Why Canada Goose Is So Expensive | So Expensive | Business Insider

Less Than 3 minutes into the 2004 Thriller the day after tomorrow we see our first Canada Goose logo no one so much as Shivers throughout this entire sequence and when Dennis Quaid breathlessly props himself up we see a nice clean shot of that pristine logo on an unblemished parka the film was a turning point for Canada Goose part of a careful marketing strategy implemented by CEO Danny Reese that allows the brand to sell parkas for more than $2,000 but with the company Under Fire for its use of animal products and with increased competition from other

brands can Canada Goose weather a changing luxury outerwear industry so how did a Canadian outerwear manufacturer transform into a globally recognized luxury fashion brand and why are these coats so [Music] expensive when I think of Canada Goose one thing that really sticks out is how how quickly it's managed to move from a real utilitarian private label company into the luxury space before Canada Goose was Canada Goose it was snow goose and before that Metro sportsware limited started in 1957 by Danny Reese's grandfather Metro sportsare began in a tiny Toronto warehouse with a focus on high

performance outerwear for Canada's working class unlike the prominently branded coats modern mod Day Canada Goose offers most of Metro Sports wear's Products were meant for other companies to slap their logos onto like L elban and Eddie Bower but then Danny's Father David Reese joined the company in 1972 filled with ideas that would set Metro sportsware on the path to becoming Canada Goose this was just one of his Innovations which changed the game not just for the company but for the industry David invented one of the first ever down filling machines which revolutionized Metro sports's manufacturing

process instead of filling every garment by hand a slow messy and inexact process this machine allowed workers to ramp up production with more control over quality the company became known for its down filling expertise it even sold the machines to other factories for a time but crucially the down filling machines open the door for the to start making more Parkers its signature item to this day so in our production lines we have the capability to do uh manufacture multiple Styles but at any given time we are producing one style when Business Insider visited the factory

was focused on the Snow Mantra parka this $1,895 parka takes $8 and 1/2 hours 247 pattern pieces and 45 crafts people to come together together unlike most garments which might be sewn together by a handful of people a single Canada Goose jacket requires a small army the sewing is the most critical part of it the fabric must first be cut in order to support our cutting operations here of approximately 2,000 jackets every day we consume about 14,000 meters uh each and every single day the down stuffed and fluff and don't forget the iconic logo each

production line can pump out up to 300 jackets a day but Canada Goose declin to tell bi how many finished jackets are stored in the warehouse at any given time I don't know that's kind of sensitive sorry each jacket goes through rigorous testing to make sure it will perform as advertised tests for strength color transfer and resistance check for Flaws this machine rubs up to 40,000 circles on a piece of sample Fabric and after the test is finished we uh check the appearance of the fabric to see if there's any pilling or any noticeable uh

change to the look of the fabri to capitalize on the company's reputation for quality in the late 1970s David started selling Metro sportsare parkas under an in-house brand snow goose you don't probably know the name of any private label company I don't all of the luxury brands that we think of rely on branding it sounds obvious but they have a logo you think of Louis Von's LV you think of um Gucci's horse bit snow goose really took Canada Goose from something that only people in the clothing industry and the Garment industry the manufacturing industry would

have heard about into something that everyday people on the street would recognize and hear about they didn't cost a grand yet but the private label gave the company a stepping stone to the Canada Goose prices we see today but how do you convince folks to buy your new brand name label prove you can keep people warm in the 80s Metro sportswear did it developed the Expedition parka for the United States Antarctic program this was the company's warmest parka yet with a windproof outer shell and resistance to temperatures down to -30° cus and a logo that

looks incredibly similar to the Canada Goose logo we see today scientists nicknamed the coat big red and it became standard issue for the Antarctic program you'll still see bright red scientists and staff scuttling through the snow at McMurdo base and South Pole station today Canada goo sells a civilian version of the Expedition parka for $1,950 you can be as warm as an Arctic researcher until the early '90s Metro sportsare mainly served the Canadian Market but the early success of the snow goose brand helped the company take its first steps into Europe and your current CEO

Danny ree he discovered that snow goose was already trademarked in the region so in 2000 snow goose became Canada Goose one really important question uh is Canada Goose provide prepared to provide people with Park as if we hit an apocalpse Ice Age absolutely that's a that's a question I don't get every day before Danny took over as CEO in 2001 he was already pushing the company into the future I was our C company's first customer service representative entering phones I set up our first email I cannot operate a sewing machine but other than that I

