Winter is here, have you already put on a warm down jacket?If your down jacket is a brand of Bosideng or Canada Goose, then you may not know that these two leading companies in the down jacket industry have recently suffered a crisis of stock price ** and market value shrinking sharply. What the hell is going on?Why are these two once glamorous down jacket brands in such a predicament?What does this mean?
Since the second half of 2021, the stock prices of these two down jacket brands have begun to fall off a cliff**. As of December 12, 2023, Bosideng's share price has increased from its peak of 6 in September 2021HK$57 shares, down to 296 Hong Kong dollars shares, down more than 50%, and the market value evaporated by more than 38 billion Hong Kong dollars, about 34.9 billion yuan.
Canada Goose's share price rose from a peak of 72 in November 2020$27 shares, down to $10US$67 shares, down more than 85%, and the market value evaporated by more than US$6.2 billion, or about 44.3 billion yuan. Such a decline has surprised and puzzled many investors and consumers.
The down jacket industry is a typical seasonal industry, and its sales season is mainly concentrated in October to February of the following year, during which the demand for down jackets will reach the highest point. At other times, the demand for down jackets will drop sharply, and even unsalable. Therefore, operators in the down jacket industry need to reasonably arrange production and inventory according to market changes to avoid the risk of excess or out-of-stock.
From 2015 to 2020, the sales of down jackets in China increased from about 30 billion yuan to about 50 billion yuan, with an average annual growth rate of 108%。Among them, the sales in 2019 and 2020 were 46.3 billion yuan and 49.7 billion yuan, respectively, with a year-on-year growth rate of 156% and 73%。This shows that the down jacket industry has maintained a high growth rate in the past few years, especially in 2019, affected by the low winter temperature and consumption upgrades, the sales of down jackets have reached a record high.
However, since 2021, the growth rate of the down jacket industry has slowed down significantly. According to the China National Commercial Information Center**, down jacket sales in 2021 will be 50.7 billion yuan, a year-on-year increase of only 2%. The sales of down jackets in 2022 and 2023 will be 51.6 billion yuan and 52.5 billion yuan respectively, with a year-on-year growth rate of 18% and 17%。This shows that the down jacket industry has entered a low-speed growth plateau, and the saturation and competition of the market are constantly improving.
First of all, it is the high ** of down jackets, which has led to a decline in the purchasing power of consumers. According to data from the China National Commercial Information Center, between 2015 and 2020, the average price of down jackets in China rose from 438 yuan to 656 yuan, an increase of 498%。Among them, the ** of large-scale cold-proof clothing has exceeded 1,000 yuan, of which more than 2,000 yuan accounts for nearly 70%. Such a level has exceeded the tolerance of many consumers, especially in the context of unstable economic situation, prices, and slow income growth, and consumers' willingness and ability to buy down jackets have declined.
Secondly, the homogenization of down jackets is serious, which leads to the difficulty of consumers' choice. As a functional garment, the main attributes of down jackets are warmth, lightness, and comfort. However, these attributes are not much different between different brands of down jackets, and it is difficult for consumers to find the one they like and fit from the many down jacket products. Moreover, because the style and color of down jackets are also relatively simple, consumers' aesthetic fatigue is also increasing, and the demand for down jackets is also decreasing.
Furthermore, it is the emergence of substitutes for down jackets that has led to the transfer of consumers. With the development and innovation of science and technology, some new types of warm clothing have also begun to appear on the market, such as woolen sweaters, cashmere sweaters, thermal underwear, fleece jackets, etc., which not only have the function of keeping warm, but also more fashionable, diverse and convenient, which can meet the wearing needs of different occasions and climates. In contrast, down jackets are bulky, monotonous and unportable, and consumer preferences are gradually shifting to these new types of warm clothing, which has affected down jacket sales.
The development trend of the down jacket industry is a low-speed growth plateau, the saturation and competition of the market are constantly improving, and the factors such as high down jackets, serious homogenization, and the emergence of substitutes have led to the decline in consumer purchasing power and demand. This is undoubtedly a huge challenge for operators in the down jacket industry, who need to adjust their business strategies according to market changes to cope with the crisis.
First of all, there is the decline in market demand. The main markets for Bosideng and Canada Goose are in the colder regions of the Northern Hemisphere, where the demand for down jackets has been affected by climate change. According to the World Meteorological Organization, 2021 was the sixth hottest year on record, with the global average temperature 1 above pre-industrial levels2 degrees Celsius. This means that the temperature in winter is also rising, the time and frequency of use of down jackets are decreasing, and the consumer demand for down jackets is also decreasing.
Secondly, there is the intensification of market competition. Both Bosideng and Canada Goose's market share has been challenged by other brands. In China, Bosideng is facing competition from brands such as Heilan Home, Semar, and Metersbonwe, all of which are constantly improving their product quality and brand image, attracting the favor of low-end consumers with lower quality and higher cost performance. Internationally, Canada Goose is facing competition from brands such as Montclair, Northface, and Columbia, all of which are constantly innovating their product features and designs to attract the love of high-end consumers with higher quality and stronger personality.
Again, it is the damage to the brand image. Both Bosideng and Canada Goose's brand images have been negatively impacted. Bosideng's brand image has been questioned by down **, and some of Bosideng's down is pulled from live birds, which is not only cruel, but also violates international animal protection agreements, causing many consumers to resist and disgust. Canada Goose's brand image has been affected by political factors, because the founder and CEO of Canada Goose are Jewish, and some of Canada Goose's products use Israeli fabrics and technology, which has led to some Middle Eastern countries and Muslim consumers ** and boycotts, and even violent incidents of smashing stores and burning.
The crises and risks of Bosideng and Canada Goose mainly include the decline in market demand, the intensification of market competition, and the damage to brand image, all of which have had a serious impact on their stock prices and market capitalization, making their future full of uncertainty and challenges.