How Mulberry got squashed in fashion’s squeezed middle; The brand was one of Britain’s success stories – but alienated its core customers by putting up prices without raising quality accordingly

How Mulberry got squashed in fashion’s squeezed middle

The brand was one of Britain’s success stories – but alienated its core customers by putting up prices without raising quality accordingly

Hannah Betts

The Guardian, Friday 31 January 2014 19.20 GMT

One upon a time there was a nice, British leather brand called Mulberry that occupied the middle market where it flourished very happily. Many of its acolytes were women of the same vintage as this Seventies institution, customers who admired good quality at good value prices. Then, the company acquired a fashionable new designer who beguiled their daughters, giving them “it” bags for “it” girls, the various Alexas, Lanas and their ilk. Everyone was terribly proud and its forces went from strength to strength. And then, someone got greedy …

This week, Mulberry issued its third profit warning in 18 months in the wake of poor, heavily discounted Christmas trading, causing its shares to plummet by 27%. Its chief executive, one Bruno Guillon, who joined the label in 2012 from Hermès, has been criticised for hoicking up prices in a bid to carry Mulberry upmarket, forcing it from the £150-£500 per purchase bracket to the £1,000+ range. The brand makes more than 60% of its sales in the UK, but is bent on global expansion, within Asia, not least. British sales are down 3% and there is talk of a substantial Korean cancellation.

If all this seems a tad handbags at dawn, Mulberry was once one of the Great British success stories, at a time when there were few to celebrate. In July 2011, this Somerset-based company hit the headlines with news that it was now worth a billion pounds. Bloomberg reported a 526% increase in Mulberry’s stock, and the Duchess of Cambridge sallied forth on her first official tour toting its £850 Polly Push Lock. Fewer than three years on, and what we are talking about may be nothing less than the making and breaking of a British brand.

The recession and (please God) its aftermath have proved “interesting times” for the fashion industry, in the Chinese sense of “that bit too interesting”. Nevertheless, its success stories – Hermès being the case in point – have been in bona fide luxury, in which design, quality and longevity can be seen to merit loftier price tags. It has emphatically not lain in alienating one’s core customers in a cynical and unconvincing lurch towards blingier prices with no corresponding polishing up of product.

Mulberry will not even be staging a show at the next London fashion week, that publicity tool vital in securing not only celebrity bums on seats, but visuals for the upcoming season. Moreover, it continues to lack a designer after the departure of its creative director and uncommon genius, Emma Hill, who quit last summer – reportedly in dispute over the Guillon grand plan. And last year, sources revealed many of Mulberry’s “British” products to be made in Turkey and China, including its signature scotch-grain luggage. Guillon may be arguing that the more expensive lines deploy better leathers and are UK produced, but to too many of us this will feel like a case of emperor’s new clothes.

For the other great recessionary lesson has been that quality sells at honest prices: witness the John Lewis phenomenon. Success is about knowing who one is as a brand and knowing who one’s customer is – the two being intimately related. Wannabe Alexas craved Mulberry for being aspirational yet accessible, older birds for well-made wares at competitive prices. Neither will be in the market for a £4,500 Mulberry ostrich tote: youngsters will go back to Reiss, the wealthier veterans to Celine.

The fashion industry undoubtedly boasts its own “squeezed middle”. Sales among mid-market chains were down 2.2% in December compared with 2012. M&S and Debenhams endured depressing Christmases. Yet those prepared to “style it out”, in “it” gal parlance, can and will reap rewards. Youth retailer Ted Baker posted a 25% rise in sales between August and November, while Jigsaw, led by former John Lewis fashionista Peter Ruis, saw sales jump 7% to £64.2m in the year to 28 September, net profit growing 21% to £1.9m. Both will be in a position to make moves on traditional Mulberry enthusiasts.

Another problem that Mulberry and other retailers face is that moment when “it” becomes – well – a tad shit, tipping over from cool into being that bit too ubiquitous. Fashion moves on and labels have to be prepared to roll with the punches. However, the upside is that, with some adjustments, such a feat can be pulled off again. Just look at once derided rival Burberry, currently reporting a 15% festive sales boost. Still, one obviously has to retain a brand with which to do business.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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