I've done pretty much every every role from packing jackets to sweeping floors taking out garbage as a kid to answering the phones and typing letters when Dany asked his father to step aside so he could run the company Revenue sat at just $2 million Dany told Forbes that at the time Canada Goose had a cult following in the coldest places on Earth but that cult following made for a small Market he wanted to cast a wider net but first he needed to convince regular people they needed high performance outerwear so he made it a [Music]

luxury probably the most recognizable symbol of that shift is the logo the first Canada Goose logo was a nod to the snow goose logo featuring a goose with its wings outspread but in the early 2000s came the emblem we know today the patch is supposed to make wearers feel like they belong to a club instead of solely catering to a niche market of folks who need these parts he shifted the company's Focus to high income urbanites in cold climates who might want these parkas so going up market for Canada Goose meant going um from something

that people bought because they needed it to people buying it because they want to buy it it means raising prices marketing to a more luxury clientele selling in more luxury stores the price of luxury came to about a grand the issue was Canadian and City dwellers didn't seem to be interested every Toronto store owner Danny pitched the company's new catalog to turned him down so he tried his luck abroad Dany managed to persuade a handful of high-end retailers in Europe to purchase some parkas and funnily enough once Canadian retailers noticed the coats catching on abroad

they started placing orders leading Canada Goose to repport its product by 20 2008 the company's sales revenue had grown to $16.4 million and this growth came with next to no traditional marketing budget instead of purchasing Prime Time commercials or two-page spreads Dany handed out Paras to people who would be seen working out in the cold hockey players bouncers valet even ticket scalpers were gifted jackets in the hopes that they become analog influencers while this effort helped the brand and build an aura of authenticity it didn't quite capture the attention of the luxury consumers Dany was

trying to reach things really picked up when Canada Goose entered Hollywood with its appearance in 2004's The Day After Tomorrow kened Deus did not pay for this inclusion according to its former head of marketing but it did provide parkas to the entire cast and crew months later movie goers saw the logo once again again in National [Music] Treasure in 2012 Dany Dove deeper into the entertainment World by sponsoring film festivals like Sundance and the Toronto International Film Festival he gave out hundreds of coats to attendees filmmakers and actors people in the industry who would be

seen it didn't take long for the Canada Goose logo to pop up in paparazzi photos of celebrities like Emma Stone Hugh Jackman and common by the time Canada Goose filed for an IPO in 2017 it was reporting a revenue of $291 million Canada Goose um really embraced gifting um before the influencer era where gifting has become really popular it's a lot more authentic to see someone wearing something cuz they're choosing to wear it versus being paid to one thing that's important to remember is that gifting is a form of marketing it is a marketing budget

it's expensive to send hundreds thousands whatever it is dozens of these coats to people but it's one that consumers believe probably rightfully so is a little a little more authentic at this point Canada Goose products have appeared in over 300 film and TV Productions around the world industry folks wearing gifted jackets is one thing but leveraging that popularity to connect with the Brand's actual consumer is something else we've been a wholesale brand for so long and um we decided that we wanted to have direct relationships with our consumers we wanted to sell online we wanted

to have stores in 2014 the company launched its website and in 2016 its first Flagship stores in Toronto and New York City luxury is all about experience it's about feeling good when you wear the product feeling good when you're buying the product feeling good when you're browsing for the product and you can control that whole experience in a brick and mortar Boutique and what you saw was when Canada Goose started opening brick and mortar stores analysts reported that they were actively siphoning off sales from other outerware brands like Northface in just four years Canada Goose's

direct to Consumer sales went from zilch to accounting for nearly half the company's Revenue in 2018 and today it accounts for over 70% of its business the company currently operates 72 retail stores and plans to open more and while these plans reach across the globe anchoring the company in Canada remains a priority as other manufacturers in the industry picked up their operations and moved them abroad to cut costs Danny made a bet we thought well if we could stick around and stay made in Canada for like say 5 years while everyone else left that uh

we would be in this great position 5 years later because we'd be amongst the only people left making stuff in Canada and that's what happened and so you know as a result we had this uh competitive Advantage where we were you know we were we were an industry leader at made in Canada Canada is really cold and so you trust that if this is made in Canada and people in Canada wear it it's going to keep me warm in New York or it's going to keep me warm in London it also is a signifier of

quality um whether fairly or not um people assume that if something is made in Canada versus made in China there's going to be more dedication to Quality and and making sure it works as a performance garment you see this with our as most of their products are still made by hand in France you see it with Brunello Cinelli their sweaters are made in Italy in a factory town yet the company has moved some of its manufacturing abroad its knitwear line introduced in 2017 is manufactured in Italy and some downfill items come from Romania gloves and

mitts are made in China if you scroll down to product info on Canada Goose's FAQ page you'll see that the company says it tends to find a Canadian manufacturer for gloves and Ms but knitwear will stay abroad the official reasoning for this being that's where the experts are losing control over your supply chain you just lose some of that authenticity that you have really capitalized on and and kind of sold as your brand um so far for Canada Goose this is this has not been a problem the Brand's most notable controversy comes from its use

