Canada Goose Inc.: At a Retail Crossroads Harvard Case Solution & Analysis

Problem Statement

Dani Reiss, the President of Canada Goose had to make a choice between the two available offers and to decide the future development of the company. There were three basic challenges that the company would face during the process of shifting its business from the small independent distributors to the nation-wide retail chains. These challenges are given below.

  • Although performing the distribution process through large national chains would increase the sales of the company but there could be a huge risk of diluting the premium brand image of the company, which was built-up over years of struggle.
  • Developing co-operation with Levine’s Menswear or Asmuns Place would threat the survival of small shops because of high discount offerings at these locations.
  • The company had no past experience of co-operation with any retail chain.

Situation Analysis

Canada Goose was focusing on functionality and style during the extreme winter season throughout the Europe and North America by offering its products through online sales and retail stores. It had developed a premium brand image in the market by offering specialized products at premium prices. There were numerous competitors in the premium winter jacket market, but due to the company’s strong position and specialty for its functionality products, it was enjoying a sustainable position in the market. However, the president of the company was worried about the strong market position and diverse product portfolio of the North Face, an American outerwear company, which was the only major competitor of Canada Goose in the market. Initially, the products of the Canada Goose were only available at local-small sized independent stores but due to the increasing trend of online shopping most of companies had ensured the availability of its products on the internet and therefore to cope with this demand Canada Goose had also approved two online clothing companies to sell its products on the internet. With the help of these strategies the popularity of the Canada Goose brand was increased, therefore Reiss and his executive team had begun to consider a shift from its existing distribution partners to large nation-wide retail channels that would pre-dominantly stock company’s products in a number of large cities of Canada. On the other hand, the increasing demand of company’s products and the success of its recent partnership with the Ontario based Athletic Legends had increased the confidence of Reiss that a national level partnership would work in the best interest of the company. Therefore, he had started to explore and grasp different opportunities for the enhancement of its retail and distribution channels.

SWOT Analysis

  • Strengths: - Canada Goose had established a popular and well-known brand image in the fashionable jackets industry by offering high-quality and durable garments. The company had struggled a lot for the brand authenticity through the continuous growth of its brand until it became the competitive advantage of the company. The company’s sales were significantly increased over last five years, which showed an increase in the customer loyalty of the company. The company had developed a diverse product portfolio and made a number of fashionable designs, which were distributed through a wide range of distribution channels across Canada and in the international market through a wide range of retail partners.
  • Weaknesses: - Canada Goose had a very limited variety of products and it was charging premium prices for its products. The company was also focusing upon distribution of its products through local small-sized distribution partners, which was a potential drawback for its exposure to the nation-wide markets.
  • Opportunities: - The increasing sales turnover of the firm shows that it will be capable of developing a strong brand image and attaining a constant rate of sustainable growth in the future. The success of its partnership with the Ontario based Athletic Legends had increased the confidence of Reiss that a national level partnership would work in the best interest of the company. Therefore, it could develop a good partnership with the Levine’s Menswear and Asmuns Place, which would insure their long-term success and sustainability in the future. With nation-wide exposure of the company’s brand, it had a good chance to change its distribution patterns from small independent store to larger nation-wide chains.
  • Threats: - There was a very high degree of sensitivity regarding the pricing of the product in the target market. The increasing competition at both the domestic and international level would endanger the market sustainability of the company. It would be difficult for the company to prevent its products from heavy discounting because retail partners would primarily demand for that.

Market Analysis

Before making any sort of decision regarding the future expansion and contracting with nation-wide retail channels, it is necessary for the company to conduct a comprehensive market analysis and for this purpose, I have conducted the following different types of market analysis.

 

 

Marketing mix (4 P’s of marketing)

PlaceThe company was selling its products through a number of independent stores and online retailers.
PriceIt was charging premium prices for its products that was falling between Cand$450-Cand$890.
ProductsThe company was offering numerous products for men including: Chilliwack, Heli-Arctic, Menswear Constable, Expedition, Snow Mantra, Nomad and Voyager. For women it was offering: Women’s wear Chilliwack, Trillium, Solaris, Porter, Voyager, Mystique and Expedition.
PromotionThe company’s promotional activities mainly relied upon word of mouth advertising methods, sponsorship and different types of product placement methodologies.

 

Segmentation Analysis

Canada Goose customers were changing from time to time i.e. initially the company was targeting adults aged between 34 and 50 but with the development of its brand and extension in its product portfolio it had changed the target segment of people from 16-64 years old. In the recent years a significant increase in the sales of company’s products had been observed, which showed that preferences of customers had changed over time and they were now buying premium products with a high-brand image. Due to the enhanced brand image of the company, most of the people buy its products because they consider them a symbol of status.

Competition Analysis

There were a number of companies operating in the premium jacket market, but the main competitor of the company was the North Face, an American outerwear company. Both companies had almost the same type of retail and distribution networks but the major advantage to the North Face company was its highly diversified product portfolio. North face had also a competitive advantage over Canada Goose in terms of their access to the larger metropolitan areas of the country through its 24 retail locations across the America.

Financial Analysis

The overall financial position of the company was sound and it was enjoying high revenues over the past few years. Most of the items of Canada Goose had a 100% contribution margin i.e. Gloves, Expedition Parka, etc....................

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In June 2008, President and owner of Canada Goose Inc (Canada Goose), the maker of luxury sports jackets was giving a thought to future direction of his company. Despite the steady growth in recent years, the President believed that there were significant opportunities for Canada Goose further strengthen itself as the market leader in the industry. The president found the two offers from national retailers very interesting. Both were in the form of long-term contracts in the past; Canada Goose had used such contracts to maintain successful relationships with many distributors. Proposals were profitable, but the president needed to consider the proposals in accordance with the current marketing strategy.
and June Cotte, Jesse Silvertown Source: Richard Ivey School of Business Foundation 12 pages. Publication Date: 05 May 2009. Prod. # 909A12-PDF-ENG

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