Canada Goose has shown excellent performance and numbers ever since Dani Reiss took over as CEO of the company in 2001. In the decade since, the company has registered an astounding 4000% growth leading many in the industry to deem Reiss as a visionary. Canada Goose has established strong markets in many European countries, especially the Scandinavian ones in addition to its home base in Canada.
What is more surprising is that the company has been able to achieve such phenomenal success at the most meagre of marketing budgets – marketing including salaries accounted for 10% of Canada Goose’s total revenue. Organic marketing, including word of mouth marketing were the company’s biggest draws and speak volumes about the well-established brand’s loyalty and value amongst its customers. I would give the brand an excellent score of 9 on a 1 to 10 scale of brand strength.
Through proper brand management, the company has been able to establish an aura of exclusivity around the brand – this is even more impressive when you consider that the brand had initially started out as a utilitarian brand, nowhere close to high end, luxury jacket manufacturers out there. By effectively using marketing tools, Canada Goose has indeed now become more of a status symbol for many and the demand for these sought after products has always outstripped supply by a mile.
An example of how the management effectively were able to establish Canada Goose as a high-end, authentic brand is as follows – before Dani took over the company utilized product placement and would give bouncers outside bars who had to stand in the extreme cold all night their jackets but now the company has signed a sponsorship deal with Fairmont Hotels and outfits all the bellhops, greeters and doormen at every Fairmont Hotel in Canada Goose jackets. Not only does it help to strengthen the brand’s association with exclusivity but it also bolsters the association that Canada Goose has with Canadian Heritage and History.
The fact that Canada Goose jackets never go on sale, even during big shopping events during Christmas, is proof of the brand’s tenacity. Like other luxury brands, for example Louis Vuitton – who has famously never gone on sale – Canada Goose jackets as well have never been sold for a discount. They are instead often sold at a premium by many of its retailers. The fact that there have been numerous attempts by large national retailers to order the company’s jackets, which were all turned down by the company is testament to the brand’s forte.
Consistently good sales and a general increase in brand awareness has led the management to rethink its strategy and start stocking at national retailers as well. Canada Goose’s ability to combine jackets that were chic yet fully functional is the company’s differential advantage. The industry has many competitors, both high end brands which sell jackets at higher price points than Canada Goose and others that were driven by functionality and sold for lower prices. However the company felt unthreatened by both.
An unlikely indicator of brand strength for Canada Goose would be the fact that the company is plagued by piracy and counterfeit issues. Although by itself it is a bad thing but it speaks volumes about the fact that the brand is popular and has a high enough demand that pirates want to mint money by using Canada Goose’s iconic brand. The fact that these jackets are made in Canada are another aspect that add to the brand’s strength. This appeals to the locals by inciting patriotism and for international customers it adds to the products authenticity – who would no winter outerwear better than Canadians?
Once a brand has orders coming in, products being sold at higher prices than the MSRP, repeat orders during one season and organic band expansion to international markets it means that the brand is fully developed on a sound and stable footing. Canada Goose has achieved just that. Brand loyalty is at an all-time high, people think it’s chic and fashionable to wear the company’s jackets and even the company’s round logo with a map of the Arctic is extremely popular.
Reiss and his team have indeed developed an enviable brand in Canada Goose and from here there is only one way to go to – forward. Question 2 Canada Goose is truly at an enviable position at this point in time. The brand commands excellent sales, has immense awareness and demand for its products actually is far more than the supply. There are certain advantages that come along with such brand strength, I’ll discuss three of these in what follows.
Ability to Innovate The company has shown excellent numbers ever since Reiss took over as CEO and is financially in a position to reinvest profits into developing new product lines. Indeed innovation has been the hallmark for the brand and the company has consistently developed products that are not only technologically at the cutting edge but also are up to date in terms of fashion as well. Premium Pricing Since the demand for the brand has traditionally outstripped supply, the company can easily and without loss charge a premium from its customers. As mentioned the company sells its products at a 100% markup and which in turn translate into increased revenues.
Selection of Distribution Channels Canada Goose’s impressive numbers lend to it a semblance of autonomy. The company is in a position to dictate its terms and conditions to distributors, rather than the other way round. Traditionally the company has used only curated small independent retailers, which helped the company establish the brand’s exclusivity but is now in a position to leverage the Canada Goose brand to nationwide retailers and reap the benefits of increased research.
