Canada Goose Formulating Strategy For Entering The Chinese Market

According to the world clothing shoes and hats net, Canada light luxury brand.

60 has many years of history, but as a well-known brand in recent years for global consumers, it is still very young.

After selling products through wholesalers for a long time, Canada Goose began to focus on direct selling strategy.

Market traffic declined.

And other electricity providers increasingly seize.

Share, Canada Goose, needs to tailor the strategy according to the changing retail situation: accelerating the growth of e-commerce with the opening of some flagship stores.

Dani Reiss, chief executive, said that this would help Canada Goose and other luxury brand peers to gain a margin of nearly 15 percentage points in profit margins.

Direct selling strategy also helps to reduce Canada Goose's dependence on retailers. Almost all sales of Canada Goose over the past three years have come from retailers.

Department stores, including Saks Fifth Avenue, Bloomingdale 's, Harry Rosen and Holt Renfrew, were hit by Amazon, and had to choose to close stores or lay off staff when department stores were down.

Amazon announced in June this year that it will launch the beta version of the "first fitting and repurchase" - Prime Wardrobe services. This will be another important move for Amazon to attack the traditional fashion industry. It will undoubtedly be a big challenge for Messi retailers and other entities.

Wholesale industry deteriorates

Reiss has been the chief executive officer of Canada Goose since 2001. He is the third generation of the family's successor.

"There is no doubt that the wholesale industry is deteriorating," Reiss said.

He stressed that Canada Goose still has close ties with wholesalers, and the new knitted sweaters and jackets will still attract consumers to department stores.

But Reiss said that the growth of direct selling channels is faster and will probably become the largest source of sales after that.

In the fiscal year ending March 31st, direct sales accounted for 29% of Canada Goose sales.

Flagship store is still important.

E-commerce is the core of Canada Goose consumer strategy. The company has its own regional network in Canada, the United States, the United Kingdom and France, and plans to launch official websites in seven other European regions this year, and eventually expand to all parts of the world.

At the same time, the flagship store of Canada Goose can partly make up for the shortage of direct selling website coverage.

So far, Canada Goose has opened two flagship stores in Toronto and New York, and will open four new stores in London, Chicago, Boston and Calgary this year. By 2020, the number of flagship stores is expected to reach 15~20.

Reiss said: "in the past 20 years, every decision we made is very prudent, and so is the opening of flagship stores to ensure that we will not regret the signing of the lease agreement in the next few years."

Rapid growth in the future

The rapid growth of Canada Goose has delighted analysts. Since its listing in March, its share price has risen 42% and its market value has increased to $2 billion 160 million.

Evercore ISI analyst Omar Saad said in a April report: "Canada Goose is the first clothing brand to achieve super fast growth in the new digital age.

After completing the highly digitized business, what kind of results will Canada Goose meet? Think of it: you can easily reach 3 billion contemporary consumers without having to build fancy stores and expensive marketing campaigns.

Saad estimates that the ratio of Canada Goose sales to total sales has increased from 0% in 2014 to more than 20%, which is far higher than the Burberry Group Plc ranked second in luxury brands (10%).

In the last fiscal year, the gross profit margin of Canada Goose was 53%.

In contrast, Moncler SpA had a gross profit margin of 77% in the last fiscal year, while Burberry, Hermes International and LVMH all reached 65%~70%.

BMO analyst John Morris estimates that gross margin will grow by 120 basis points per 5% increase in the proportion of direct investment in Canada Goose.

Canada Goose annual report shows that compared with wholesaler sales, the profit from direct selling products is two to four times higher.

In the last fiscal year, sales of direct selling channels increased by more than two times, while sales of wholesale channels increased by only 12%.

"We believe that the increase in the proportion of direct sales will help us to increase the profit margin," Reiss said.

Next stop - China

For a long time, Canada Goose has been a pragmatism brand, selling practical winter products near the Arctic circle.

After joining the company, Reiss hopes to extend the brand's first class products to other regions.

Reiss brought the product to Europe, first successful in Stockholm, then spread to Italy, Germany and even Japan, but in its domestic market, Canada Goose took a long time to gain a foothold.

Reiss said: "this is a typical Canadian fashion. Canada will only accept its products after accepting it from other countries."

Reiss mentioned that their next target is China, and they are formulating a strategy to enter China, "China is a huge potential market".

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