It's Going Down
By Chavie Lieber
January 4, 2016
Luxury outerwear brands Moncler and Canada Goose have turned puffy winter coats into legitimate luxury items.
The start of winter has felt like anything but. This December was the warmest on record for many cities around the world; the Weather Channel even reported that this Christmas might very well have been the warmest "of your lifetime." And brands are paying for it.
AdAge wrote that retailers lost $185 million in sales in November alone, and BuzzFeed found that many companies are being forced to apply steep discounts to jackets, coats, and scarves. There's one notable exception though. The luxury outerwear category — specifically Canada Goose and its French rival Moncler, two high-end coat brands that have seen remarkable growth over the last few years — won't be taking much of a hit.
"It's warm out, but the fashionistas are all wearing their Canada Goose," WWD deputy editor Arthur Zaczkiewicz told the Guardian last month. "They're sweating, but they're doing it. Fashion trumps the weather."
"While the warmer weather has been unhelpful to the sales of outerwear, the retailers mostly affected are those in the middle market," says Neil Saunders, an analyst at Conlumino, explaining that mid-market stores are where consumers go to impulse-buy coats when the weather turns cold. "Premium brands like Canada Goose are likely to hold up more as consumers see the purchase of such items as investments."
For decades, The North Face, Patagonia, and Columbia dominated the outerwear space. If you needed to contend with a harsh (or even semi-harsh) winter climate, outdoor brands you could find at REI were the obvious go-to. Now Canada Goose and Moncler are taking over.
"In terms of luxury, the category that used to be a popular splurge was handbags," Roseanne Cumella, an analyst with the Doneger Group, adds. "Right now, that category is outerwear."
Experts point to Moncler as the brand that instigated this shift. "Moncler developed more modern and feminine silhouettes in their traditional puffer coats, as well as spearheaded successful collaborations with fashion designers such as Sacai and Thom Browne," says Jennifer Sunwoo, Barneys' executive vice president of designer ready-to-wear.
Moncler has been around since 1952, when it was known as a manufacturer of tents, sleeping bags, and anoraks. Two years later, founder René Ramillon applied the brand's signature quilting techniques to outerwear and began selling coats. Moncler's roots were in mountain sports: the company supplied gear for the Italian expedition to K2 in 1954 and the French expedition to Makalù in 1955. It became a bonafide European favorite after outfitting the French ski team for the 1968 Winter Olympics in Grenoble (it later named one of its product lines after the city, known as the "capital of the Alps."). As the Telegraph notes, Moncler jackets were also popular with European teenagers during the 1980s, but "by 1999 that buzz had faded and Moncler's sub-cultural credentials were already a matter of historical record."
Moncler awoke from its slumber in 2003, when entrepreneur Remo Ruffini bought the company and began transforming it into a proper fashion brand. Ruffini's first order of business was to sever existing licensing deals that had allowed Moncler coats to be made in factories all around the world; Ruffini decided all production would take place exclusively in Europe. He also halted the brand's distribution in sporting goods stores, instead creating partnerships with upscale retailers to transform the brand's reputation and take the Moncler coat from practical ski gear to coveted luxury item.
Ruffini cemented the brand's new image when he launched the company's first women's line, Gamme Rouge, in 2006. It was initially designed by former Valentino designer Alessandra Facchinetti and then by Giambattista Valli, and has been shown during Paris Fashion Week since 2008. In 2009, Moncler launched a men's collection for the line designed by Thom Brown. In the years since, it has teamed up with Nicolas Ghesquière and Pharrell Williams for collaborations, and had campaigns shot by Bruce Weber and Annie Leibovitz.
"Our CEO has put more style into the coats, and that's what pushed us into the fashion industry," Alex, a sales associate at Moncler's Soho store in New York City, says on a recent evening. The space is jam-packed with shoppers despite the curiously warm temperatures outside. In-store displays — illuminated photos of snowcapped mountains, mannequins wearing ski helmets and goggles — help stir enough cold-weather excitement that customers are able to look past the price tags. Moncler jackets can cost more than $2,000; it sells beanies for $465.
