Canada Goose joins Canadian retailers in e-commerce push

One of the country’s most iconic retailers has joined the fray of the online marketplace.

Canada Goose revealed Monday that after decades of selling its famous parkas through wholesalers, it is shifting its a direct-to-consumer strategy focused on e-commerce, supported by a few flagship stores.

CEO Dani Reiss told Bloomberg News that he hopes the move will help narrow a 15-point profit margin gap between with its luxury retailer competitors.

The change in tactics comes as retailers try to maintain customers in a market where consumers are increasingly making purchases through Amazon rather than heading to the local mall. In fact, Canadians spent a total of $26.6 billion, or about $730 per capita, on online shopping last year.

Maureen Atkinson, a senior partner at retail consultant firm J.C. Williams Group, told Yahoo Canada Finance that while there is a greater need for businesses to emphasize their online presence, she doesn’t believe they can be successful without brick-and-mortar locations.

“I think that’s why you have Amazon getting into stores,” she said, referring to the online retail giant’s growing fleet of physical locations.

“I think it’s neither one nor the other. I think you have to have both. What the balance is between (the two) depends on the store, the customer base — a lot of different kinds of things … I think any retailer these days [is] moving towards having stores, if they don’t have stores already, and then there are other retailers that are improving the number of stores they have, so think it just is that all the retailers are trying to find the right balance.”

In the case of Canada Goose, Atkinson said the strategy “makes sense” because luxury retailers need fewer stores to serve the limited customer base who can afford the product.

“It’s almost better to have fewer stores but have it accessible in other ways,” she said.

“They obviously must’ve figured out that they can serve their customers well by being online, as opposed to adding more stores, [and] it certainly reduces the cost of expansion.”

Evercore ISI analyst Omar Saad said in a note earlier this year that e-commerce sales already account for more than 20 per cent of Canada Goose’s revenue, compared to zero in 2014.

While Atkinson said the Canadian retailer stands to improve its profits from an increased focused on online sales, the strategy comes with its own costs.

“Staying ahead in online is expensive … it doesn’t put them in a position where they don’t have to invest, but they’re just investing in a different medium,” she said.

Canada Goose’s annual report said that jacket sold directly to a consumer provides two to four times more operating income than one sold through a wholesaler.

However, the strategy isn’t without flaws. Atkinson says Canada Goose will have to see if consumers are prepared to buy its products without seeing them in person and trying them on.

“It’s not like people can’t find a Canada Goose store. They may not be able to find them in their backyard … but they tend to be available in most large cities, so I don’t see a huge downside, but you know never say never,” she said.

“I think they’ll try this and I think if they don’t feel like they’re getting the kind of growth they want, I’m assuming that they’re prepared to change gears.”

Click through the gallery to see how some other Canadian retailers are trying to expand their reach online.

How Canada Goose and other Canadian retailers are going online

One of Canada’s most iconic brands is transforming how it connects with customers, but it isn’t the only company to do so. (Noam Galai/WireImage/Getty Images)

How Canada Goose and other Canadian retailers are going online

Aldo’s online sales jumped 15 per cent in 2016 and account for about for about 20 per cent of its overall sales revenue, according to Strategy Online. Atkinson said the Montreal-based company invested early in e-commerce are now “leaders not just in Canada but around the world.” (Mike Mozart / Flickr)

How Canada Goose and other Canadian retailers are going online

Canadian Tire made a big push last year to expand its e-commerce offerings last year. It’s sporting-goods division, Sport Chek, is running a pilot for same-day delivery in the Toronto region, and similar plans are in the works for its namesake stores. However, with its large network of brick-and-mortar locations, Canadian Tire still relies on clients dropping by to pick up their online orders. While its e-commerce business still does not take up a significant chunk of its sale, it has enjoyed large percentage gains, according to Reuters. (THE CANADIAN PRESS/Chris Young)

How Canada Goose and other Canadian retailers are going online

The Hudson’s Bay made its big push for e-commerce last year with a $60 million investment in an online delivery system. This included a massive robotic warehouse in Scarborough, Ont. At the same time, the Canadian retail giant acquired flash sales website Gilt Groupe for $250 million. However, that move has so far proven to be a disappointment. Earlier this year, the Bay announced that it wrote down $116 million on the deal, even though the website was once valued at more than $1 billion. (REUTERS/Mark Blinch)

How Canada Goose and other Canadian retailers are going online

Women’s fashion retailer Reitmans announced plans to shutter 40 stores this year and redesign its distribution centre to support e-commerce sales, which rose 51 per cent last year. (THE CANADIAN PRESS/HO)

How Canada Goose and other Canadian retailers are going online

Despite competition from Amazon, which delivers package foods to homes, and Walmart, which is testing home delivery in Toronto, the country’s biggest grocery store company, Loblaw Co., has yet to wade in. While it hinted it could “experiment” with home delivery earlier this year, the company currently only offers customers the ability to order online and pick up items at more than 100 Loblaws stores. (REUTERS/Chris Wattie)

How Canada Goose and other Canadian retailers are going online

Unlike the other businesses mentioned here, Montreal-based menswear retailer Frank And Oak actually started selling its wares online, but since 2014 opened more than a dozen brick-and-mortar locations in major cities across North America. It has since rolled out two-hour delivery in Montreal, Toronto and Vancouver, and offers “guided shopping” on its app, according to Strategy Online. (Yahoo)
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