Amid a global slowdown in the high-end sector, performance apparel brand Canada Goose remains optimistic in its future as a luxury lifestyle brand.
Canada Goose’s second quarter results for fiscal year 2024 concluding on October 1, 2023, were described by chairman and CEO Dani Reiss as “solid… with earnings exceeding our expectations and gross margin expansion despite operating in a challenging retail environment.”
The last decade has seen a bolstered presence from the brand, which was established in 1957 in Toronto, Canada, particularly in markets such as mainland China, Japan, and South Korea, where appetite for performance luxury continues to grow.
Another heritage brand that appears to have been rejuvenated in recent years, Canada Goose is finding its footing among a younger, more discerning audience. Its direct-to-consumer (DTC) business has grown from 29 percent in 2017 to almost 70 percent in 2023, with the company planning to achieve 80 percent by the end of 2028. And Canada Goose is also plotting its expansion across categories, including lifestyle products such as eyewear and homeware which transcend seasonal requirements, as Canada Goose continues to expand its customer base and geographic reach.
In conversation with Retail in Asia, Canada Goose president Carrie Baker delves into the company’s strategic growth plan, “curated” expansion in Asia Pacific, and building a presence in travel retail.
RiA: Canada Goose announced a five-year strategic growth plan earlier this year. Please can you tell us about that?
Carrie Baker: Our Five Year Strategic Growth Plan is being brought to life through three strategic pillars. Asia is a key part of this global roadmap.
The first is to accelerate our consumer-focused growth, with a focus on increasing our women’s business, while also building deeper connections with existing customers. Globally, women make up 50 percent of our clientele and we’re looking to be more in line with the luxury industry average, where women represent +60 percent. And that opportunity is more significant in regions, such as APAC. We know there’s opportunity to not only expand, but better connect with customers and meet them where they are with what they want. We are hyper-focused on understanding who our customers are, where they’re going, and what they want, and why.
Our strongest cohorts are Millennials and Gen Z. The support from younger generations is a good indicator of our long-term opportunity to establish a deeper relationship with them.
The second pillar is to continue expanding our DTC presence. Our DTC business has grown from 29 percent in 2017 to almost 70 percent today, and our goal over the next five years is to reach 80 percent by the end of fiscal year 2028. This includes adding more stores, strategically, and strengthening our digital capabilities to provide an elevated online experience.
And the third is to create new and expand existing categories – rapidly. We’ve built a global reputation over the last 65+ years around keeping people warm in the coldest places on earth, and that trust for protection and superior craftsmanship has enabled us to expand into other categories, now protecting people from all elements and across all seasons. Our products are resonating so we see more room for growth in those existing collections, while also setting our sights on other lifestyle products, like eyewear and home.
This is all underscored by our financial results. In Q2FY24, our non-heavyweight down category grew year-over-year globally, expanding within our overall mix. And when we look at APAC, rainwear, apparel, and footwear performed especially well.
RiA: Among the strategic growth pillars for Canada Goose is building your DTC network. How will you grow this channel in Asia?
Baker: Stores are certainly a critical part of our strategy. With only [around] 60 stores, we are still early in our DTC journey, so there is incredible opportunity around the world for us, including in existing markets. There are areas where we need to drive deeper awareness such as the US and Europe, while also capitalising on underserved demand in others such as Asia-Pacific across Greater China, Japan, and Korea. We’re just about to launch in Australia and there are many other countries where we don’t yet have a presence, so plenty of opportunities still ahead.
Japan is a highly influential luxury market. We first entered Japan over 20 years ago, and it was one of the first international markets to embrace the brand. It has primarily been through wholesale channel but we’ve been dialing up that presence with retail stores, as a result of our joint venture with Sazaby League which we formed last year (April 2022).
Korea is similar in influence and known to have impact across all of Asia and worldwide. There is significant runway for growth in this market and we’ve partnered with Lotte Corporation to help us make our mark, expanding in an authentic way.
Greater China is home to our largest store network – nearly 30 stores – which we first started in 2018 with a store in Sanlitun. We first opened doors in large cities like Beijing, Shanghai and Hong Kong and see opportunity to maximise our footprint in those larger cities like we recently did with our Beijing flagship. Five years following its opening, we expanded into a new location and that is now our largest store in the world.
We’ve also opened doors in smaller cities such as Shenzen and Harbin and will continue to expand selectively – we’re not looking to be everywhere – into cities where we don’t yet have a presence.
