Warm competition

Eileen Gu is endorsing Bosideng

Canada Goose started out selling its signature gear to fans of winter sports – catering to those going skiing as well as mountaineers attempting to ascend Everest.

Over time, the brand was coveted more as a fashion item, however, and even as something of a status symbol. Despite hefty price tags – some of its goose down jackets cost consumers more than $1,000 – the brand has also found a receptive audience in China.

The Toronto-based company now has over 20 retail outlets in the country, compared with just nine in its home market in Canada. It has just opened three new stores in Xi’an, Qingdao and Tianjin, with another planned for Chengdu by the end of the year.

In early November Canada Goose announced that quarterly revenue to October jumped by just over 22% on a constant currency basis to C$277 million (around $206 million).

But sales in Asia-Pacific were disappointing, showing a decline of 4%.

Chief executive Dani Reiss said he was “not seeing the level of improvement we had assumed in China” where mall closures and travel restrictions were curtailing the numbers of shoppers.

In comparison, homegrown down jacket giant Bosideng reported revenue of Rmb6.18 billion ($884 million) in the six months to late September, a year-on-year increase of 14.1%.Bosideng also benefited from a strong Singles’ Day performance, leading the category in sales on Tmall and JD.com.

What was notable in the results is that Bosideng reported similar gross profit margins to Canada Goose of around 60% (in fact, Bosideng was slightly higher), despite a cheaper product range than its Canadian rival.

Bosideng explained that this is the result of an effort to move upmarket and that sales of its higher-end apparel have been encouraging.

“Bosideng shares certain similarities with sportswear label Li Ning, which has also been a bright spot in the domestic consumer market. Both companies started going upmarket around 2018. Its savvy around-the-clock advertising has changed the impression of consumers, who used to think that domestic brands were old fashioned and boring,” assessed 36Kr.

To that end, Bosideng has been splashing out on advertising to revamp its brand image. In the first half of this year marketing expenses reached Rmb1.6 billion, accounting for over a quarter of revenues. More recently, it has tapped Olympic idol skier Eileen Gu to appear in its commercials, for instance.

More work needs to be done to entrench Bosideng at the premium end of the market, however. Based on its online sales data, the company’s best-selling styles are typically priced at Rmb1,000 or lower. Jackets with price tags above Rmb2,000 have average sales turnover of no more than a thousand units a month, while garments priced between Rmb3,000 and Rmb5,000 sell in even lower quantities.

“That suggests that consumers can accept Bosideng at Rmb3,000. But if it expects to be the next Canadian Goose, it will be difficult to enter the Rmb10,000 bracket,” 36Kr commented.

Other analysts have predicted that it will be challenging for Bosideng to shake off its lower-price image with shoppers, because this is the clothing that still makes up the majority of its business.

“Bosideng is faced by a dilemma. As a leading domestic down jacket company, [the process of] going upmarket seems only to be a matter of time. However, based on the economic environment and overall sentiment on spending, it would be totally unwise to forego its bread-and-butter: the low-end market,” warned an industry blogger.

Competition in China’s down jacket market is also growing. Even the more affordable brand YA YA has launched a higher-end sub-brand called Goose. Another competitor Gofans offers a newer “Blackgold” label that focuses on higher-performance jackets. And Canada Goose’s own Canadian rival Moose Knuckles, which sells down jackets priced between Rmb5,000 and Rmb16,000, has also opened a pop-up store in Guangzhou to test the waters. 

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