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LONDON - Mulberry has drawn a line in the sand. Rejecting a bold £83 million takeover bid from Frasers Group, the British luxury brand has made its stance clear: it refuses to bow to external pressure.
Instead, the largest manufacturer of luxury leather goods in UK is doubling down on its ambitious recovery plan, now led by Andrea Baldo, a seasoned industry leader whose tenure at Danish label Ganni reshaped its global footprint.
With sales down by 18% year-on-year and a staggering pre-tax loss of £34.1 million, Mulberry faces the need for a high-stakes transformation. The task ahead? Leverage Baldo’s expertise to pivot the brand toward growth and sustainability, reigniting its iconic status in the luxury market.
I was 21 when it happened—my first encounter with the Mulberry Bayswater. It was a Tuesday morning, and as I walked into Selfridges, time seemed to stand still. Love at first sight—tan, structured and sophisticated, and I was hooked.
Fast forward 15 years, it's surprising that the 54-year old legacy brand hasn't leveraged aggressive advertising campaigns or high-profile marketing strategies in recent years, despite its strong celebrity following. And Mulberry's understated approach is affecting its share price.
Rebirth of a Classic: Mulberry's Fight to Reclaim Its Crown
Baldo’s appointment signals more than just a leadership change—it’s a lifeline for a company in flux. Under his leadership, Ganni expanded internationally, achieved B Corp certification, and tapped into the growing demand for ethical luxury. Now, with Mulberry’s share price down nearly 60% in 2024, his role will be crucial in navigating the brand’s repositioning.
The stakes are higher than ever, but the strategy could be very simple: draw from Mulberry’s British heritage, champion its craftsmanship, and focus heavily on sustainability to reclaim its position as a leader in the luxury sector.
According to Interbrand, the world's leading brand consultancy, 67% of companies in the S&P 500 may be inaccurately valued due to a misunderstanding of a key business asset: their brand. While Mulberry is a British luxury brand and not part of the S&P 500, the insights from Interbrand's research are highly relevant.
Interbrand's analysis reveals that a company's price-to-earnings (P/E) ratio is often influenced by how well its brand is communicated and perceived by the investment community. Brands that effectively convey their value proposition tend to enjoy higher and more stable P/E ratios, signalling investor confidence and potentially boosting share prices.
A Four-Step Solution for Mulberry’s Brand Communication
Here are four key steps Mulberry can take to potentially boost its share price through enhanced brand communication:
- Develop a Brand Valuation Model: Quantify the brand's contribution to financial performance to demonstrate its value to investors.
- Conduct Financial Community Research: Understand how investors currently perceive Mulberry's brand and identify gaps in understanding.
- Analyse Communication Effectiveness: Review and enhance investor relations materials to better convey the brand's strengths and future potential. (LVMH email stakeholders a reminder plus a button to 'Add to Calendar' the date of their quarterly financial results.)
- Revise Brand Strategy: Ensure that the brand strategy aligns with market expectations and is effectively communicated across all channels.
Strategic Recommendations for Market Reinvigoration
Facing a takeover bid from Frasers Group and grappling with financial losses, the British luxury brand has a unique opportunity to reshape its future. By adopting a blend of consumer-centric strategies and future-facing business models, Mulberry could turn its current challenges into a springboard for growth.
Here’s how the brand can reinvigorate its position in the market.
1. Embrace Cultural and Emotional Storytelling
- Mulberry should leverage its heritage, steeped in British craftsmanship and sustainability, to resonate with today’s consumers who prioritise authenticity.
Mulberry’s heritage, steeped in British craftsmanship, sustainability, and timeless style, is its strongest asset. In today’s market, where 75% of consumers prioritise authenticity, brands that tell genuine stories are winning loyalty.
Much like how challenger snack brands leverage nostalgia and health narratives to appeal to modern consumers, Mulberry should weave its rich history into every touchpoint. By stressing its craftsmanship and ethical values, Mulberry can tap into the growing demand for luxury goods with deeper meaning.
2. Tap into the "Affordable Luxury" Trend
- Develop a product line that appeals to younger buyers seeking high-quality items at accessible prices, reflecting the rising demand for affordable luxury.