"They don't just use that same, standard plastic outside layer that everyone uses for puffy jackets," posits Andrew, a musician from London who's browsing the store. "They have more intricate patterns and fabrics. They really do more with a coat than the average brand. Like, when I think of myself wearing this coat, I think of Bond, jumping out of a helicopter, skiing down the mountain in front of avalanche — in a Moncler."
"I think people like the fashion aspect of Moncler, but there's also a lot of technology that goes into this jacket," Alex continues, lecturing to a group of eager shoppers. "We use Japanese nylon, which is very fine, so you will rarely, if ever, see a feather come out of a stitch. We use 90 percent down, 10 percent feather, which is the best ratio on the market right now. That means wind cannot go through the coat, and the coat is much lighter than other companies', but is a lot warmer too."
By the time Moncler celebrated its 60th anniversary in 2012, it was considered the hottest outerwear brand on the market. W called it the "the crème de la crème of goose-down-filled jackets." Suzy Menkes wrote that the brand was turning "duck jackets into swans." The London Times hailed Moncler as "the new Burberry." Sales soared from 45 million euros in 2003 to 489 million euros in 2012, according to Reuters.
Moncler's success hit new heights in 2013 when it went public on the Italian stock market, in what many considered the most successful European IPO of the year. The company has opened 62 more stores since then, bringing its total to 184 as of June (166 of which are directly operated by the brand), with a dozen more to come this year. Revenue has climbed to $759.7 million.
While the brand is aggressively expanding into areas like China, Russia, and Japan — the Tokyo store that opened in Ginza in September has "people lining up all day outside," according to WWD — its expansion focus has been on the United States. In 2010, the brand had one free-standing store in the US; it now has 14, including one in Honolulu, of all places. This expanded retail footprint has contributed to its visibility, though Drake wearing a Moncler coat in his video for "Hotline Bling" certainly helped too. Moncler has made it.
"Moncler is the ultimate luxury purchase," says Jennifer Denime, a florist from Delaware shopping at the Soho store. "I love everything European, so I have several Moncler jackets. They are light, warm, and fitted, and they do more for you than the average jacket. They are sexy."
In an article leading up to Moncler's IPO, the Wall Street Journal asserted that buying shares would be a good investment because "it has few direct competitors." Just two years later, Moncler is no longer the lone superstar in the world of luxury outerwear.
Canada Goose has technically existed since 1957. It originally operated under the name Metro Sportswear, making durable men's coats for Ontario's police force and for Canadian park rangers subjected to brutal Arctic temperatures. It also made coats for brands like L.L. Bean, Timberland, and Eddie Bauer as an independent contractor.
When CEO Dani Reiss, took the reins from his father (who also owned the company) in 2001, Metro Sportswear was pulling in just $3 million in annual sales. Reiss's plans to catapult the brand first involved changing its name to Canada Goose and having it stop producing jackets for other companies.
He also moved all of the brand's manufacturing to Canada and pushed for stronger international distribution. Sweden had been a strong market for Metro Sportswear since the ‘90s, but Reiss was able to get Canada Goose in high-end stores all across Europe, where its ski jackets sat next to ones made by Prada and Gucci. Reiss introduced a women's line and convinced department stores like Bloomingdale's and Nordstrom to carry the brand.
If Canada Goose's history and turnaround sounds similar to that of Moncler, that's because it is. Eventually the brand caught on throughout Canada and the United States, and by 2013, its annual sales hit $150 million.
While Canada Goose is cheaper than Moncler, its prices are still steep, with coats ranging from $525 to $1,275. But as Brooke Jaffe, Bloomingdale's operating vice president and fashion director of ready-to-wear explains, "I don't think there's ever been offered this type of quality and value, with all the technology of the down and all the different ingredients of its coats."
