Losing the Burberry licence, and refilling the floor with own brands (2014)

Losing it was not the hard part — replacing it was

The essential point about this decision is that Sanyo Shokai did not make it. The fate of the pillar it had stood on for half a century lay with the licensor’s global strategy, decided in Britain. What remained to the company was not the fact of the loss but the question of how to fill the sales floor afterwards. That Sugiura chose to hold roughly 70% of the counters with successor brands rather than fold them was, as management thinking goes, entirely natural — an attempt to preserve both the department-store channel and the ¥140bn scale of the business.

Brand power, however, cannot be substituted with counter count. Newly launched in-house labels could not quickly absorb the traffic and the price points that the Burberry name had generated, and the opening move aimed at preserving scale arguably deepened the losses instead. The management that later led the rebuild reached profitability precisely by letting go of the attachment to scale. A company that lost its pillar to an external decision and reached first for a substitute of equal size shows, in one frame, both how much had been lost and how hard it is to replace.