The luxury landscape is transposing. Consumers are now drawn to affordable luxury—a space between high-end exclusivity and mass-market appeal. This segment, expected to grow at 6.7% annually, offers Mulberry a significant opportunity to attract younger, aspirational buyers without diluting its brand equity.
By developing a product line that sits at this intersection, Mulberry can mirror the approach seen in other industries, such as the rise of premium snack brands offering high-quality products at accessible prices.
3. Leverage Limited Editions and Drop Culture
- Introduce capsule collections or artist collaborations to create urgency and exclusivity, drawing from the successful "drop culture" trend popular among Gen Z and Millennials.
Gen Z and Millennials are driving the rise of drop culture, where limited-edition releases create a sense of exclusivity and urgency. By introducing capsule collections or collaborations with artists, Mulberry can tap into this trend.
The trend of "drop culture" and limited-edition products creates urgency, encouraging consumers to make purchases due to the fear of missing out (FOMO). According to research, 64% of consumers are more likely to purchase products in limited supply.
This model has been a cornerstone of success in streetwear, and luxury brands are increasingly adopting it to generate buzz and deepen engagement.
4. Sustainability as a Luxury Marker
- Amplify transparency around sustainable practices, as over 60% of consumers are willing to pay a premium for verified sustainable products.
Sustainability is no longer a secondary concern in luxury; it’s a defining feature. According to BCG, over 60% of consumers are increasingly driven to pay a premium for products that offer verified sustainable credentials, particularly in the luxury sector, where sustainability is now seen as a mark of quality and exclusivity.
Furthermore, First Insight's report on consumer spending underscores that 73% of Gen Z shoppers are willing to pay more for sustainable products, reflecting a broader trend in luxury and beyond where eco-consciousness is influencing purchase behaviour.
Mulberry already has sustainability initiatives in place, but it could amplify its impact by creating more transparent communication about its production processes, from carbon-neutral operations to the use of ethical materials.
5. Using Nostalgia as a Powerhouse
- Transform the advertising strategy by embracing authentic storytelling that emphasises Mulberry's rich British heritage, fostering emotional connections crucial for brand loyalty.
Nostalgia is emerging as a significant trend in the luxury sector, particularly as consumers increasingly seek emotional connections with the brands they invest in. According to recent studies, consumers are more likely to purchase products which offer a connection to past experiences.
Nostalgia taps into this by offering products that evoke personal memories and cultural references, creating a sense of authenticity and heritage.
For Mulberry, this represents a significant opportunity to transform its advertising strategy by embracing authentic storytelling that spotlights its rich British heritage and craftsmanship. Taking inspiration from brands like Hugo Boss, which has successfully maintained relevance by celebrating its history while continuously innovating, Mulberry can similarly blend its heritage with contemporary ideals.
By aligning its messaging with themes of authenticity and craftsmanship, Mulberry can foster emotional connections that are crucial in today’s market. This strategy will not only enhance brand loyalty but also position Mulberry as a leader in the luxury sector, committed to both its heritage and the evolving expectations of modern consumers.
6. Explore the Resale Market
- Enter the booming circular economy by creating a resale platform for pre-loved Mulberry items, enhancing sustainability while maintaining brand exclusivity.
The circular economy is booming, with platforms like Vestiaire Collective and The RealReal experiencing double-digit growth. Mulberry can enter this space by creating its own resale platform, enabling consumers to buy and sell pre-loved Mulberry items directly through the brand.
This not only taps into the sustainability trend but also allows the brand to maintain control over the second-hand market, enhancing its exclusivity.
The Time is Ripe for a Mulberry Renaissance
Mulberry possesses the foundational elements for a successful resurgence: a rich heritage of quality and design excellence, cultural relevance through celebrity endorsements, and untapped storytelling potential. By strategically enhancing its brand communication and engagement, Mulberry can reinvigorate its market position and positively impact its share price.
By embracing cultural storytelling, expanding into new product categories, and investing in sustainability, Mulberry can navigate its current challenges and come out stronger. The future of luxury is about more than just beautiful products—it’s about creating deep, meaningful connections with consumers.
By adopting these strategies, Mulberry has the potential to become a leader in the luxury space once again.
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