Increased Brand Awareness Brand awareness is at an all-time high. The brand is usually assumed to be synonymous with Canadian heritage and culture and at a 2010 G8 conference the then Finance Minister present Canada Goose jackets as souvenirs to visiting delegates from member countries. Owning a Canada Goose is considered to be a privilege by its customers and loyalty translates into increased brand awareness. This added flexibility can help the company cut down marketing costs and hence focus on product development.
The company is at a juncture where it has to decide to either go forward with nationwide sales or stick to its current strategy of local retailers, which has brought the company so far. However saying no to either of the two orders would be suicidal for the company. Stagnation The company has a potential to use the brand’s current standing to lure more sales and increase its customer base widely. However if they continue to do business as usual, there is a risk of the company peaking out sooner and dying down. Increasing Competition
Extreme weather outerwear is a very fiercely competitive industry. If the company refuses to expand, there is a very strong risk of some of its closest competitors, most likely The North Face to overtake Canada Goose and gain some of its market share. Increasing competition translates into decreasing market share. Promote Counterfeits Expansion of the company’s sales net is one way to rid Canada Goose of the menace of piracy. When there is only a limited number of retailers, currently localized by geography, customers who want their products but can’t find them will be easier to con by pirates.
This is especially true for online retails because currently the company just has two third party retailers online and unsuspecting customers can be easily lured to buy counterfeit products. In essence, changing the way the company does its business can be an indirect solution to the company’s piracy issues. Question 4 Canada Goose has a number of options which it can avail if it chooses to expand. However there is always the risk of brand dilution due to saturation of the market with Canada Goose products, which obviously would be detrimental to what the company desires.
However saying no to any of these opportunities is like rejecting growth. In addition, the company had recently had its first experience at retail chain distribution by stocking at Ontario-based Atheltic Legends. This experience had been very successful and Atheltic Legends had placed larger reorders. In what follows, I will discuss and compare all of the possible expansion opportunities that the company has based on market breadth, depth and share criteria. Option 1: Asmun’s Menswear Asmun’s Menswear has approached the company with the offer of a long term contract.
Asmun’s is a 170 year old Canadian retail store with 10 branches nationwide, it stocks several of the best high end brands and is usually frequented by affluent women and men. It is perfectly suited to the aspirations that Canada Goose has of becoming into a full-fledged luxury goods manufacturer. However that being said the current order by Canada Goose raises certain concerns, in my opinion, which should at least be evaluated before making a decision. Asmun’s has placed an order for four or five women’s jackets only and that too in their choice of colors and styles.
I think this foretells the rigidity that the established retail giant has or will have once Canada Goose gets into relationship with them. No company wants an over bearing distributor. To make matters more difficult, Asmun’s had requested Reiss that they be allowed to use Canada Goose’s products in store’s print advertisements. Since these advertisements went out to almost anyone who signs up with them and also since Canada Goose had as a principle never used advertising as a marketing tool, went against Canada Goose’s current marketing strategy.
There is always the chance that this increased used of advertisements and other variations in the marketing mix, could lead to brand dilution – something that the company so dearly wants to avoid. Freedman, Asmun’s representative has also told Reiss that if they stock men’s products in the future – Canada Goose will have to be exclusive to them. I would consider this to be a veiled threat, since what they are doing is that not only are they dictating terms of this contract but also of future contracts.
If Asmun’s offer to eventually begin stocking men’s merchandise as well does materialize, Asmun’s would be a good alternative in terms of market breadth. The retailer is frequented by affluent women over the weekdays and has an equal split between men and women over the weekends. These customers have the budgets to afford Canada Goose jackets. Also since the store has a veritable history stretching 170 years, they certainly will have loyal customers who prefer to shop only at Asmun’s.
This means that repeat purchases (market depth) will be most likely possible here, provided Canada Goose gives the customers monetary incentives as well to come back and buy again. However market share is where this option seems to lack. Because currently they’ll only stock women’s clothing and also because the average customer for Canada Goose is anywhere from 18 to 60 years of age, the younger lot wouldn’t frequent the shop very often. Also the company’s 10 outlets pale in comparison to the other option 20. Upfront however both the options will represent 5% market share of Canada Goose’s business.
Option 2: Levine’s Menswear Levine’s Menswear like the other option, is an established retail chain specializing in the ultimate high end premium men’s brands. It too has a heritage associated with its 50 years history and has 20 retail locations across Canada – and they also have plans to expand by 20 more in the near future. Levine’s was synonymous with high quality menswear and stocked the best luxury brands from across the world. It is well suited with the company’s plans of furthering strengthening its status as a premium brand.