of Fur and Feathers in 2015 the organization animal Justice filed a complaint with Canada's competition Bureau saying that Canada Goose's description of its coyote trapping practices as Humane was false and misleading the complaint was dismissed in 2016 but protests by Peta and other animal rights activists intensified protesters appeared at store openings at the company's IPO even outside Danny's house in 201 21 just over a month after that protest Canada Goose announced its intention to end the use of all fur and its products Danny has never said outright that the backlash is what moved him to

make the change TOS it was an intuitive decision to stop using fur and to uh become a more sustainable company but that didn't stop Peta from claiming Victory luxury Brands and fur have always gone hand inand fur is a limited product which means exclusivity it's it's expensive it's warm what you're seeing in response to environmental concerns or Animal Welfare concerns is some luxury Brands moving away from fur Monclair Doan gabana vowed to stop using fur Canada Goose vowed to stop using fur it's really hard to tell how much of that is a business reason in

terms of people are not buying fur and how much of that is a marketing a marketing not Ploy but it's a marketing move to make the brand seem more palatable um in response to critics Canada Goose wouldn't stop cold turkey however it laid out a multi-year plan for ditching fur starting with ceasing the purchase of fur by the end of 2021 and the manufacturing by no later than the end of 2022 the functionality of fur um worked in such a ways it protected uh a person's face in the extreme cold weather or in uh in

wind storms and things like that there's no specific material that replaces it we very much focus on the construction of our hoods and all the surrounding elements to make sure that they were equally as functional as they were before when they did have fur fur hasn't been Canada Goose's only animal rights controversy activists have also taken issue with the company's use of down in 2017 Peta released a video that supposedly depicted mistreatment of geese at Canada Goose's down supplier a Peta spokesperson told bi that afterward Canada Goose agreed to diversify its products away from down

paa has since removed mention of Canada Goose from the video but there's little indication these controversies have hurt Canada Goose's sales while profit has fluctuated for Canada Goose over the years annual revenue has grown pretty consistently it's been inching closer and closer to a billion dollars since 2022 the shift to direct to Consumer has caused a dip in wholesale Revenue that has analysts cautious about Canada Goose's future in response to the strategy change wholesale Revenue fell 41% this year direct a consumer has a lot of longterm growth potential but moving away from wholesale so quickly

has already caused some issues let me just kind just check what it is today let's see Canada go stock not good okay over the last 5 years the company's stock Val value has plummeted about 70% in October 2024 Wells Fargo downgraded the stock from equal weight to underweight and basically that means that it's no longer going to perform or they don't expect it to perform similarly to its luxury peers they expected to perform not as well The Brokerage cited diminished brand heat as the main reason for the downgrade mentions of Canada Goose on social media

fell 24% in the third quarter of 2024 at the same time there was 11% growth in mentions of other outerwear Brands a lot of luxury stocks have struggled this year um and it's a reflection of the macro environment it's also a reflection of Canada Goose maybe losing a little of that brand heat in May 2024 Canada Goose updated its long-term goals it outlined three main areas of focus strengthening the DTC experience in person and online expanding product lines and simplifying internal operations the creation of new categories moves Canada Goose's Focus away from its core line

of downfill products including parkas with thousand plus price tags shoes HomeGoods and rain and warm weather clothing entice customers to buy more from Canada Goose year round for a company like Canada Goose which is built off one really high quality product that's meant to last your lifetime it's really hard um to create repeat customers and it's a really it's a balancing act because you want them to come back but you don't want to move too far away from your Niche because then you lose that core hero product in May 2024 the company appointed the fashion

designer hater Akerman as its very first creative director his first collection is true to form for Canada Goose combining the old and the new and a 60 plus piece array based on the original Snow Goose line it includes parkas but also items from newer product categories like apparel and accessories you want to be really careful when you're expanding your product range or broadening your Market um because again it's a lot harder to go up Market than it is to go down Danny told Vogue business that bringing acman on was part of a strategy of infusing

a new energy into the brand but in a way that stays true to our heritage it's classic Canada Goose mixing its established authenticity with Innovation one thing that would be really smart for Canada Goose to do is move into different styles of winter jackets so the key is to maybe make a new winter jacket style that people want they don't necessarily need it their old Canada Goose will keep them warm but um it it it's a new look it's hot it's what everyone's wearing overall analysts seem to be cautiously optimistic about the future of Canada

Goose but as the company navigates its strategic shift only time will tell if it can soar to new heights or if it's just winging it [Music]