"The word is Latin for 'to move forward' and founder Thomas Burberry invented the equestrian knight logo with that flag. So his whole philosophy was about that," he says.

Bailey, 41, who manages the brand image as well as the design, has helped put the 156-year-old company in an enviable position. One of the Britain's oldest heritage apparel labels, it has come to represent a barometer of the industry's health. In September, a profit warning from the company - its first after years of strong growth - sent shockwaves through the industry and had journalists speculating whether luxury fashion was heading for a fall.

Thanks to Bailey, high fashion has had Burberry fever for the past six years. Gone are the days when its iconic checks were associated with "chavs" - an unfortunate consequence of Burberry's post-millennium success. Now he has adorned the trench with designs as disparate as African batiks and sweet-wrapper metallics.

Bailey hails from Yorkshire, and says he inherited his creative streak: his mother was a window dresser for Marks & Spencer and his father was a carpenter.

"I've always loved design, architecture and imagery, and from my dad, furniture design. But I kind of fell into fashion - it wasn't something that was always on my radar as a kid."

He went to art school, but says his progression to fashion was natural because he was attracted to the construction of clothes and the traditional skills it involved.

"I love weaving and cutting patterns, the actual craft involved." The designer honed his skills with womenswear at Donna Karan and Gucci before moving back to Britain to the helm of Burberry.

"I always worked for a brand that really signified a place," he says. "Donna Karan is so New York. I was living there and fully immersed in her world. And Gucci was so Italian. We were based in Florence and Milan, and it had such a sense of Italian identity."

But with these two brands, Bailey's emersion was a process of discovering a new culture. Joining Burberry, he says, was like reconnecting with his own heritage. "It was very instinctive and natural. I had grown up with Burberry. My grandfather had a trench coat when I was growing up. It was part of my experience - I didn't have to learn it. That was the difference."

Bailey pulled Burberry out of a slump within the first few years, making it relevant again. Queen Elizabeth awarded him an MBE in 2009.

In September, the brand opened its new Regent Street flagship. The 44,000 square metre space in a 19th century building - Westmoreland House, built for the Prince Regent - with the latest in digital integration, is Burberry's latest big experiment with luxury and technology. The Pacific Place store mirrors some of the design aspects of its London counterpart, and includes hi-tech touches such as a giant video wall and interactive touch screens.

Burberry is shaking off the old rules about luxury retail. In 2010, it became the first major brand to allow people to watch its fashion shows live online and place orders in real time.

"Christopher Bailey on Burberry's digital strategy" Video by Hedy Bok

"Luxury is about choice", says Bailey. "We don't want Burberry to be intimidating. That kind of luxury doesn't feel very modern any more, it feels old-fashioned to make somebody feel insecure in order to feel worthy of something."

The world has changed, he says, partly due to the democratisation of the web, but also because young successful people don't expect that type of snootiness from fashion any more. A forward-thinking online strategy has given the brand exceptional resonance with Gen Xers and Gen Yers.

Burberry overtook Gucci this year as the most "liked" fashion luxury label on Facebook, amassing more than 10 million fans.

A stroll though the label's London headquarters at Horseferry House, in Westminster, reveals a modernist interior housed in a heritage building. It's full of young, attractive staff, dressed with a very British casual glamour. Women wear just-out-of-bed hair with striking heels, skinny trousers and effortlessly chic tops. Men seem to be of the dandy-with-an-edge ilk.

"We sometimes talk about it being an old-young company," says Bailey. "Big heritage, big history, but it's a young team. When you have a young team you automatically do things in a different way - hopefully, it's relevant to the way we live."

Burberry Prorsum's recent spring-summer 2013 womenswear is an example of how Bailey fuses the archives with something fresh and radical. It started when he found an image of Burberry corsets ("It was something I never thought we would have done but was obviously a big part of the business at one point.") and an old catalogue of capes. "I just loved the contradiction between corsets and capes, and that started off this whole thing," he says. "I wanted the metallic colours to be juicy, almost like you could wring them out."

Protective, sporty, rounded shoulders came from the capes, and corset belts cinched waists with a feminine touch.

"I believe in living with your eyes open," says Bailey. "I've never been one of those designers who has to go on a trip to find inspiration. I have always felt that life is pretty inspiring if you are aware of it - and often on your doorstep."

Bailey oversees all facets of the label's image, from the adverts, music and catwalk shows to the architecture of their stores and headquarters. Adding to the brand's cultural kudos are initiatives such as Burberry Acoustic, the live music arm of the fashion brand that runs live gigs, mainly of young British indie acts in London.

"The amazing thing is I get sent things all the time," he says, running over and clicking on his computer. "This girl just sent me an e-mail this morning and I think she is like 14 or 15. She has an unbelievable voice.

"I love that contradiction of a big, global talent that everybody knows, but then also young kids who have this great raw talent."

Bailey has an eye for young talent. The label's campaigns have become a career launch pad for young British models such as Cara Delevingne, Rosie Huntington-Whiteley, Jourdan Dunn and Eddie Redmayne. Casting rising stars of the music, modelling and acting worlds - including Emma Watson in her first major fashion campaign - has given the label a sense of being ahead of the mainstream. It represents a new, fashionable London, a far cry from the stuffy image Burberry had come to represent in the '80s and '90s.

"I quite like that the label talks to so many different types of people, and I want the campaign to represent new, fresh ideas," he says.

Bailey talks excitedly about being part of a creative hub in Britain, among designers such as J.W. Anderson, Christopher Kane and Erdem, and a slew of emerging talent. He is so full of enthusiasm for others' talents, the designer forgets to talk about his own.

"I think fashion is a uniter," Bailey says. "It brings together so many different creative industries now, whether it's actors, musicians, architects, or web designers. It is something that is so wonderfully global."