Why Burberry's CEO Will Make a Great Apple Executive Angela Ahrendts has led Burberry to record profits. Next year, we'll see what she can do for Apple.
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You don't often see a career move like this: Angela Ahrendts, chief executive officer of British fashion brand Burberry, has accepted an offer to become Apple's senior vice president of retail. That will mean ditching London for Cupertino, Calif., and taking a step down in title for the woman who last year was the highest-paid CEO on the FTSE 100 list of companies.
For some tech-industry watchers in the U.S., the question today might be "Who is Angela Ahrendts?" Even among the fashion savvy, it's Burberry's 42-year-old chief creative officer Christopher Bailey, not Ahrendts, who has been the most visible face of the brand. Others may be wondering why Apple chose her to lead a retail division that has been without a chief for the past year, and which historically has lacked enduring leadership.
While the jump may seem strange at first glance, Ahrendts, 53, makes perfect sense as an Apple executive, says Carolina Milanesi, a vice president of research at advisory firm Gartner. Like Burberry in 2006, the year Ahrendts came on board, Apple is facing a situation in which its products are saturating the market, and it needs to find a way to regain some of its old exclusivity while continuing to grow sales.
There's no question that Ahrendts' more than seven-year tenure at Burberry has been a smashing success. Sales have more than doubled and the fashion brand's stock value has more than tripled in that time. The stock is down more than six percent today on the news that Ahrendts will be departing, but even so it is trading at nearly USD$24 a share, far above its July 2006 high of about USD$7.50 a share, when Ahrendts took the reins as CEO.
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The trademark Burberry plaid was everywhere in the mid-2000s, devalued by its association with celebrities and street punks ("chavs" in British slang) and a popular target of knock-off artists. Ahrendts successfully retooled Burberry, pulling the plaid from most of its products and, with chief creative officer Christopher Bailey, turning the company into a respected international fashion house.
Since then, Burberry has seen double-digit sales growth in Asia, a region Milanesi says is "absolutely crucial" for Apple. For some time now, China has been the No. 2 buyer of iPhones after the U.S., and in China -- as in Japan, Korea and other parts of Asia -- the in-store experience is of paramount importance.
Apple wants to increase foot traffic to its stores, but not at the expense of its famous customer care, Milanesi says. Burberry successfully strikes this balance, making you "feel that you are in an atelier," experience-wise, without having to pay atelier prices, she says. "[Burberry is] an expensive brand but not a luxury brand, and Apple is the same."
Long gone are the days when owning an Apple product meant that you had money or an important, creative job. But Apple CEO Tim Cook told Bloomberg Businessweek last month that he is still targeting high-end consumers rather than the "junk part of the market."
The question for Apple, and the challenge for Ahrendts, will be whether it's possible to cultivate a sense of scarcity while achieving market ubiquity. To be, as Milanesi says, "not for everybody, but for enough people."
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