Reiss attributes the success of the brand to its Canadian roots, a detail that's hard to miss, considering a patch with Canada Goose's distinctive logo — a red and blue map of the Arctic, surrounded by Canadian maple leaves — is affixed to every product. (Moncler has a similar patch strategy, though its logo depicts red and blue mountains with a Gallic rooster.)
"I think people today are really interested in authentic product," says Reiss. "There are a lot of brands out there that try to attach a story to their product, but it's not real. But we actually are the real story. We're the Land Rover of clothing. We started in Northern Canada, and the coats were the uniform of the high Arctic. They were made for people working in the coldest places on Earth."
And like Moncler, the brand now has Hollywood's seal of approval. It's been sponsoring the Sundance Film Festival since 2013, the same year Kate Upton graced the cover of Sports Illustrated wearing one of its coats and not much else. But the real growth came after Canada Goose was bought by private equity firm Bain Capital in December 2013 for a reported $250 million.
"We are very excited to employ our global resources and experience to help the team continue to build the business and fuel an even more successful future," Ryan Cotton, a principal at Bain, told press when the deal was announced.
Following Bain's purchase, the brand launched e-commerce — first in Canada last year, and then in the US this past September. Its revenue has doubled to $300 million and Reiss says the US is the brand's "fastest growing market." He expects his company will make 800,000 jackets this winter. Sunwoo says Barneys has only been carrying Canada Goose since 2014, but based on its performance, Barneys "more than tripled the buy this year."
Also benefiting from this trend is smaller Canadian outerwear company Mackage, which was launched by childhood friends Eran Elfassy and Elise Dahan in 1999 and has seen almost a 30 percent increase in sales "over the last few years."
Dahan says the brand came to fruition because "we were living in Montreal and there was nothing to wear that kept you warm but didn't make you look like the Michelin Man." True to Dahan and Elfassy's initial vision, Mackage's down jackets are carefully tailored with cinched waists and narrowed shoulders.
Mackage coats start at $650 and cost as much as $1,850, and the brand says this is for good reason. Its puffer coats are 90 percent down (just like Moncler's), with a quality of 700 fill power (which means its coats are extra fluffy); the feathers are coated with textured polymer to increase durability. The coats themselves are comprised of six layers, each working to make the pieces water- and stain-repellent, windproof, breathable, down-preserving, and above all, warm.
Attached to every jacket from Mackage is a tag stating the lowest temperature a person wearing the garment can withstand. These labels — which mark coats as acceptable in temperatures ranging from 23 to -31 degrees Fahrenheit — are assigned only after the coats are subjected to experiments in a Quebec lab and assigned official thermal insulation values and temperature ratings.
Elfassy insists Mackage coats are the best option on the market: "There are other winter coats brands out there that we compete with, but they are made for western European winters. Our coats are made for the blizzards of the North American winter." But he admits the brand has started allocating even more money towards research and development for 2016. While stylish-yet-functional winter jackets were considered innovative when Mackage first hit the market 16 years ago, Moncler and Canada Goose are now totally dominating the category.
"Moncler and Canada Goose have elevated the game," says Bloomingdale's Jaffe. "They brought all the elements of a perfect storm to see this category reach new heights."
There's a reason why luxury outerwear is having a moment — and it's the same reason outdoor apparel brands are popping up by the dozens and why athleisure just won't die.
"The root of this category comes from shoppers wanting to look good when doing the things they are doing," says Paula Rosenblum, a managing partner at Retail Systems Research. "If it's walking out in the cold or going to the gym, consumers today want to feel like they have the best."
Outerwear brands never used to be considered part of the luxury category, with the exception of Burberry, whose coats "were never known for warmth and functionality," says Forrester Research retail analyst Sucharita Mulpuru. But Moncler and its peers have "completely changed the dialogue."
"These brands have done a remarkable job at marketing their functionality," says the Doneger Group's Cumella. "The utility and inherent properties of their items are appealing to the customer because there's been an overall growing movement towards authentic outerwear.
