Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
If you've ever imagined yourself as Butch Cassidy, you'd need the perfect hat to pull it off. The Last Best West can make you one – maybe whiskey coloured, with an open, gentle hand-rolled brim.
The business, which is based in Calgary, designs and makes handmade cowboy and Western hats, leather holsters, rifle sheaths, chaps and other cowboy leather. It was launched as a website in 2000 by sole owner D. Longfellow Wood, 57, originally as a vehicle to promote his adventure book The Last Best West, written under the nom de plume Longfellow Deeds.
Today the company ships all over the world, and its website attracts about 4 million visitors annually.
Among its customers are the Smithsonian museums as well as the entertainment industry, including Fox Entertainment Group, for the character Jedediah the Cowboy in Night at the Museum 3, cable channel AMC for Hell on Wheels and the TV series Fargo, which is shot in Calgary. Hats range from $350 to more than $900.
The Last Best West sells online to a primarily U.S. customer base (it has no bricks-and-mortar location). For that reason, the company employs an American hat-maker and leather-maker, and it ship its goods from the United States.
However, Mr. Wood would like to have more customers in Canada. He plans to find a Canadian manufacturer, which would keep prices reasonable for Canadian customers, given the rise in value of the U.S. dollar. He would also like to open a flagship store for Canadian-made goods, ideally in a small Alberta town close to a tourist destination.
"It could be tied into a whole Old West theme," Mr. Wood says.
However, he wonders whether that's a good idea, given that Amazon has just eclipsed Wal-Mart as the biggest retailer in the world without having one single store.
"It's a very difficult decision to make," says Mr. Wood, who has a background in retail management. "Is there any margin in it? Is it feasible to have a bricks-and-mortar location in today's world?
The Challenge: Should the Last Best West open a retail store in Canada or focus on increasing sales online only?
THE EXPERTS WEIGH IN
Sunil Mistry, partner at KPMG Enterprise, Toronto
A storefront would likely cost them quite a bit of infrastructure to set up, plus rent and inventory. They need to do an analysis to see whether the market would repay that investment and how long it would take. So many companies are battling this issue, and what we've found is that not opening up a bricks-and-mortar store is becoming the norm.
They could try something halfway in between as a test. When you talk about Alberta, you think of the biggest event out there every year – the Calgary Stampede. They should try to get a short term lease, say two months right smack in the middle of the Stampede and see how they do.
Whether or not they open a store, they should launch a separate Canadian website. Since they've been doing this strictly online for some years for their American customers, why should it be any different for the Canadian market? On a per capita or population basis, Canada is right up there in terms of using the Internet to buy goods and services. We don't have that issue of needing to touch, smell and feel the goods any more.
Berkeley Warburton, customer strategy lead, Accenture in Canada, Toronto
Your first thought shouldn't be, "Do I need to open a physical store?" It should be, "How can I sell through other people? How can I get other people to be my promoters, therefore pointing others toward my digital presence, Facebook or website and encouraging people to shop there?"
They could create a physical community through social media and brand ambassadors – for example, by establishing a group of aficionados who actively promote the brand. They need to tap into the people who are shopping on their site who love their product and treat those people as brand ambassadors to get the message out to other people within their circle. An actor would be a great brand ambassador, but local people can be, too. For instance, Lululemon's community of brand advocates include yoga studios and teachers.
The market for this product is very niche. For most niche products, what's working in the U.S. would extend into Canada. Before they do anything, they could conduct customer interviews or surveys to see whether Canadian customers are looking for something different than U.S. customers. They might undercover something very interesting or fundamental to confirm why they haven't been able to get much traction in Canada.
They could also form strategic partnerships. Companies like ours or oil and gas companies such as Shell have lots of employees and clients who participate in the Calgary Stampede. A $350 hat as a gift to a client isn't really material for a corporation in the way it is to a customer. Tapping into strategic partnerships is all part of selling through others. It's having someone else sell your product for you.
Alex Tilley, founder, Tilley Endurables, creator of the Tilley hat, Toronto
In 1984, when I decided to make an actual business out of selling our hats and travel clothing, I rented space deep within an office building, hired staff, and began advertising, using testimonials, always with the name and city of the sender for veracity's sake. But the majority of our customers sought us out, and our offices became an ever-expanding store until we later moved into our flagship store a couple of years later. I learned that Canadians were not mail-order-oriented when it came to hats. They needed to touch, feel and see how they looked in a Tilley by visiting us and trying them on.
I would be hesitant to invest in such a wonderful but expensive and appearance-changing hat without having my hand held by the maker. I'd seek him out, no matter where he lived. I think your clientele will do the same. Test, test, test.
Before going to the expense of a store, I'd do what Tilley Western in Vancouver did: They opened a "store" in the basement of their home. After its success, they rented a small actual store, then a much larger one. Another idea is to share another retailer's store for a few hours per week, to test the idea. The other retailer would benefit by having potential customers enter his/her store.
THREE THINGS THE COMPANY COULD DO NOW
Survey the market
Any company looking to expand in any jurisdiction needs to do a market study.
Sell through others
Make strategic partnerships with large corporations and court brand ambassadors to sell for you.
Test, test, test
Consider a hybrid option such as renting a retail location for a few months or a "store within a store."
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Interviews have been edited and condensed.