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Wednesday, February 23, 2011

The Need for Innovation is NOW!

The Need for Innovation is NOW!

There has been a lot of talk about innovation and Canada is lagging far behind its peers. Over time this will continue to erode our place in the economic G20 and ability to be competitive. Economic theory will indicate that as a result this will impact us greatly in the future.

So the big economic question becomes where can we find new sources of economic value?

Growth comes from the simple fact of selling existing goods, products and services to new markets. Growth can also come from selling the same goods with an innovative slant to the existing markets.

The Chindia manufacturers have to only export their products abroad to North America to gain new revenues and increase market share. They have a very good idea of what people are looking to buy and at what price points. The consumer now has new products at lower prices (sometimes at a lower quality level) to buy and will take that market share from the local manufacturer. Usually these clone products offer no innovation except for a cheap price with a cheaper quality product.

Take the clothing industry for example where Canada was a prime exporter. The overseas manufacturers have basically destroyed and shut down many of our factories. In the past, we had Warren K. Cook making suits using needles and thread with Italian fabrics assembly line style where now they come from Indonesia using glue and Chinese fabrics. The bottom of Spadina used to have a huge manufacturing base. Now its all condos. What’s left of the haberdasheries on Spadina have actually moved a bit west on Queen street. Many tailors used to buy their canvas and fabrics from Archie Fine & Sons (who are still in business). Today it’s a dying art and a dying business.

The surviving Canadian fashion brands have been thinking about design innovation the past 10 years in order to remain in business. They are being innovative in the way they make their products and trying to cut as much cost as possible. These companies are still family owned and as their parents started it up in the 50s the kids are now running the business since the 80s and 90s. They believe in quality products and using a local workforce and being a Canadian business first. We are lucky though because there has been a shift in style that is favoring the Heritage brands. Roots still makes their leather goods in Canada, Canada Goose still makes their down filled coats and Parkas in Canada, Sorel boots are back in style, and Hudson Bay is still iconic. Today fashion is looking backwards in order to create a forward demand for their product. Take what worked in the past and modify or enhance it and now you have a new product that will fuel your growth and increase sales to the existing market.

Canada Goose has been making warm outdoor wear for over 30 years but was well suited for the North Pole than wearing it at a trendy bar sipping martinis. When the change their jackets and started offering a bomber style jacket at a more affordable price point – sales took off. However, the Europeans have been snatching up the line 5 years ago as it was a trusted brand.

The biggest US retailer looking backwards is J.Crew who has resurrected older labels and added some innovation to their products. Cole-Hann has done the same with Nike and added certain athletic shoe features into their dress shoes making them more comfortable to wear. Columbia sportswear has always been innovative in their approach to clothing and foot wear. Innovation can be the key driver that will fuel the growth in new sales.

The innovation touch points are where a gel heel insert makes a dress shoe more comfortable, a Gore-Tex liner in a dress boot makes it more comfortable, a running shoe with Kevlar shoe laces makes them better lasting, a handbag with a micro fiber lined pocket to protect an iPhone screen, a Victorinox suitcase with a numbered luggage tag that can be tracked back to its owner if lost, a Wolverine Trench Coat that has a Gore-Tex liner making it more comfortable, a Zegna sport jacket taking cues from high performance fabrics, the list can go on and on. This innovation is what the consumer uses to make buying decisions when buying a quality product and it differentiates the manufacturer from all the others.

Being innovative in taking an existing product and adding enhancements to it will fuel growth in the existing market and in current export markets a lot faster than trying to gain market share in brand new markets. It is a heck of a lot easier to sell new products to those that recognize your brand than trying to create brand awareness. This economic growth will then fund more opportunities to create demand and increase brand awareness into the new markets. This keeps jobs in Canada, revenues for Canadian retailers and the taxes can be used for provincial and federal budgets.

Canadians love their down filled parks, snowmobile boots, and leather goods and buying “Canadian Made” makes perfect economic sense.

John Leonardelli
Senior Unified Communication Consultant


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