Toronto-based fashion brand Canada Goose, known particularly for its warm outerwear, is looking to focus on sales through its own stores and online channel as it pulls its line from multi brand retailers. Since its first standalone store opened in 2016 in Toronto, Canada Goose has opened 21 stores globally with seven of those being in Canada.
Canada Goose’s focus on direct-to-consumer channels could pose a threat to multi-brand retailers in Canada as well as globally. Earlier this year, we reported that Canada Goose had pulled its product from Quebec City-based retailer La Maison Simons. After that report, French language publication La Presse reported that Canada Goose had pulled distribution from retailers SAIL, Sportium, Sports Experts, and Atmosphere. Last week, SAIL filed for bankruptcy protection and on Thursday, it announced that the Sportium chain in Quebec would shutter entirely while two SAIL stores in Ontario would close as well.
More multi brand retailers would struggle if Canada Goose pulled out. Toronto-based retailer Sporting Life sells tens of millions of dollars worth of Canada Goose product annually and the retailer’s future could be in jeopardy if Canada Goose were to pull out of Sporting Life stores. Retailers such as Harry Rosen have built dedicated Canada Goose retail spaces to maintain a partnership with the brand, and the nearly completed Holt Renfrew Ogilvy store in Montreal will soon include a dedicated Canada Goose women’s boutique on its third level luxury fashion hall.
Canada Goose was available for years in multi-brand retailers before opening its own stores. In October of 2016, Canada Goose opened its first store in the world at Toronto’s Yorkdale Shopping Centre. That was followed soon after by a store in New York City’s Soho area. Canada Goose has since opened stores around the world.
In Canada, Canada Goose operates standalone units in Vancouver (CF Pacific Centre), Calgary (CF Chinook Centre), Banff (Cascade Plaza), Edmonton (West Edmonton Mall), Montreal (1020 Ste-Catherine Street West), and most recently at CF Sherway Gardens in Toronto. The CF Sherway Gardens Canada Goose store features an ‘experience’ where consumers can learn about the brand and order product that is shipped to their homes (mall stores in Ontario have not reopened due to COVID-19 at press time). The Montreal, Edmonton and CF Sherway Gardens stores feature ‘cold rooms’ where shoppers can try on jackets in sub-zero temperatures.
Canada Goose also operates international standalone stores in New York City, Boston, Chicago, Short Hills NJ, Minneapolis, London, Paris, Milan, Tokyo, Hong Kong, Beijing, Shenyang, and Shanghai.
This year, Canada Goose will open a downtown Toronto store and plans were in place to expand the Yorkdale store. In downtown Toronto, Canada Goose will open a nearly 5,000-square-foot store on the third level of CF Toronto Eaton Centre where an Apple store was located — Apple moved downstairs into a much larger space late last year. At Toronto’s Yorkdale Shopping Centre, building applications indicate that Canada Goose will expand its 4,500-square-foot storefront by annexing an adjacent space occupied by foodservice business Nadege. The expanded Yorkdale Canada Goose store, which would include a ‘cold room’ as well as other experiential elements, will span more than 6,500 square feet with a prominent facade facing in three directions next to the mall’s Nordstrom store.
In an earnings call last week, Canada Goose CFO Jonathan Sinclair told analysts that the company will increase its focus on its direct-to-consumer business, particularly in the early stages of reopening after COVID-19 closures. “This allows us to control the consumer experience directly while earning double the revenue and triple the profit on a unit-for-unit basis,” Mr. Sinclair said.
Strategic wholesale partnerships with multi-brand retailers is still part of Canada Goose’s strategy moving forward, according to CEO Dani Reiss. And while wholesale will be smaller going forward, the “business model remains intact,” he said. “Many (wholesale retailers) are expecting us to be one of the brands that help lead them through the recovery,” Mr. Reiss said in the call last week.
The direct-to-consumer trend has taken hold globally over the past several years as brands open their own stores while also expanding online sales. What has resulted is a situation where multi brand retailers that introduced brands to some markets have been shut out. The trend has unfortunately resulted in the demise of some retailers. One example is Toronto-based Davids Footwear — last year, luxury brand Valentino informed Davids that it would pull the brand from the store after opening a standalone Valentino boutique at Toronto's Yorkdale Shopping Centre, and the Valentino exit was partly to blame for Davids’ bankruptcy filing and eventual chain closure. If Canada Goose pulls out of some multi brand retailers, that too could spell the end for some retailers especially after prolonged COVID-19 store closures.
COVID-19 has hit the bottom line of many brands, and it remains to be seen if some continue to open direct-to-consumer storefronts. Rents are among the biggest expense for retailers, and some brands may slow plans to open corporate stores until finances improve. At the same time, an acceleration of the shift towards online sales could see more brands continue targeting consumers directly both online as well as with standalone units acting as brand showrooms, which could mean less distribution in multi-brand retailers in years to come.
I would be curious to know what sales per square foot Canada Goose is doing. I’m guessing close to Apple Store numbers?
The Yorkdale location was doing well over $50mill/year typically (over $66m in 2018 I was told), so indeed the numbers are high. I’m curious what other stores do and how the new units in China will impact sales here.