Burberry Shifts Its Strategy in Japan – Burberry Shifts Its Strategy in Japan Burberry, the icon – Studocu
Burberry Shifts Its Strategy in Japan
Burberry,
the
icon
British
luxury
apparel
company
best
known
for it
s high-fashion
outwear,
has
been
operating
in
Japan
for
nearly
half
a
century.
Until
recently,
its
branded
products
were
sold
under
a
licensing
agreement
with
Sanyo
Shokai.
The
Japanese
company
had
considerable
discretion
as
to
how
it
utilized
the
Burberry
brand.
It
sold
everything
from
golf
bags
to
miniskirts
and
Burberry-clad
Barbie
dolls
in
its
400
s
tores
around
the
country,
typically
at
prices
significantly below those Burberry charged for its high-end products in the United Kingdom.
For
a
long
time,
it
looked
like
a
good
deal
for
Burberry.
Sanyo
Shokai
did
all
of
the
market
development
in Japan,
generating
revenues
of
around
$800 million
a
year
and
paying Burberry
$80
million
in
annual
royalty
payments.
However,
by
2007,
Burberry’s
CEO,
Angela
Ahrendts,
was
becoming
increasingly
dissatisfied
with
the
Japanese
licensing
deal
and
22
others
like
it
in
countries
around
the
world.
In
Ahrendts’s
view,
the
licensing
deals
were
diluting
Burberry’s
core
brand
image.
Licensees
such
as
Sanyo
Shokai
were
selling
a
wide
range
of
products
at
a
much
lower
price
point
than
Burberry
charged
for
products
in
its
own
stores.
“In
luxury,”
Ahrendts
once
re-
marked,
“ubiquity
will
kill
you—it
means
that
you’re
not
really
luxury
anymore.”
Moreover,
with
an
increasing
number
of
customers
buying
Burberry
products
online
and
on
trips
to
Britain,
where
the
brand
w
as
considered
very
upmarket,
Ahrendts
felt
that
it
was crucial for Burberry to tightly control its global brand image.
Ahrendts was determined to rein
in licensees and re-
gain control of Burberry’s sales
in foreign
markets,
even
if
it
means
taking
a
short-term
hit
to
sales.
She
started
off
the
process
of
terminating licensees before leaving Burberry to
run Apple’s retail division
in 2014. Her hand-
picked
successor
as
CEO,
Christopher
Bailey,
who
rose
through
the
design
function
at
Burberry,
has
continued
to
pursue
this
strategy.
In
Japan,
the
license
was
terminated
in
2015.
Sanyo Shokai was
required to close
nearly 400 licensed
Burberry stores. Burberry
is not giving
up
on
Japan,
however.
After
all,
Japan
is
the
world’s
second-largest
market
for
luxury
goods.
Instead, the company will now sell
products through a limited number of
wholly owned stores.
The
goal is
to
have
35
to
50
stores
in
the
most
exclusive
locations
in
Japan
by
2018.
They
will
offer
only
high-end
products, such
as
Burberry’s
classic
$1,800
trench
coat. In
general,
the
price
point
will
be
10
times
higher
than
was
common
for
most
Burberry
products
in
Japan.
The
company realizes
the move
is risky
and fully
expects sales
to init
ially fall
before rising
again as
it
rebuilds
its
brand,
but
CEO
Bailey
argues
that
the
move
is
absolutely
necessary
if
Burberry
is
to have a coherent global brand image for its luxury products.
