Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
Janet Han wants to see Canada established as a nation of winter coats, much like Italy is known for shoes and France for its pastries.
That's why the founder of Wild North Inc., a high-end outerwear company based in Oakville, Ont., sees the current market monolith Canada Goose as healthy competition.
"We live in a cold climate and we're such a big country. I think we [Canadians] can make a name for ourselves, and thanks to Canada Goose, we've paved a bit of a path for ourselves already," says Ms. Han, who launched her business in 2014. It has since grown to a staff of seven.
Ms. Han, who also serves as Wild North's creative director, has produced a line of luxury jackets that range in price from $600 to $2,700. (See photos of the jackets here.) A decade ago, this price may have seemed exorbitant, but the winter parade of Canada Goose insignia down any city street proves people are willing to make an investment in staying warm.
The hefty cost comes from high production values and design, Ms. Han explains, noting that her coats contain more natural fibres than those of her competitors: She uses wool, silk and cashmere instead of Gore-Tex, a synthetic material popular in the outerwear industry. Fur that lines the coats comes from hunters in Northern communities, a partnership that supports their local economy.
Establishing a foothold in a market dominated by a goliath requires a major marketing push, and Ms. Han feels she's up to the task. A sizable chunk of the company's 100-per-cent growth over the past year has gone toward mobilizing street teams to educate consumers about the benefits of purchasing a good quality winter coat.
But while she values a bit of healthy competition, the flood of counterfeit Canada Goose coats that has plagued the outerwear giant are also affecting the bottom line of boutique brands such as Wild North.
"It's frustrating," she says. "People see the [fake] jackets and say, 'Okay, $100, $200, great. We'll buy these.' … There are ways of noticing if it's the real thing or a knockoff, but when people shop, they're driven by price."
Canada Goose has added extra tags to distinguish its coats from the counterfeits. Emerging businesses such as Ms. Han's, however, often don't have the budget to do the same. "I think it's really damaging for small companies. When we experience that, we can't really do much to fight it. This is something we have to live with."
For now, Ms. Han has decided to keep her new designs under wraps to minimize the chance they'll be copied before they hit the racks, but she recognizes this tactic will have limited effect.
So far, counterfeits haven't hurt the company too badly, but she knows that as Wild North grows, so will the chance of pirated jackets cutting a swath into her potential customer base.
THE CHALLENGE: How can a luxury brand move into a market dominated not only by a major player but the player's pirated goods?
THE EXPERTS WEIGH IN:
Jeff Berry, senior director of research and development at the data and loyalty solutions firm LoyaltyOne Co., Toronto
My starting point would be to understand who your customer is. The reality is that the person buying the counterfeit coat isn't ever going to be your target market. So it's important to get your product to people who are truly in the market for that and not spend your money against people who aren't. The reason they're buying the counterfeit coat is that it's close enough to the real thing and they don't want to spend $900 on the Canada Goose version of it. You can overspend in marketing on people who actually aren't your target market if you don't sit down and think that through first.
Create a reason for people to want to engage with the brand, because you're only going to be buying a coat once every five or 10 years. Make people actually care and be proud of the logo – that's part of the Canada Goose phenomenon. For people, at least in the beginning, it was about: "Hey, look I've got this logo and it means something," and I think that's why there were so many knockoffs, because it was recognizable.
Lorne Lipkus, intellectual property litigator at Kestenberg Siegal Lipkus LLP, Toronto
Canada's new anti-counterfeiting legislation came into effect at the beginning of January. Without paying any fee, this company is entitled to register its copyrights and trademarks with the Canada Border Services Agency. Then every time customs finds a counterfeit of their product coming into the country, they will contact the number they have on the list.
Our firm will be assisting brands in the registry. We'll be the primary contact on a seven-day-a-week telephone number and e-mail dedicated to being advised by customs without charge to most of the brands we represent. It doesn't cost them anything and it's something all brands should be doing.
A lot of the brands I represent also use sophisticated brand protection technology in their products. They can put markers on their product or label that is not nearly as expensive as what people think. And I suspect we can probably convince a brand-protection company to give a break to a young entrepreneur to encourage them to put a device on its product based upon small volumes in the hopes the volumes get larger.
Joanna Griffiths, founder and chief executive officer of Knix Wear, a maker of high-end women's underwear, Toronto
I can relate to the challenges Wild North faces, as Knix Wear also offers a premium product in a competitive landscape with tons of counterfeit potential.
Our products are more costly because they do more than your typical pair of underwear: They're moisture-wicking, anti-microbial and invisible under clothes. As a result, our prices range from $22 to $38 a pair. We launched a little over a year ago and we have been fortunate enough to experience tremendous success – more than 200 retail doors and counting including Hudson's Bay and soon Bloomingdales in the U.S. But it hasn't been an easy task. On a limited budget, we have had to communicate our (huge) point of difference and convince customers to join us.
My advice to Wild North is to stand by your superior product and go above and beyond in the service you offer. Strike a deal with a high-end dry cleaner, and offer one free dry-cleaning service to keep customers' coats in top condition. Extend the guarantee on your website and offer to repair coats for a five-year period. Do whatever you can to make your customers comfortable with making a $1,000 investment. When you don't have a track record to rely on, you have to leverage what you can – the promise of the future.
THREE THINGS THE COMPANY CAN DO NOW
Chase the right base
Invest in customers who are in the market to buy a high-end coat. Don't waste resources trying to convert the knockoff crowd.
Know your rights
Register your product with the Canada Border Services Agency.
Create meaning for consumers. Much like Canada Goose, a logo that "stands for something" can convert an apparel line into an iconic brand.
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Interviews have been edited and condensed.