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‘Premiumization’ puts Canadian clothiers on world shelves

Saxx CEO Tim Bartels: The underwear design – inspired by a baseball catcher’s mitt – makes it unique and is what continues to open doors around the world.

Saxx

Vancouver-based Saxx Underwear Co. spent nine years perfecting its design and customer service before taking its product beyond North America.

The idea was to ensure that attributes of the men's underwear company remained intact as it expanded into European, Australian and Latin American markets over the past year, says Tim Bartels, chief executive officer.

"We've always been a company that has exceeded expectations in customer service and customer experience," he explains.

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Mr. Bartels says this has led to a big uptick in demand for the past three years. Described on the company's website as "Life Changing Underwear," the undergarment's patented "BallPark Pouch" – inspired by a baseball catcher's mitt – continues to open doors around the world, he says.

While the product is designed and developed in Canada, a factory in China produces the underwear. This is the reality for Canada; manufacturing clothing and apparel for export is long gone and is not coming back, according to some.

Canadian apparel companies have instead established a reputation for excellent customer service and innovative design, which has allowed them to tap into the conspicuous retail trend of "premiumization." A term first used in the nineties to describe bringing more luxurious products to the masses, premiumization is what will continue to put Canada's clothing products on shelves around the globe, experts say.

Globalization and "an increased focus on the quality of products and the shopping experience in many markets have further fuelled consumers' appetite for premium products," according to a 2016 Nielson Global Premiumization report.

Between 2012 and 2014, the demand for "premium" products – defined as goods that cost a minimum of 20 per cent more than the category's average price – swelled 21 per cent in Southeast Asia and 23 per cent in China. Which means that not only is this part of the world manufacturing the goods, they are the main consumers of them, as well.

That is the way the market is going and "it's not a bad thing at all," explains Bob Kirke, executive director at the Canadian Apparel Federation.

Canadian clothing companies are able to make larger profits when they design their products at home but manufacture in Asia. "In general terms, if you're making [clothing] in Canada, but you're competing against Bangladesh goods, it's nearly impossible to be competitive," says Mr. Kirke.

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"The product that is sold by Canadian firms in foreign markets is frequently produced in another foreign country," he says. "But a lot of companies in Canada, particularly on the West Coast, have become very strong and very diversified with high-innovation content."

Canada's cut of the export market for clothing, footwear and accessories in 2016 totalled $2.5-billion, up about $300-million from a decade before, according to Statistics Canada.

In Asia, says Mr. Kirke, Canadian clothing companies can find "extremely sophisticated, high-capital intensive factories" – not something that can be found easily at home. Canadian clothing companies wishing to break into or remain in the global apparel sphere (particularly the United States) need to focus on what has already been established as Canada's strengths in the marketplace.

"The top 20 [Canadian] exporters … those companies, every single one of them, came up with a little different product," he explains. "And [they] really place the onus on service."

There is still plenty of room for Canadian producers to join in the premium or specialized product space, according to Andreas Schotter, a professor of international business at the Ivey Business School at the University of Western Ontario.

"There's also, for small-scale, an opportunity now to go into a really niche market, like Canada Goose and Lululemon started out, and I see that as an encouraging sign," says Dr. Schotter.

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But, according to him, the element that some Canadian companies are still missing is leveraging the country's brand of clean, healthy and natural.

"I've been saying this for years, that we need to play this up more … and benefit from Canada's global natural brand," he explains. "I don't see enough companies leveraging this."

Businesses in Canada have an opportunity to get in on this shift in the global clothing market as more people embrace the premium brands and the global economy, Dr. Schotter adds. But Canadians need to let go of the notion that clothing and apparel products can be manufactured here because it is simply not cost effective.

"The industry will never be the same," he says.

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