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Apple hires Burberry CEO to run retail, keep brand burnished

Gregg Keizer | Oct. 17, 2013
Angela Ahrendts will join company in first half of 2014 to run both brick-and-mortar and online stores

Today, however, analysts saw Ahrendts' hiring as exactly the opposite: As another signal that Apple was serious about retaining its premier brand image.

"I think Apple looked at Burberry and the challenges they had in the market, and saw her as the one who brought back that aspirational brand and then grew it in places like China, Korea and elsewhere," said Carolina Milanesi, an analyst with Gartner Research, in an interview. "Those speak to the challenges Apple is having. Like Burberry, Apple has to deal with the fact that its brand is everywhere because of the iPhone, but they cannot run the risk that the brand is seen as cheap."

"Burberry is very successful in China," pointed out Ben Thompson, an independent analyst based in Taiwan who covers technology at his website, via instant message Tuesday. "[Her hire] is more about that she's clearly successful at driving brand value."

On Twitter, Evans noted that Burberry has 69 stores in China, compared to Apple's eight.

China is a focus at Apple, what with its huge number of mobile phone subscribers and the part it has played in generating record Apple profits over the last several years. But as even Cook has acknowledged, revenue from the region — Apple defines its Greater China sales area as the People's Republic, Hong Kong and Taiwan — was down 14% year-over-year in the second quarter. The region's contribution to Apple's total revenue also dropped for the quarter, from 15.4% in 2012 to 13.1% in 2013.

Thompson, who has gone on record as viewing Apple's pricing model for the iPhone 5C as a reaffirmation of the Cupertino, Calif., company's brand positioning rather than, as most expected, an attempt to go low and grab market share, said that Ahrendts' hiring was Apple again "doubling down on the iPhone's higher order differentiation."

On his website, Thompson elaborated. "One of the many bear arguments against Apple is that the basis of consumption in smartphones is changing from the user experience to price," Thompson wrote. "cfdcv ued design and user experience are sustainable differentiators, Apple seems to be driving the basis of consumption of their products to that of a lifestyle and statement of luxury, which companies like Burberry have done quite well and quite profitably."

Also notable, added Milanesi, was that Ahrendts will be in charge of both sides of Apple retail, the physical stores and the online outlet. "The two need to go hand-in-hand, the two have to be together," Milanesi said. "Apple must portray the brand in the same way in both."

Apple has not filed documents outlining Ahrendts' compensation with the U.S. Securities and Exchange Commission (SEC), but according to U.K. filings, she was paid a salary for the year ending March 31, 2013, of 1.02 million ($1.63 million) and a bonus of 1.55 million ($2.48 million).


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