Consumer

Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Welcome to instafashion.

Burberry's extravagant catwalk shows are always the highlight of London Fashion Week. From September, it will turn the event's traditional timetable and format on its head to exploit the competitive weapons it's built behind the scenes.

The British luxury brand will replace its current four shows with just two, in September and February, and combine menswear with womenswear along with styles for all seasons. And crucially, everything on the catwalk will be available to buy online and in Burberry stores immediately afterwards. Normally, fashionistas must wait six months to get their hands on the bulk of the collection.

Burberry's calling it "See now, buy now," and it’s a move that's as on-trend as one of its ponchos -- and one that rivals may struggle to replicate. But there's also a risk that Burberry has overestimated the capacity of its systems and supply chain to manage its expected surge in orders and meet the tighter shipping deadlines.  

Bottoming Out?
Burberry shares have gained this year, but there's a long way to go
Source: Bloomberg

Behind the scenes, Burberry has already been taking steps to shake up its different collections and its supply chain to make the new show format possible. It's invested in recent years to improve the way it manages its stock for digital customers -- for instance, it's shortened delivery times by fulfilling online and mobile orders in the U.K., the U.S. and China from local stocks.

Over the past six years it's been testing the waters by making some of its collections immediately available to buy. Now, it's going to be everything.

The fashion calendar's been around as long as Burberry's iconic black-tan-and-red check, and it's ripe for a shake up. 

With the spate of departures of high profile creative directors over the past year, the fashion industry has been abuzz with talk that the number of collections and shows is becoming too much of a burden for top designers.

But there's another reason why Burberry's move makes sense.

The luxury market isn't expanding as fast as in the past. Exane BNP Paribas estimates that this year global growth could match 2015 at best. To boost sales in a static market, luxury brands now have to play the game of grabbing market share from rivals.

Burberry is disadvantaged in this new reality.

It gets 40 percent of its retail sales from Chinese consumers, whose shopping habits have changed. They've taken to travelling to Japan for their shopping sprees to take advantage of favorable currency moves against the yuan. Unfortunately for Burberry, Japan accounts for just 2 percent of its sales, compared with 7 percent at LVMH and 12 percent at Hermes, according to Bloomberg Intelligence.

But as luxury brands struggle to stand out, Burberry has a digital advantage.

Burberry's Digital Dominance
Its share of sales from digital is well ahead of its peers
Source: Bloomberg Intelligence

It's at the vanguard of digital in fashion, selling through its own social network and Twitter and marketing through video-sharing platform Periscope and photo-sharing app Snapchat. The controversy surrounding its decision to hire Brooklyn Beckham, son of David and Victoria, to photograph its Instagram campaign should at the very least have boosted awareness of its digital presence. 

With images of models posing with their Burberry backpacks transmitted instantly, it makes sense for its tech-savvy customers to be able to buy the bags as soon as they show up in their feeds.

Other luxury brands, such as Gucci, Coach and Louis Vuitton, are catching up, but Burberry has the top slot in research firm L2's survey of luxury fashion brands' digital strategies. Burberry estimates that between a quarter and a third of its year-on-year sales growth derives from its investment in clicks.

Investors seem to anticipate good returns on the strategy. Shares are up slightly so far this year, and trade at about 17 times the next 12 months' earnings, a small premium to the Bloomberg Intelligence global luxury peer group. 

Burberry's Bounce
The British luxury goods maker has regained its usual premium against its peers
Source: Bloomberg data, Bloomberg Intelligence

This is a big test for Burberry's supply-chain gamble, and it's still ironing-out the details on the new approach. To disappoint customers keen to click on its catwalk styles would be a fashion faux pas worse than turning up to a party in the same Burberry dress as another guest. For shareholders the consequences could be more serious, and those betting early that this strategy will pay off could wind up being disappointed.

But if it can make this even speedier spin on fast fashion work, rivals will be clamoring to copy it.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andrea Felsted in London at afelsted@bloomberg.net

To contact the editor responsible for this story:
Jennifer Ryan at jryan13@bloomberg.net