MEMORANDUM RE:Canada Goose Inc. : At a Retail Crossroads Summary: Canada Goose Inc, a market leader in the luxury sport jacket industry, is renowned for its style and fashion during the winter season and is featured in over 150 independently owned retailers and more recently, in the Athletic Legends Sportswear. In addition to being sold online by two authorized dealers, Canada Goose products have also been placed in a number of countries and have had outstanding results in the European market.
It had always been a successful niche brand and now under the leadership of Dani Reiss, is poised for expansion. With two distribution offers by very prominent high-end national chains, Asmuns Place, a leading fashion specialty store for both men and women, and Levine’s Menswear known for professional service and high-quality men’s fashion, an excellent opportunity presents itself for Canada Goose to expand. However, Reiss has to decide whether these offers are aligned with his other objective of maintaining the premium brand image which has been built over the years.
Partnering with these national chains has caused some concern for Westbrook’s Downtown, and the other independently owned retailers as they fear they will not be able to compete with these large national chains if they chose to heavily discount any of Canada Goose products. Although there are many companies in the premium jacket market, The North Face, an American outerwear company, was Canada Goose’s main competitor. Problems/Opportunities:
In shifting the focus from small independent distributors to large national chains that would stock the products predominantly in the largest Canadian cities, Reiss faces three challenges. Firstly, although distributing through national chains would result in increased sales and growth for Canada Goose, therein lies the risk of diluting the premium brand image that has been developed and successfully maintained over the years.
Currently demand significantly exceeds supply, and with increased supply of Canada Goose products, this over-exposure could certainly harm the brand value. Because of these recent offers, Reiss is also confronted with the possible erosion of strategic alliances established with Westbrook’s Downtown and other independently owned retailers because it would be difficult for them to compete with these chains if they decided to discount Canada Goose products.
And thirdly, even though distributors in the past were prohibited from using Canada Goose as a loss leader and the company could cease to sell its merchandise to retailers engaging in excessive discounting, under Canadian law it is illegal for clothing manufacturers to set a minimum selling price, so Canada Goose could not prohibit these chains form heavily discounting its products. Each offer, whether one or both are accepted, offers an excellent opportunity for Canada Goose to expand as increased production will allow the company to benefit from economies of scale and experience.
There is also an opportunity to expand the product line to include special prototype jackets which are useful for non-winter weather based on the interest expressed by Levine’s. Canada Goose can further cement itself as the market leader in the luxury sport jacket industry by accepting one or both of these offers as it will result in increased visibility and sales in Canada’s largest cities. Marketing Recommendations:
Although the offer from Asmuns provides an avenue of growth for Canada Goose, Reiss should revisit this proposal in light of the initial order of specific styles and colors from the women’s line along with the request for exclusivity despite the fact that no guarantees can be given that they will order any of the men’s line in the future. With Asmuns mid-week shoppers tend to be mainly affluent women, it would be an ideal outlet to reach this market segment. Reiss should not agree to exclusivity as this will limit the company’s reach and eventually hamper its growth. If they do not agree to on-exclusivity, Reiss could perhaps seek an alliance with another high-end chain to be a distributor of Canada Goose products With 20 locations across Canada, securing a contract with Levine’s Menswear would not only allow for Canada Goose to expand, but this partnership would also align with the company’s objective of maintaining its premium brand image, especially as prices tended to be higher in Levine’s than at similar stores. And even though Levine’s intends to grow to 40 stores, this should not deter Reiss in taking advantage of this opportunity as its warehouse can accommodate expansion in the future.
This therefore should be planned for so that as Levine’s grows, Canada Goose would be able to supply its needs. The expressed interest in carrying special prototypes should be also be explored as it another opportunity to sell these types of products that were not traditionally ordered by the independently owned retailers. This can allow Reiss to spend more focusing on the development of special prototypes including other jackets which can be worn outside of the cold weather times.
Although Reiss estimated that costs associated with hiring a sales representative for the Levine’s account would cost upwards of $80,000, with the anticipated increase in sales, the return on investment of paying the sales representative will not only be significant, but will ensure that the relationship with Levine’s will be properly managed. If Reiss is still not convinced, he could visit the contract with the representative and explore having a commission based salary which would ensure that he is not paid more than the sales generated from Levine’s.
Reiss’ concerns by Asmuns request to feature Canada Goose products in its print advertisement can be addressed contractually. Similar to the way other premium brands are marketed, Reiss should include a clause stipulating the manner in which these products are to be marketed. This clause would encompass the prevention of using Canada Goose as a loss leader to safeguard against possible brand dilution, and ensure that the marketing strategies employed are consistent with Canada Goose’s goal of maintaining a premium brand image.
Canada Goose has been able to successfully manage relationships with its distributing partners over the years. The concerns expressed by Westbrook’s Downtown should be addressed by Reiss as it is essential to maintain these business relationships. Reiss should reassure these partners that although these offers from these chains are on the table, based on their upscale reputation and that they usually set their prices higher than that of similar stores, it is unlikely that they would heavily discount Canada Goose products as by giving heavy discounts, they would also risk diluting their brand image.
Reiss should embark on a customer appreciation campaign which will not only serve to reinforce his message, but also to let them know that their business is valued. Through these strategic alliances with Asmuns and Levine’s, Canada Goose will garner the benefits of economies of scale. In the long-term therefore, Reiss could consider other alliances, with U. S.