The illustrious British fashion house, Burberry, recently made the announcement that it will take another source under its direct control. This action is being taken as part of Burberry’s continuous goal to enhance control over its supply chain and improve the overall quality of the brand’s goods, as stated earlier.
Since over twenty years ago, the British brand’s outerwear has been the product of a collaboration between itself and an Italian supplier, Pattern. After the acquisition, Pattern will continue to do business from its product development location in Turin, which comprises the company’s staff, equipment, and inventory. Around 70 of Pattern’s workers will be joining Burberry as a result of the transaction. Traditional gabardine trench coats from this brand are still created in Yorkshire, in the United Kingdom.
The What and Why
In order for Burberry to put product development for technical outerwear under its own roof, the firm has agreed to pay Pattern a total of 21 million euros to purchase a business unit from Pattern, which will allow Burberry to do so. It is anticipated that the transaction will be finalized later this year.
The Chief Executive Officer of Burberry, Jonathan Akeroyd, was quoted in a release as saying that “this strategic investment is a crucial next step in bringing our outerwear category to full potential.” “By expanding on our solid foundations in the UK, it will increase our skills and enable better control over the quality, distribution, and sustainability of our goods.”
As part of the agreement, the British heritage brand will acquire new staff members, pieces of equipment, and inventory in order to better oversee the “quality, delivery, and sustainability” of its products, which will include quilted and down garments. According to a statement released by the firm, the iconic trench coats worn by Burberry customers will continue to be woven and produced at the production plants located in Yorkshire.
Under the direction of the brand’s new designer, Daniel Lee, Burberry is looking to expand its product offering to include more apparel that can be worn in the great outdoors. Jonathan Akeroyd, the chief executive officer of the company, stated that “this strategic investment” was a critical next step in bringing the potential of the outerwear category to its fullest.
Upon the conclusion of the transaction, around seventy of Pattern’s workers at the Torino location will go over to Burberry. The other aspects of Pattern’s company that were not part of the deal will be maintained and operated as usual.
This is not the first time that Burberry has made an investment in its supply chain; in 2018, the company bought its leather goods supplier, CF&P, which was situated in Florence. Since the epidemic, when supply was disrupted by lockdowns and travel disruptions, luxury companies have been buying up suppliers at a faster rate than ever before. Among these are LVMH, which has purchased a majority stake in the tannery Heng Long Italy and the leather and suede manufacturer Robans; Brunello Cucinelli, which has purchased a 43% stake in the knitwear supplier Cariaggi Lanificio; and Chanel, which has purchased a majority stake in the knitwear company Paima.
Brands are able to increase their access to certain resources, production processes, and capacity, as well as polish their messaging around craftsmanship when they use a vertical supply chain. It also gives companies better control over operations, which enables them to avoid some disruptions in the supply chain that are caused by macroeconomic factors. According to the opinions of several experts, the difficulty is in striking a balance between the costs of the purchase and navigating cultural differences while integrating suppliers.
The risk will not shift even if the connection is altered because of the change in ownership. The firm that has just acquired the supplier is now responsible for all of the problems that the supplier has been experiencing, including those that are associated with the supply chain. The new owner is responsible for bearing the risk associated with this situation. There is undeniably more control, but the problems and risk concerns still need to be addressed and remedied. It’s possible that it won’t be as simple as it seems.
The fact that Burberry has decided to bring another supplier under its own roof is a move in the right direction for the firm. Burberry is able to guarantee that its products are manufactured to the highest standards and in an ethical and environmentally responsible way since the company has increased its control over its supply chain. This move also illustrates Burberry’s dedication to innovation and agility, which is important as the firm works towards developing a supply chain that is more responsive to client needs and focused on the customer experience.