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#012: How to marry brick and mortar with online retailing. The Canada Goose way.

Canada Goose is the second fastest growing luxury brand in the world.  They have created an amazing store experience that at the same time makes it easier to manage the store and reduces inventory costs.  And it is easy to do.

David Young:

Welcome to the Empire Builders podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us. But we’re highlighting ads we’ve written and produced for our clients, so here’s one of those.

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David Young:

Stephen Semple, you’re in Canada.

Stephen Semple:

I am, proudly.

David Young:

And I know you wanted to brag a little bit about a Canadian company in this episode.

Stephen Semple:

Absolutely. It’s about time we brought a little bit of Canadian to this whole thing. I actually feel bad it’s taken this long.

David Young:

Well, tell me your Canadian story.

Stephen Semple:

I want to talk about a company called Canada Goose. And it’s not necessarily super well-known. So the first thing I want to add is that they are, right now, the second fastest growing luxury brand on the planet.

David Young:

Wow.

Stephen Semple:

So, when somebody’s the second-fastest luxury brand on the planet, I think it’s worth paying attention to what they’re doing. And what I specifically want to talk about is they have a very interesting business model in terms of how they’ve managed to marry brick and mortar in their online presence that only works for consumers, but actually makes their business a lot easier to manage. And these guys have done just an amazing job building this empire. But let me tell you a little bit about the story of Canada Goose. They make these big puffy like Michelin Man style puffy winter coats, right?

David Young:

A parka.

Stephen Semple:

Yeah.

David Young:

As one wears in Canada.

Stephen Semple:

Right, that is stuffed with goose down.

David Young:

Uh-huh (affirmative).

Stephen Semple:

Surprise, surprise, right? And they were founded in 1957 by a Polish immigrant, Sam Tick. And they originally started as a company called Metro Sportswear, and they were making clothing for police and municipal workers and private labels. So basically, high volume, low margin stuff. And by 1985, they grew to 50 employees and they started their own brand at that point because what they wanted is they wanted to have more control over their destiny. And they called it Snow Goose.

David Young:

Okay.

Stephen Semple:

And in the early nineties, they ran into some issues with the name Snow Goose because of other companies and whatnot, and they changed their name to Canada Goose. And then here’s when it gets kind of interesting because in 1997, under Canada Goose, they sold $3 million worth of product.

David Young:

87. 3 million.

Stephen Semple:

Yep. Some 3 million. Not a lot, but by 2008, 17 and a half million dollars. Five years later, 70% of the company was sold to Bain Capital, Mitt Romney’s company, for $250 million. So Bain Capital came along and bought 70% of the company for that price. But there was an interesting thing, stipulation. Sam Tick stipulated that that was great, they were going to sell the company, but manufacturing had to be maintained in Canada.

David Young:

Okay.

Stephen Semple:

And these coats are still made in Canada, they’re not made in China or anything along that lines. That’s part of the deal. 2014, sales hit $200 million. 2016, they went public. And by 2018, they were doing $591 million worth of sales. And today, second fastest growing luxury brand.

David Young:

So, what’s the key?

Stephen Semple:

Here’s the key. Here’s what they’re doing. When you go into a Canada Goose store, it’s a weird experience. So first of all, first of all, they are prepared and line people up outside the store. So if every salesperson has a customer, they will make you wait. They will actually make you wait outside the store. \.

David Young:

Okay.

Stephen Semple:

You come into the store and they have this whole elaborate story of Canada Goose and talking about down all those other things. And you get an opportunity to try on a coat. And you can try on a coat and here’s the other thing that they have in the store. These are warm coats, right? So the other thing they have in the store, big walk-in freezer.

David Young:

Nice.

Stephen Semple:

You to walk in, you can sit down in there for 20 minutes. Man, the coat’s still warm. So, that’s the shopping experience. But what’s the biggest frustration that we have today when you go shopping for clothes? You were talking about shopping for shoes earlier. What’s the biggest frustration we have?

David Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

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David Young:

Let’s pick up our story of where we left off and trust me, you haven’t missed a thing.

Stephen Semple:

What’s the biggest frustration that we have today when you go shopping for clothes? You were talking about shopping for shoes earlier. What’s the biggest frustration we have?

David Young:

They’re out of my size.

Stephen Semple:

Right. Or they got the size, but not in the style I want. Or do you know I’d like to try the one larger just to make sure. Canada Goose has eliminated all that. You can not buy a coat in a Canada Goose store. I want to say this again. You can not buy a coat in a Canada Goose store. If you want to do the buy, you go over to the computer, you buy it, it gets shipped to your home. Because this way, guess what they’re able to guarantee? They’re able to guarantee that every cut, every size, is available in the store for every customer. Do you remember? They’ll customer is up outside-

David Young:

Yeah.

Stephen Semple:

[crosstalk 00:07:32] customers. You are guaranteed to be able to try on what it is that you want to try on in a Canada Goose store.

David Young:

Perfect.

Stephen Semple:

Brilliant. And guess what? With the way online stuff goes today, it might even be at your home by the time you freaking get home.

David Young:

It comes to the idea too of choose who to lose, right? We choose to lose the people that need a coat today, right? You wouldn’t find a Canada Goose store necessarily at a ski resort-

Stephen Semple:

Right.

David Young:

… where the weather turned cold and you think you’re going to go in and get a coat to wear.

Stephen Semple:

Right.

David Young:

That’s-

Stephen Semple:

And these are thousand dollar coats. So-

David Young:

Yeah.

Stephen Semple:

… it’s like, typically a person’s buying a thousand dollar coat has probably already got a nice coat.

David Young:

Probably. I wouldn’t be in a ski area without one, right.

Stephen Semple:

Right? Yeah. And here’s the interesting thing. It has also made the business easier to manage because if you’ve got 30 stores and you’re trying to keep inventory selection at 30 stores, you don’t have to worry about that. They have one distribution warehouse that they’re shipping the sizes out of.

David Young:

Amazing.

Stephen Semple:

Now think about how much inventory you have to have in the store. I just need to have a couple of sizes, it’s minimal.

David Young:

Mm-hmm (affirmative).

Stephen Semple:

It’s minimal.

David Young:

Need every size, every color, and that’s it.

Stephen Semple:

That’s it. And so it’s simplified the business, it has made for a better shopping experience. Then they’ve also gotten, look, they’ve got fantastic marketing behind it and whatnot. But the part that struck me is, this is something every retailer can do is start thinking about how do I marry online shopping and my brick and mortar? Instead of thinking of those being two separate things, or I have to measure the sales from each one of them and, oh, and I’ve got to also, like person might walk out without buying a coat. Fine. Then they go home and they order. If they love it, they’re going to buy it. Don’t worry about that.

David Young:

Mm-hmm (affirmative).

Stephen Semple:

But this thinking about the shopping experience differently and how do I marry and make the brick and mortar and online work together. Look, there’d be lots of people who don’t need to go to the store. They already know their size and they’re going to order it. That’s fine. That’s fine. But that to me is the innovative thinking that they brought that I really admired about the Canada Goose experience.

David Young:

There’s a little psychological element of, I don’t know, it’s not true scarcity, but the experience of, oh, I’m waiting in line to go in there, right?

Stephen Semple:

Yeah.

David Young:

I assume that there’s lines.

Stephen Semple:

Yes. Look, you walk through a mall, back when we used to have malls still open.

David Young:

Back When we could still go.

Stephen Semple:

And there was crowds in them. There was only two stores that had a lineup outside their shop, Apple and Canada Goose.

David Young:

Amazing. Great story.

David Young:

Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app, and leave us a big fat juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire-building session, you can do it at empirebuildingprogram.com.

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