Patagonia notified SNEWSÂ® on Nov. 15 that it would become the largest, single vendor of outdoor apparel to Mountain Equipment Co-op (MEC), Canada's largest retailer of outdoor clothing and gear. Beginning in fall 2006, MEC will be featuring the Patagonia product line as part of its offering to its members. Patagonia's products will be featured in all MEC sales channels including retail stores, catalog and website.
"BK (Bill Kzulczycki) has been in discussions with MEC for years," Nate Smith, Patagonia's director of international sales, told SNEWSÂ®. Smith added that this move was the result of two years of additional conversations with Rich Hill, Patagonia's vice president of sales.
Added Hill, "The No.1 reason for initiating this relationship with MEC and Patagonia is we are perfectly aligned with each other both from a cultural standpoint and from an environmental standpoint."
This relationship began to solidify when Patagonia helped MEC make the move into organic cotton, according to Hill. It really was cemented once MEC agreed to join 1 Percent For the Planet -- an organization co-founded by Patagonia owner Yvon Chouinard. In addition, MEC has committed to join the Conservation Alliance and agreed to embark on a joint Patagonia/MEC Canadian environmental project. Â
With just under 200 specialty doors selling Patagonia product currently in Canada, Smith and Hill both believe that the impact on Patagonia's business will be minimal. However, both also acknowledge that the impact to some of the specialty retailers might be significant.
"We know that this decision will have an impact on our specialty retailers' business, some more than others," Smith told us. "Overall though, this decision was not about growing our Canadian business as we are forecasting no growth for the market as a result."
"How our specialty retailers will react remains to be seen," added Hill. "We've worked very hard to communicate with all of them, but how, ultimately, each will react is a crystal ball we don't have. We absolutely want to retain all of our specialty dealers, but we realize that there will be more turf protection from some more than others."
Hill told us that one of the driving business factors in making this decision was the fact that Patagonia feels, as a company, it has not done a very good job of serving the Canadian customer.
"This is a natural extension of doing what has worked so well for us in the U.S. and taking that same multi-channel approach to Canada," said Hill. "We are embarking on a long-term strategy to best serve the customer in Canada."
Part of that strategy involves opening Patagonia stores, gradually, in Canada. The first one will open in Vancouver, not far from the MEC headquarters.
SNEWSÂ® View: While we are certain that some retailers will react by booting Patagonia out of the store, in the long run, and perhaps even in the short run, this is a very good move by Patagonia. With only two reps in Canada, it has not been servicing its retailers particularly well, especially when compared to, say, someone like The North Face which has tech reps in retail stores on an almost weekly basis.
By positioning itself so strongly in MEC, Patagonia will be afforded brand visibility it has lacked in the key major metropolitan areas, as well as the outlying areas with MEC online and mail-order customers.
MEC is indeed an extremely good cultural and environmental match. In many ways, the companies see things in a similar light. All-in-all, the partnership will be good for both businesses and good for the environment.
As for the specialty dealers, there is a reason so many retailers do cluster around MEC stores -- traffic. For those that are able to continue to differentiate, this news will have little impact on business. For those who are larger Patagonia dealers near an MEC location, it might cause a little head scratching followed by a quick shift to another brand that carries cache with the customer. Cloudveil is increasing its presence in the Canadian marketplace, so it would not surprise us to see that company benefiting from those retailers who decide Patagonia needs to go and a new brand needs to come in.