Macpac tiptoes onto U.S. shores banking on specialty retailers noticing

In August 2004, Macpac, well known in New Zealand, Australia, Europe, Asia, and in some pockets of the United States and Canada, tiptoed into Salt Lake City and set up shop in a hotel near the Salt Palace during Summer Market. The company had wanted to exhibit, but there simply wasn't room. With our ispo and Friedrichshafen connections, we knew enough of Macpac to be intrigued by its foray onto U.S. shores, so naturally we put company director Bruce McIntyre under the SNEWS® heat lamp for a round of questions.
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In August 2004, Macpac, well known in New Zealand, Australia, Europe, Asia, and in some pockets of the United States and Canada, tiptoed into Salt Lake City and set up shop in a hotel near the Salt Palace during Summer Market. The company had wanted to exhibit, but there simply wasn't room.

By the time it packed up shop and headed home, Bruce McIntyre, managing director for Macpac Wilderness Equipment Ltd., and his team had signed on seven retailers who placed sleeping bag, pack and tent orders for the New Year. It was just enough success to convince McIntyre that Macpac would be successful over here as long as the company established a U.S. distribution base and went about achieving traction methodically. McIntyre told SNEWS® that he hopes to add between 15 and 20 more stores before the end of 2005.

With our ispo and Friedrichshafen connections, we knew enough of Macpac to be intrigued by its foray onto U.S. shores, so naturally we put McIntyre under the SNEWS® heat lamp for a round of questions. Here then is a condensed version:

SNEWS® -- What is Macpac's history, in a nutshell?

McIntyre -- I began to make backpacks in my parent's garage in 1973, and named the company Macpac Products (NZ) Ltd. By 1978, we had started to sell into Australia and in 1981, we started to make tents. In 1983, we merged with Wilderness Products, a company Geoff and Shelley Gabites had founded in 1976 making outdoor clothing and sleeping bags. We shifted their production to Christchurch and renamed the combined business Macpac Wilderness Equipment Ltd. In 1987, Macpac packs were sold for the first time in Switzerland and Holland and in 1989 we launched the range of packs, tents and sleeping bags in Germany. Our next country we opened was the United Kingdom in 1992 and in 1996 we began exporting to Japan. In 2000, we began distribution in Sweden and Denmark, moved production from New Zealand to Asia in 2003, and then in 2004, we opened up the U.S.

SNEWS® -- What motivated Macpac to attempt to enter an already very crowded U.S. market?

McIntyre -- Macpac has been selling outdoor equipment directly to retailers for over 30 years. Currently, we're sold in over 11 different countries. We have never entered the U.S. market. Our focus has been on building a strong base in our European and Australasian markets, but we have always kept an eye on the U.S., knowing one day we would wish to enter.

The U.S. will always be a crowded market. Although the competition worldwide is very strong, we already successfully compete against many U.S. brands, and we also have a successful mail-order business into U.S. and Canada, so we know that there are a number of American people who appreciate our products already.

We also believe that there is an opportunity for a distinctive brand from New Zealand to create a point of difference in the market. The essence for us is to enter a market when we as a company are ready, and for us, that time is now in the U.S.

SNEWS® -- Why do you believe Macpac can be successful here where other international brands have not?

McIntyre -- We realize that the U.S. market is tough and traditionally inward looking. We're not underestimating the enormity of (effort required toward) breaking into the market. Nevertheless, Macpac is a distinctive New Zealand brand which offers a level of performance that (we believe) is not available in the U.S. New Zealand outdoors is wild and beautiful and on our doorstep. We offer a set of product values which are distinctively kiwi, such as extreme durability and weather-resistance. We come with the same can-do kiwi attitude that sets New Zealand apart from the rest of the world and which enables us as a nation to achieve things that you would normally expect from much larger nations. And, Macpac has a long history of design innovation which is ongoing.

It is also important to realize we are not in a rush. We are here for the long haul. It took us nine years to feel like we were a major brand in the United Kingdom, but we now have a very solid business there, because we took that time. Being privately owned means we aren't under investor pressures for instant return.

SNEWS® -- What does Macpac bring to the U.S. retailer that other domestic or international brands already being sold here don't?

McIntyre -- None of the other brands are from New Zealand. We bring a brand with a long heritage and very unique story based on the amazing environment and geography of New Zealand. I can't overstate the importance of the New Zealand environment on us. New Zealanders demand a lot from our products because their lives and safety depend on it. There is a great deal of remote wilderness here with extreme, fast-moving weather patterns off the Antarctic. New Zealanders do hard stuff every week. We build gear that is highly resolved, very durable, and weather-proof, and undeniably fit for purpose. For us, it just has to be.

SNEWS® -- How will Macpac support the brand and support the retailer in terms of marketing and PR?

McIntyre -- Our initial strategy is to build brand credibility through strong PR. When you have a very strong product, encouraging word-of-mouth promotion, such as through magazine gear reviews, is very effective. We are very lucky in securing Ashley Devery to champion PR for us in the U.S. She will be exceptional. We have planned many initiatives to talk to our customers "one to one" and create a buzz.

SNEWS® -- What can a retailer expect from Macpac if it buys into the program?

McIntyre -- At the business end, I think our offer/package to the retailer is very competitive. They will make a great margin and have a product they can believe in and sell with confidence. It will be very well supported by us from the U.S. and New Zealand. I'm absolutely rapt with the U.S. logistics, repair agent (for us U.S. folks, that means warranty services), and PR teams we have set up.

We try very hard to be "the" point of difference for our stores. This goes from our products, to our catalogs, to our promotion, to our distribution strategy. We have no desire to be in every shop, just the best ones. I want people to come into our retailers' shops because they have Macpac and the store down the road doesn't. I want the customer to know that when they buy a Macpac, they have something that is timeless, enduring and unique. We aren't into the disposable society. We are into great gear that is still great in 10 years. No one ever regrets buying quality.

At the relationship level, we are loyal first and foremost. We are outdoor people and want to have fun as well as do good business. That's why we deal direct. I think you'll find "kiwis" fairly up front, honest and uncomplicated. A bit like our products.

Outside of that, you can all laugh at our funny accents.

SNEWS® -- You make quite a point of stating your company is New Zealand focused and grounded, and yet you, like many U.S. companies, have moved production from being domestic to Asia. Why and how does this affect your New Zealand quality claim?

McIntyre -- We had a very efficient and flexible factory in New Zealand which we proudly supported until it became financially unviable. The benefit of moving to Asia is essentially the cost of production. The value of our dollar rose from USD $0.44 in 2001 to USD $0.72 in 2004 -- that's a 64 percent increase! Fortunately, we have been able to find Asian factories with high workplace ethics and strong quality programs so Macpac's legendary quality can be maintained. The major drawbacks with Asian manufacture is they require higher lead times and they have a less intelligent quality system (focused on quality control, rather than quality assurance) than we had with locally-based flexible manufacturing.

SNEWS® View: Macpac's canvas packs are unique enough, and the quality of the entire pack, tent and sleeping bag line is good enough, that with the right specialty retailers (and by that we mean retailers who are more concerned with their own brand than the brands they carry in their store), both the company and the retailers carrying Macpac product should realize strong results. It is a great line of products from a company with a fantastic culture that just screams specialty! And that alone should set them apart. Of course, the fact that McIntyre is obviously realistic about growing a market and not in this for a quick return, like so many other failed international companies before who see the United States as a land scattered with diamonds just waiting to be pocketed, also bodes well for both Macpac and any retailer who decides to climb aboard too.

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