This order, in my opinion offered Canada Goose a lot more flexibility. Unlike Asmun’s, they weren’t overbearing on ordering decisions and placed a larger upfront order of 8 to 10 different jacket styles, with the possibility to increase the number in subsequent orders. Also the average customer at Levine’s was a working male, who had enough disposable income and didn’t necessarily care about cost when making a buying decision. In addition to being exposed to these affluent customers, Levine’s had given the go ahead to Canada Goose that they’ll stock the company’s newer prototype models as well.
This was the first time any distributor had favorably responded to prototypes the company developed. The biggest drawback in terms of market breadth that this offer has is that the retailer is completely men-centric. This means that although the number of male customers would definetly rise, women’s sales won’t be growing at much the same rate. Again since these store were frequented by affluent males, Canada Goose might be missing out on its younger customers. Another advantage that this option offered is that they are a much larger chain of stores then Asmun.
40 stores in the near future means that there will be 3 times as many customers to serve as Asmun’s. If managed effectively, the greater number of stores can translate into increased sales. Like Asmun’s, the store has a veritable history and loyal clients. In addition, these clients have the ability to pay a premium for the same products sold at another competing stores just because of its excellent customer service and brand reputation. Market depth will be maximized by going for this option.
Market share is bound to increase as well because these stores will offer Canada Goose a much larger client base, in addition this client base has the capacity to pay for these products. Option 3: Going for Both If the company is able to strike out a deal with Asmun’s to accept men’s products even when the company is stocking at Levine’s Menswear or if they divide their men and women product lines between these two stores, the company can achieve maximum benefit. In terms of market breadth, the company will now have the most varying type of customers and the numbers for both the stores will definitely add up.
However there is a chance that repeat purchases (or market depth) might suffer as a result of going for both the options. There is a chance that the market may become saturated by the sudden influx of Canada Goose products at two giant national retailers leading retailers to make less frequent purchases because they aren’t able to get their existing inventory out of the stores. In the off chance that this does happen, Canada Goose needs to devise an effective strategy to tackle this – which can probably mean allowing discounts, something that is against the nature of the company.
However by stocking at two national retailers with their own set of loyal customers, market share would definitely increase. These stores with their extensive network of retail outlets and efficient supply chain systems will be able to sell more products quickly than say for instance, the small independent retailers. The common threat from the first three expansion strategies is that of brand dilution. Since the brand will now be sold it more locations, if not managed well, there is a chance of it loosing that brand exclusivity that the company has nurtured so far.
Also to successfully go and tap international markets, the company needs to carry out extensive market research that will aid in product development. The product will need to be modified for regions, for instance, where the winters may not be as severe as they are in Canada. Option 4: International Expansion/Buying back Distribution Rights Canada Goose already has established sales in 28 countries. In fact, Scandinavian countries were the ‘early adopters’ of the brand as a high end, chic and fashionable product rather than the home base in Canada.
The company’s success in the European market proves that a market for Canada Goose exists internationally and that the company can effectively manage international distribution by giving distributor’s in the new countries full autonomy over product placement. This will not only increase sales and revenues but provide the company with valuable market research. For instance, Canada Goose’s distributor in Japan – Empire of the Sun Distribution Company Limited used its extensive knowledge about Asian tastes to guide the company to modify their products to suit local tastes.
The Chilliwack bomber with its fitted design was an outcome of this collaboration and has gone on to become a market leader for the company in not only in Japan, but in other countries including Canada as well. Market breadth, depth and share all will definitely increase as a result of this expansion. The company’s already burdened supply chain will need to be upgraded to support this international expansion. A marketing department which can coordinate all these international ventures will be needed, as well as opening satellite offices in countries where sales are going really well (for instance, in Sweden).
The risk associated with this move will be that there is a possibility that the over-reliance on third party distributors might lead them to become too powerful so as to pose a significant threat to company policy. A company wants to keep control of how its products reach the end user. To mitigate this risk, Canada Goose might consider Buying Back Distribution Rights in countries where sales are really well. So for instance in the Scandinavian countries the company can buy out the third party distributors and hence gain the maximum benefit from that market.