At the same time, we see strong opportunity within the digital landscape, particularly in Asia, and are focused on advancing our capabilities to continually deliver an exceptional online experience for customers.
RiA: Canada Goose is positioned in the performance luxury lifestyle category. What opportunities and challenges are you seeing in this positioning in Asia?
Baker: Consumers in Asia are savvy shoppers and have high expectations of quality – as they should – which is why our brand, which is built on quality craftsmanship, resonates so well. Constantly delivering at that standard is our evergreen challenge, but one that we’re inherently built to succeed – it’s what we do best.
It’s known that Asia is one of the strongest luxury markets, but consumers have now become more aware of how and why their luxury product needs to deliver, particularly in response to the pandemic.
It was reported earlier this year that outdoor activities are thriving, as people turn to nature to stay healthy, beat everyday stress and foster ecological awareness. Those two elements combined, tell me there’s a greater understanding of, and demand for, products that balance of performance and luxury. They want products that stand the test of time and the elements that are made with quality materials, elevated styling and uncompromised craftsmanship – that’s Canada Goose.
RiA: Are you also pursuing growth in your existing categories, and will you also be adding other categories to the Canada Goose collection?
Baker: Absolutely. As I mentioned earlier, category expansion is one of our strategic growth pillars. We are focused on rapidly introducing new categories that are relevant to more seasons, elements and climates.
Related, we also have a “China for China” approach, launching projects designed to build local relevance. Our collection with Angel Chen for example. She was our first-ever Guest Designer in 2021 which is a programme where we tap global designers, artists and creatives to fuse their perspective with our brand DNA. Our collaboration with Feng Chen Wang and Xu Zhen followed in 2022.
RiA: Canada Goose recently entered Japan with Sazaby League. Can you tell us about your expansion, continued growth and distribution strategy in that market?
Baker: We’ve been in Japan for over two decades, and Sazaby has been a partner of ours for many years of that journey. Last year’s joint venture was an evolution of our partnership. They’ve helped elevate us and their successful history building strong consumer brands in Japan will drive us forward.
Among our store network there, we recently opened our third store in Tokyo and will continue to grow our DTC network, while ensuring wholesale plays a complementary role. Japanese consumers are also trend forward and have a good eye for what consumers want today, tomorrow and even into the future. Some of our bestselling styles over the years have originated in Japan first.
RiA: And you are also partnered with Lotte in South Korea.
Baker: Lotte has helped us expand and elevate our presence in Korea, providing a new and fresh perspective and a clear path into the future. In the past year, we’ve hosted successful events – the first in Seoul to celebrate the partnership and then another recently in September to launch our collaboration with London-based fashion house, rokh and artist, Matt McCormick, which attracted influencers and celebrities including Jung Hae In and ITZY. Events like these are always impactful, but we find they’re truly special in markets that are hungry to engage with us, like Korea, especially when they’re able to experience the performance of our products.
RiA: How do you approach your expansion across other markets in Asia?
Baker: Our strategy is best described as curated expansion. We are still early in our global growth story and we are excited about the incredible opportunity we have around the world. However, we still have so much potential in the markets we’re already in and with the stores we’ve already opened. We will continue to be selective in opening new doors, expanding when it’s the right time and right for our business.
Our business in Asia-Pacific is performing well and we have great plans for the market both in the near and long term. More recently, we’ve seen strong performance in Hong Kong, Taiwan, and Macau – specifically at our stores – fuelled by the return of Mainland Chinese tourists.
Our newest market launch is Australia, where we’re set to open a permanent store in Melbourne and pop-up store in Syndey within the next couple of months. These mark our first stores in the country so it’s a particularly exciting chapter in our story. We see Australia playing an important role in growing awareness of our year-round collections.
We’ve also embarked on a Travel Retail launch, where we debuted our first airport store in Frankfurt. Travel Retail represents an exciting opportunity to bring more Canada Goose to more of the world – connecting with consumers at a different part of their journey. We are first focused on international travel hubs in EMEA and Asia, with additional locations in Asia set to open later this fiscal year.
Overall, there is a clear and increased investment being made in retail around the world and Asia is an important part of that story. I was recently in China and was inspired by the level of investment into expanding the relevance of malls, the creativity of the spaces coming to life, and the focus on immersive experiences. They’re being conceived as true lifestyle destinations in a way that we haven’t seen before. As we grow our retail presence, it’s exciting to be a part of that – and like I said earlier, meeting consumers where they are in a way that they want.