Burberry restructures in Japan

The 35-year comprehensive licensing agreement between Burberry and Sanyo Shokai ended last June, leaving Burberry to have direct control of its business in Japan.

Previously, the UK brand operated two soon-to-be defunct nonluxury labels in Japan. Burberry Black and Burberry Blue were separate entities from the global Burberry Brit collection and retailed at lower prices. A Burberry Black trench coat, for example, goes for $470 on the shopping website Rakuten, considerably 30 percent less expensive than a starter trench coat from the Burberry Brit line, which sells at $700.

According to market research firm JapanConsuming, the country could not keep up with Burberry's evolution into a global luxury brand since the label's upper-middle brand positioning in the UK back in the 1970s and 1980s. In addition, the mismatched positioning was made more pronounced due to the increase of tourist arrivals and tourist sales at department stores.

Burberry plans to phase out the Blue and Black labels by the end of September 2015. According to Pascal Perrier, CEO of Burberry Asia Pacific, they want the brand to be 'hard to find'. Therefore, customers who are used to buying their products, which are readily available in several stores, would have to adjust.

The company estimates that the directly operated Japan business could rack in $155 million 2017, taking into account challenges, including securing the right retail space. The goal is to have eight standalone stores and about 35 concessions in department stores along with other luxury brands such as Louis Vuitton and Gucci.

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