This will also be a way to curb the threat posed by exceedingly autonomous distributors. Option 5: Increased Online Presence Canada Goose’s closest competitor, The North Face, has a much more wider audience online. Canada Goose can reach to a much wider customer base by selling its products to a greater number of third party retailers. However, there is a risk to doing this. Stores selling counterfeit jackets will become harder to discriminate by the customer – this threat is also posed by international expansion.
Increasing piracy, an issue which underscores the fact that the brand is doing well, is a menace for the company and increased online sellers make it easier for pirates to con people. To mitigate this, the company can adopt a two pronged approach. Start a campaign to effectively teach customers on how to differentiate between genuine and fake products and second to file high profile public law suits to deter any potential pirates from copying your products. Question 5 If I were lucky enough to be in Dani Reiss’s place, I would start a tactical program to expand into new markets.
Brand awareness and recognition is at an all-time high and the company has raked in enormous profits over the last decade. It is in a position of strength and has the ability to expand its business, in an effective way all the while maintaining its image of exclusivity and high-end fashion. Considering all the options discussed above, I suggest the company to deliver products to both the nationwide retailers Asmun’s and Levine’ Menswear. A good strategy would be to revise the contracts by talking to both the retailers and giving them incentives to do business on Canada Goose’s terms.
To placate Asmun’s demand for exclusivity in the men’s business, an appropriate strategy for the company would be to give the two stores distinct product lines. The company is in a position of strength and has exceptional innovation capabilities and coming out for distinctive product lines shouldn’t be too hard. By stocking at both the nationwide retailers, the company’s market share is bound to increase however this new development will definitely draw some ire from its current small independent retailers. These larger nationwide retailers can use their economies of scale to effectively price out the small retailers out of business.
Canada Goose, as a socially responsible company, and also since these small retailers grouped together had significant bargaining power wouldn’t want to disappoint them. Multiple channel distribution is one of the most discussed topics in Marketing Strategy. While it is usually necessary and beneficial for a company to have multiple channels for distributing its products to the end customer; it is at the same time tricky to manage this situation in a way where all the parties get along harmoniously. Canada Goose currently relies only on small independent retailers to deliver its products and selects them after a thorough investigation to ensure that the retailer matches the brand’s persona.
The company’s strategy to start stocking its product at national chains is bound to draw ire from its current customers, as is already visible in the email from Westboro Downtown’s owner. However it is not uncommon for companies to do business with both small retailers as well as retail chains; North Face as has been mentioned in the case is effectively harvesting both these channels. In the MM Micromotors Simulation as well we learned on how to balance multiple distribution channels.
To allay concerns by small retailers, which when combined can pose a potent threat to the company’s sales, communication can be the most effective weapon in Canada Goose’s arsenal. A good idea will be to bring together all the small business owners, or at least the most prominent amongst them, and have them meet with Dani Reiss so that their concerns about being priced out can be addressed. Canada Goose can give them guarantees that they won’t do business with large retailers who engage in unfair discounting or using the economies of scale card in any harmful way.
Effective, clear communication can go a long way in solving many of the conflicts with smaller retail stores. Another common way to manage conflicts between large and small distribution channels is to use pricing effectively. Marketers can use implements such as discounting from the ‘pricing toolkit’ to offer, for instance, bigger discounts to smaller retailers so that they can charge a higher markup and still sell at a price that is competitive with what the big national retailers are offering.
What it means is that Canada Goose sells its products at a lower price to small retailers, so that they can earn larger profit per jacket. The big retailers can use the volume of sails to their advantage. Also since the company has already shown immense potential in international markets, a very potent part of the strategy would be to further develop international sales. The US, despite its geographical closeness, accounts for only 10% of all sales of the company – compared with Europe’s 40%!
Adapting products for less severe winters, while still maintaining its prestige and roots can spell guaranteed success for the company. Product development will be key here. The company has to continue to evolve their designs to adapt to local tastes in these new markets because, for example, bulky winter wear isn’t necessarily the first choice for many in Asia where the climate is much warmer. Company owned retail stores can be a great asset for Canada Goose. A trend started very successfully by Apple, is now being replicated by any brand that wants to expand sales yet keep that feeling of exclusivity and class.
The North Face has 28 company operated retail locations in the US that stock North Face outlets exclusively. These stores can be used as a tool to add to the brand’s premium feel. Louis Vuitton, for example, only follows this business model and sells only through its own stores. That being said, retail is a whole new ballgame unlike anything Canada Goose has done before. They’ll need to hire a new team to manage these operations, implement a revamped supply chain strategy and otherwise is very resource intensive.