Burberry To Double Presence In China By 2012

Chief Executive Tells Journalists That Burberry Looks To Have 100 Franchises In China Within “Next Few Years”

Burberry hopes to have over 100 franchises in China within the next five years as the company taps into the country's growing middle- and upper-middle class consumer class

Burberry hopes to have over 100 franchises in China within the next five years as the company taps into the country's growing middle- and upper-middle class consumer class

Although there are signs that the global luxury market is finally getting back on its feet in hard-hit developed markets like Europe and North America, luxury executives apparently still have their eyes set  firmly on the emerging world as their long-term insurance policy. A good example of the tiered growth strategy we’re starting to see pop up in the luxury trade is reflected in two announcements by Burberry this week, in which the company’s plans to push aggressive growth in the Chinese market while choosing a more subdued approach in the US, Britain, and Japan were spelled out to journalists.

By more actively promoting the casual, stylish (and comparatively affordable) side of the Burberry range in developed markets where consumers now think twice before splashing out on luxury goods while extending the company’s footprint in the huge Chinese market — while still working hard to convince buyers to shop in-country rather than online or overseas — Burberry’s developing/developed tiered initiative could portend the future (or at least the medium term) of luxury marketing.

Today, Bloomberg writes on Burberry’s “casual Brit” approach, set to be rolled out in Europe, the US, and Japan. This strategy, targeting younger markets, is centered on Burberry’s lower-priced, more youthful “Brit” line:

“We’ve always felt that Brit, as a retail concept, would be a very viable global opportunity,” Ahrendts said. The cheaper-priced line, which sells plaid polo shirts for 85 pounds ($142), is opening its first outlet in Madison Avenue in New York this month and will test more in a ‘handful of different markets,” in the U.S.

Burberry also has the opportunity to open Brit concessions in U.S. department stores, Ahrendts said. The luxury-goods company has been emphasizing its British heritage with a social- networking site modeled around its trench coats and Brit perfume advertising featuring English model Agyness Deyn.

Aggressively promoting a younger, relatively inexpensive line in Western and Japanese markets stands in stark contrast to Burberry’s long-term China tactic, which is understandable. Expansion in China’s interior regions will be critical as key Beijingers and Shanghainese consumers start to take luxury for granted and their brand loyalty begins to erode in coming years. While a growing middle and upper-middle class should keep revenue flows relatively steady in top markets, at least for several more years, it won’t be enough. This week, Burberry’s Chief Executive Angela Ahrendts told a group of reporters in London that her company is looking to more than double its 44 existing franchises to 100 locations in the next few years. From Xinhua:

In China, the company has 44 franchise stores now, following seven openings in the first half of the financial year.

Ahrendts said that Burberry is continuing to perform well in China, with strong double-digit comparable store sales growth in the first half.

Doubling its presence in the Chinese market is a bold, if natural, step for Burberry. It would seems as if Burberry execs recognize the threat of brand fatigue in top-tier markets — and possibly even see an emerging threat in home-grown haute couture — and know that the years ahead will be critical.