‘The opportunity is massive’: Canada Goose set to open two retail stores in China
Luxury parka maker’s shares have more than doubled in the last year
TORONTO canada !oose is setting up shop in china.
The upscale outerwear brand, which began opening retail stores in 2016 after operating for decades as a successful manufacturer, has announced that it will open two locations this fall in the world’s most populous country: a Hong Kong flagship outlet in october, followed by a store in aeijing the following month.
The luxury parka maker began selling its coats and outdoor apparel in china five years ago at retailers such as department store -ane crawford, and chief executive dani peiss sees potential to scale up the business significantly in a market where the brand has strong consumer awareness.
“The opportunity is massive,” peiss said in an interview. “We have been working with chinese consumers for the last two years at our own stores and seen the demand. on our websites, we can see where the orders are coming from, and the volume of traffic we get from china.”
one meeting in particular crystallized just how much the brand was resonating with customers, peiss said: a gentleman flew from
china to Toronto expressly to attend the 2016 opening of canada !oose’s flagship canadian store at Yorkdale Shopping centre.
“He said he loved canada !oose and wanted to buy a jacket for himself and his wife. It was amazing to me. Anecdotes like that speak to the awareness and the demand.”
Many veteran brick-and-mortar chains have scaled back and invested heavily in their digital operations in recent years amid fears about the changing retail marketplace. At the same time, a number of online retailers and wholesale brands have opened up standalone boutiques to showcase their wares, from Hunter aoot to Warby Parker.
canada !oose is opening a regional head office in Shanghai and has named Scott cameron, former head of strategy and direct-toconsumer at canada !oose, as the brand’s president for the region. The company has selected Imag-ineX !roup as its store operating partner in the region, and the brand will also begin selling online this the fall on e-commerce giant Alibaba’s T-Mall luxury pavilion.
Amid robust financial performance the company’s shares have more than doubled in the last year. In the third quarter ended dec. 31, revenue at canada !oose rose 27
per cent to $265.8 million and net earnings surged 60 per cent.
“What excites me about china is the opportunity to speak to the chinese consumers through our own platform,” peiss said.
As it expands beyond wholesaling, canada !oose now has proprietary websites in 11 countries and operates six bricks-and-mortar retail stores in North America and europe, while a seventh store is run with a partner in Tokyo. online and store-based operations have grown to $197 million in revenue in less than four years, and those channels now account for 38 per cent of the company ’s annual sales.
canada !oose’s move comes after a decade of european and North American retailers testing their mettle in china as the nation’s economy evolves from an export-based growth model to one fuelled by consumer consumption.
It’s a fast-growing market, with retail sales averaging growth of 12.52 per cent per annum between 2010 and 2018, according to global data firm Trading economics. aut the path to success in china hasn’t been smooth for all of them.
Walmart, now well-established, struggled for years in the nation as it tried to adapt the business to the needs of local consumers. Ikea has fared very well, but Home depot exited the country in 2011 after failing to gain traction. Fastfashion retailers H&M and uara, meanwhile, have opened hundreds
of stores in mainland china.
At the same time, sales of highend cars and luxury consumer goods have resonated strongly with the chinese and led to strong sales of brands such as -ouis Vuitton, chanel and !ucci.
The number of chinese with more than US$1 million in assets hit 1.6 million in 2016, according to a 2017 report from aain consulting and china Merchants aank, and the wealthy have been known to travel far afield for tony shopping trips.
aain noted that 8 per cent of luxury goods worldwide are bought within china, but chinese shoppers also make about three-quarters of their luxury purchases overseas. That trend could be shifting: luxury spending spiked in the latter half of 2016 and had robust growth of 20 per cent last year, and recent government policies have persuaded more chinese consumers to spend money at home.
!eorge Minakakis, principal at Toronto-based retail consulting firm Inception petail !roup Inc., said chinese consumers prefer shopping at standalone stores for luxury goods such as Versace or Prada to ensure they are getting genuine merchandise as opposed to counterfeit goods. “You are painting an image for a brand, and the details are important,” said Minakakis. “aut it is a very difficult market to expand in and real estate is a challenge … it is smart for canada !oose to take a conservative approach when it comes to opening flagship stores.”
charles de arabant, executive director at Mc!ill University ’s aensadoun School of petailing, said canada !oose achieved awareness in china initially due to widespread counterfeiting. The soughtafter coats “were copied early on,” he recalled. “That can be stamped out, but up to that point it functions as a great advertising platform.” de arabant said the most successful foreign brands in china have opened physical retail stores. “!enerally the ones that have been successful have had control over their distribution there.”
peiss says canada !oose remains on track to open up to 20 retail stores globally by 2020.
“What’s important to us is that we don’t open too many stores,” he said. “It’s important to us that they are all strategic, that they are all in the right place, and they are all well positioned to be profitable.”