in Islamic countries, the clothing products of Burberry won't get sold much because the clothing style of Burberry is in contrast with Islamic values.
Besides that, in countries where most people have internet access, they use social media platforms. In such countries, Burberry markets its products online to increase its reach.
In other countries, it uses conventional mediums such as newspapers and TV for marketing.
Technological Factors Affecting Burberry
Technological factors represent the innovation and technological advancements the world has witnessed in recent years. In this section, we will discuss how various technological factors affect Burberry.
Technological advancements have impacted Burberry in different ways. One of the technological advancements that happened in recent times was the penetration of the internet.
As the internet penetrated, the concept of E-commerce emerged. Due to E-commerce, people got the opportunity to shop online.
Due to this technological advancement, Burberry also opened its store online. Currently, it is making huge revenue by selling products online.
Besides that, as social media platforms have emerged, businesses have started using them for marketing. Similarly, Burberry also markets its products on social media platforms. This has increased the reach of Burberry and minimised its marketing expenditure.
Moreover, as Artificial Intelligence technology is emerging, it allows Burberry to lay off some of its workers and replace them with AI. By doing so, the operational cost of the brand will decrease, and the profits of Burberry can be maximised.
Other than that, as data analytics has arrived on the scene, businesses are using data analytics for forecasting and other purposes.
Burberry can use data analytics to analyze consumer data and make informed decisions regarding the marketing policy and the designs of the upcoming products.
Legal Factors Affecting Burberry
Legal factors are the factors that are associated with the laws and legal framework of the country. In this section, we will discuss how different legal factors impact Burberry.
In the fashion industry, brands can copy the design of the products of other brands.
However, to avoid such replication, many countries have intellectual property laws. These laws make sure no one copies the idea of any brand.
Intellectual property laws provide Burberry security because no one can copy its designs. However, having strict intellectual property laws also means that before launching any product, Burberry would have to make sure that the design of its product is completely unique, or else the brand might have to pay heavy fines.
Other than that, labor laws have a great impact on Burberry. The brand has a large labor force. Suppose the brand operates in a country with strict labor laws. In that case, it has to ensure that its laborers are getting at least the minimum wage set by the government, or else Burberry would have to face penalties.
Similarly, the fashion brand can face lawsuits in case of discriminatory practices with the workforce.
Furthermore, data protection laws could also impact Burberry significantly. Burberry has the data of its consumers. However, the fashion brand can be sued if that data is misplaced or leaked.
This can impact the reputation of Burberry significantly and cause the brand to suffer financially.
Environmental Factors Affecting Burberry
Environmental factors are the factors that are related to the environment. In this section of the PESTLE analysis, we will discuss how various environmental factors impact Burberry.
Burberry is a fashion clothing brand, like its competitors Louis Vuitton, Gucci, and Ralph Lauren. One of the waste products discarded by the Burberry factories is color dyes. If these color dyes are discarded without processing, they can damage the environment.
Moreover, environmental factors such as natural disasters significantly impact Burberry's operations. Burberry's reason for its popularity is its clothes. However, due to climatic changes and irregular rainfalls, cotton production is affected worldwide.
As a result, we might see cotton shortages in the coming years. This could increase the production cost of Burberry, causing the prices of Burberry to increase further.
Other than that, natural disasters often cause power cuts and disruptions in internet connections. As a result of these power and internet crises, online sales of Burberry are affected.
Burberry PESTLE Analysis: Final Word
Burberry is a fashion brand that was established in the UK almost more than 150 years ago. Over the years, the brand evolved and became a luxury brand. It increased its customer base through innovation and diversification.
Currently, the brand has more than 400 stores around the globe and generates billions of dollars annually. After discussing the history of Burberry, we proceeded further. We conducted the PESTLE analysis of the fashion brand to see what external factors impact the brand.
The PESTLE analysis framework allowed us to examine how various political, environmental, economic, technological, social, and legal factors affect Burberry's operations. If you liked reading this PESTLE analysis and want to know more about PESTLE analysis, have a look at its examples.
