Increasing prices to increase sales and limiting access to your product to pique consumer interest sounds like a recipe for fast failure. But Karen Wilson has proved that the opposite is true—that exclusivity as a brand can be a recipe for success, and it doesn't mean limiting your market share either.
"When Karen came to us a few years back, she wanted to take her line of handbags to the next step," says Chris McCarten, CEO of Myriad Marketing, a company that has been creating brand strategies for clients such as Microsoft Canada and Subaru Canada since 1997. "Karen wanted to compete with some of the major names in handbags. She came to us, described her vision, and together we developed a brand image."
What this fashionable 40-something brought to Myriad was a hobby-turned-business that had seen sales double each year since 2001. "I had been buying a lot of Kate Spade bags, so I thought I'd try making them myself," says Wilson, who lives in Oakville, Ont., with her husband and three daughters. What evolved from the idea was an inaugural collection of retro-inspired pocketbooks. Made of high-end fabrics, their design was eye-catching kitsch. But with a price tag of about $250 each, and in a market saturated with fake Prada and big-box bargains, Wilson would have to hit just the right note to make money. That meant accentuating her unique bags and making them irresistible despite the high cost. She had to become known but not saturated, coveted yet not too accessible.
But simply building a "me too" product—a Canadian Kate Spade-type replica—wouldn't cut it. "In a creative field, authenticity is required to really stand out," says Rose Mastnak, strategic director of Portrait Branding, an image-creation company specializing in creative fields. What separated Karen from the pack, and what she would have to emphasize, was her local and limited production. "All my bags feature a Made in Canada logo, which is a big selling feature," says Wilson. Initially she sewed all the bags herself, but as sales grew, Wilson hired on a team of Toronto-based employees. That kept production close to home, but higher wages would cut into the bottom line were she not able to pass that cost onto retailers and consumers. "Stores are thrilled to see the Made in Canada label, and customers are willing to pay more for it too."
The size of her company was also an attractive feature, for two reasons. First, she carries no inventory. "You waste a lot of time and money on inventory," she says. "I don't want to clear items at the end of a season. It lowers the value of your product." Second, with a production time of only three to four weeks, Wilson can offer custom designs to retailers. "Stores appreciate that," she says. "Because we're custom, they can make special requests—make handles a little longer, change the colour of the piping. They're prepared to pay a little more money based on the fact that they're getting a custom bag. Even if a competitor also carries my line, they know that their product is unique." And though low-cost offshore production is attractive, "if I start to mass-produce my products in a factory somewhere I lose that edge."
Still, price remained an issue. Many retailers were reluctant to take on a fledgling label at such a high price point. The solution: exclusivity. "My bags retail for a high price, and stores don't want everyone carrying them, so I guaranteed area rights," says Wilson. Barrington's, an Oakville boutique, for example, was one of the first to carry her collection. Because of their continued loyalty, they're still the exclusive supplier of Karen Wilson handbags in Oakville, where her bags beat out Burberry, Michael Kors and even Kate Spade. "They account for 60% of our handbags sales," says owner Paul Barrington.
The exclusive rights model had been successful, though there's an obvious downfall —your market is limited. "Each year I had to turn away six or seven stores because someone nearby was carrying my line." Not wanting to stagnate, Karen did what many designers before her have done: diversify. Like Donna Karan, who has an original collection plus her DKNY label, Wilson divided her collection from one into three: her original line with the $250 price point, a high-end line that retails for around $500 and a line of evening bags, to hit stores in August, that will cater to bridal boutiques and other specialty shops.
So why opt to go high rather then than low? "A lot of people suggested I try a lower price point," says Wilson, "but I can't compete with foreign-made products. Besides, once you have established a niche, it's better to go up."
Throughout the expansion, Wilson's consistent branding has been crucial to her success. "What makes a successful brand," stresses McCarten, "is consistency. You should be able to recognize a brand by its colours, its shape, its logo. Just by describing the essence of the brand, you should be able to recall the product." To establish recognition and create that instant recall, Wilson placed her name on every bag—it became her logo. Her original tags were fabric and a little too close in resemblance to Spade's signature look, making them—to American consumers—a Canadian knock-off. So on the advice of Myriad, she switched to a pewter nameplate. The classic and understated elegance appealed to her target market. Says Wilson: "It's amazing now the number of people who recognize the name and recognize the label."