"This isn't like buying an Old Navy puffy vest every season," says Mulpuru. "These brands have taught shoppers to think about outerwear the way they thought about a cashmere sweater or a Chanel bag. Coats were never something people talked about. But they've created a new ‘investment piece' because they've convinced people the product is worth investing in. They've changed the way people think about coats because they've added the investment value as a factor."
It's not that a coat from Canada Goose is necessarily any better than what other companies offer. According to Jakob Schiller, an associate editor at Outside Magazine, traditional outerwear brands like The North Face and Arc'teryx are still more popular in the outdoor world: "It's shocking to see a $1,000 price tag for a jacket when a nice Patagonia jacket is just as functional."
And unlike those actually in the outdoor world, it's doubtful that most, if any, luxury outerwear customers need a coat that functions at -22 degrees Fahrenheit. Still, the fact that a brand like Mackage lab-tests its coats and makes its impressive results known helps fuel purchases. Canada Goose's winter ad campaign is a short film directed by Oscar winner Paul Haggis that features mountain climbers and dogsled racers tackling extreme weather conditions in the brand's jackets. Moncler's most recent partnership is with Italian explorer Michele Pontrandolfo, who will be wearing the brand's wares as he travels across 2,485 miles of ice and snow during the world's first solo trek to the South Pole.
"These brands have done a remarkable job at marketing their functionality," says the Doneger Group's Cumella. "The utility and inherent properties of their items are appealing to the customer because there's been an overall growing movement towards authentic outerwear. Everyone wants to make gear for the top-of-mountain extreme sportsman, but few brands speak the language as well as they do. That's not to say they will keep you warmer than other outerwear brands, but they certainly market themselves like they will!"
And these coats, like any true luxury item, have evolved to represent status.
"For many people, especially those living in cities like New York, your coat is sort of like your car," says Bloomingdale's Jaffe. "It has to work well, but it also has to look good." Adds Mulpuru, "All of these brands, Moncler especially, are known in elite winter sports, and those are the sort of things that investment bankers and finance bros do."
Smaller luxury outerwear companies like Mr. and Mrs. Furs, Army by Yves Soloman, and Lilly e Violetta have seen an uptick in sales at Barneys thanks to the reinvigorated category, says Sunwoo, and The North Face even debuted a high-end outerwear collection exclusive to Barneys back in October. The space is just going to get more crowded: Not only does Moncler constantly fight off counterfeits, but brands like Michael Kors and Abercrombie & Fitch have started adding circular patches to the upper sleeves of their coats.
Jaffe says that it won't be long before more luxury outerwear brands launch with competing offers, since "there's a real demand for this type of product and once there's a revelation like that, more and more people come to the market place with ideas."
Ugg brand president Dave Powers even told Racked this fall that the footwear giant will roll out a new outerwear line by 2017 because "there's so much opportunity now in that category."
Which brings us back to this warm winter. As the New York Times reported last month, what's been selling this season is "capes, vests, raincoats with fur trimming and lighter-weight furs — items tailored more to fashion than warmth." These all happen to be items luxury outerwear brands already make. Giants like Canada Goose and Moncler aren't just winning when it comes to high-performance coats. They're smartly diversifying their offerings.
Moncler sells "super-light" down jackets in June, when it includes them as part of its spring/summer collection. Canada Goose also began releasing a spring assortment last year. At a press presentation for its second spring collection in December, the brand displayed waterproof anoraks, light down jackets, and softshell windbreakers with removable sleeves.
"We've applied our expertise in down-filled outerwear to new products that can be worn in warmer climates and other weather conditions, and for when people want to be more active," says Reiss. "As outerwear specialists we know what consumers need to protect themselves against the elements, so the 2016 spring collection is designed to handle anything Mother Nature throws at you."
As always, the marketing is on-point. Even a light spring jacket will cost you, though; the brand is charging $535 for rain shells. After all, it's still Canada Goose.