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Canterbury Unveiled
Canterbury has been around since 1904, what's been the core of the brand in that time?
It started in New Zealand and it was because of all the sheep in the South Island. One of the first major orders was to kit out the All Blacks rugby team – we have in fact made their kit for 85 years.
How has that changed? What's the core of the brand now?
It's changing. First of all the brand really developed down there. In the last ten years in New Zealand, South Africa and Australia, in the southern hemisphere it's become the leading general sports brand. So the Canterbury company have moved beyond rugby and they now cover all the sports. We now cover the commonwealth, and we have kitted out the New Zealand cricket team, the hockey team, that's men and women, netball, rowing and in fact we have kitted out the New Zealand Olympic team. So we are to that part of the world what Adidas and Nike are to Germany and America, if you like. We have also moved over into sailing as it is such a big part of New Zealand.
A big part of why I joined the company two years ago was because they had got an unbelievable heritage but it was focusing itself on core markets which, although it was doing very well, it was only a small market. So the question for me was how to get the company into the growth markets of the northern hemisphere where it was only known for rugby.
Its been very focused penetration into the Northern hemisphere. When I think Canterbury, I think of three things - base layers, rugby and cricket.
Here's what we have been trying to do. If you think of the analogy of Nike, they began with running, the main guy was a runner, so he developed leading edge technology in running, for example the waffle sole. And whether or not he intended to, he had developed technology that was great for his origin sport, so it helps you run up and down a track and it can also help you run up and down a basketball court or wherever.
So what we did, we looked at the market in the northern hemisphere and thought we can't just enter this market as a general sports brand as we would fail. If we took on the German and American behemoths we would have no chance. So to go in on a narrow front we have a chance and we are actually the leader in rugby. We have made sure we have the leading technology for rugby. When I came to the company we had fallen off the pace for technology so we corrected that quickly; the biggest technical innovation opportunity was base layers. Rugby produces bigger, faster, stronger players, they take bigger hits and they are wearing, as a result of that, more and more padding. The sweat and temperature problem in this padding was a real issue so we addressed that with our Canterbury base layer. It became the best product for rugby players and we had intentionally chosen a product that could transfer into other sports.
If a rugby player wants temperature management and regulation, which is what it does, guess what? A cricket and soccer player wants this too. So we became the leader in our niche and then we were dragged, rather than pushing into other sports. So very soon after we launched the base layer into rugby it got taken into cricket, it was also the reason ultimately that Portsmouth soccer club signed up with us this year. We have also got international golfers, Michael Campbell and Jim Furyk are wearing the base layer. We have international hockey teams, mens and women's, the England basketball team, all sorts.
We could have made a technical revelation in rugby, we could have produced head guards and it would have been great but it would have been non-transferable. We focused on an innovation that would take us into other areas.
Now we've got that, we have to keep at the top which we are doing, not through big advertising budgets but through constant innovation. The first innovation of base layers was temperature regulation, so it's cool in hot weather, hot in cold weather. The second generation was all about compression, brought out a year later. Then, through the Rugby World Cup and Portsmouth a couple of months ago we launched the third generation of base layers which is, of course, IonX.
With IonX, for athletes the potential extra 2.7 per cent power output is astonishing, that's the difference between winning and losing.
The guy who manages the technical innovation for the UK Olympics team estimates it would have taken his team from 8th position in the last Olympics to gold medal position. Certainly to the medals in all cases.
For the England team in the Rugby World Cup, the cornerstone of their recovery was their front row. All the front row trained in the months before in IonX. And the Springboks, all their kit was ionised. It's not the only factor for success but we like to think that it was a small contribution.
What makes Canterbury different to your rivals?
I think we are in a very fortunate spot, and it may not last forever and it's this: we are small enough to be quick reacting, so nimble but large enough to be global. So the way we drive forward is through innovation. We are not big enough to have a R&D lab with 200 people, so what we do is have a virtual network of outside partners. For example, the IonX innovation came for a small hi-tech company which also developed product for the American military.
These small innovation partners have found that if they take their ideas to the big global players it is very difficult for them to plug their ideas into them because they are so big they can no-longer move in a quick way, but they need to talk to someone who has a global presence – we fall into that category. I think of sports brands in about three different leagues: There are the massive global companies like Nike, Puma and Reebok. There are the very small, very niche companies who solely specialize in Triathlon for example, and they operate in their own market. We're in the middle, medium sized and we have a global presence. We have offices in Hong Kong, New York, Australia, everywhere but at the end of the day we are still a fairly small company.
How do you find and market to the 'serious amateur'?
What we don't do is massive above-the-line advertising; we don't do TV ads and advertising campaigns, because the money would be wasted. The way we market to these guys is to get elite endorsement and that means we sponsor the Springboks and Portsmouth, Premier League football teams.
In our case endorsement is more team oriented than individual. Now that we are spreading into a wider realm of sports the individual athlete endorsement will also be happening. Hence we have signed up Michael Campbell and Jim Furyk in golf and you'll se us signing up individuals in cycling etc.
The other thing we do is a lot of product placement and seeding with the influences and we spend a lot of time on this. It's a science with us, we don't just go out and give a bunch of previews to people; we've got a team of people across the country that we employ. We spend a lot of time looking at who is most influential in an organisation or structure. It's different in different sports, for example it might be the tennis coach at the tennis club or it might be the physio at a gym, it might be the star player, it might even be the county under-18 player. They are playing for their county, their division, their school, for England.
So we put a lot of time into this viral marketing.
The downside is the amount of time it takes up but we like to do it and we can't compete with the big guys on the ad budgets, but we can compete by having an intimate knowledge of the world of the serious amateur.
How do you think your gear is perceived by the customer?
The brand of choice in rugby, from the England Captain Phil Vickery down to the guy playing in the local rugby club. No question and that's based on 104 years. Also now I believe our base layer is consistently preferred by the serious amateur, by anyone who tries it – even the total amateur as it keeps them warm on a January morning.
So we have a good reputation in terms of product quality and that's a solid thing. I also think we benefit, quite luckily, from simple associations. For example, New Zealand is a 'cool' place, it is perceived as cool and green and people want to holiday and travel there – all that good stuff plays in our favour. And in sport the Southern hemisphere massively over-achieves. Not just in rugby, in Olympic medals, in gold medals per capita South Africa, Australia and New Zealand all do brilliantly. There are fantastic people in the equestrian scene, and rowing, inline skating, skiing – It's bizarre how many sports. We benefit from that.
One other thing that has been recognised now is that if you can cut it in rugby you can cut it in other sports; hence Premier ship soccer teams stealing coaches and trainers, physios and nutritionists from rugby. And that's a function of what was driven by Clive Owen and the All Blacks elsewhere. Why? It's because rugby is extremely grueling and demanding as a discipline. You've got to train people in your squad to be Olympic standard sprinters, you've got people who are Olympic standard in strength, weightlifter types, and there's the stamina and he aerobic capacity of a soccer midfielder. They then train and literally mud wrestle on a Tuesday afternoon doing drills so the product has to keep them dry and has to withstand two 18-stone guys wrestling each other and trying to rip them apart. If you can produce the clothing for this broad array of challenges then a soccer team in comparison is straightforward. We are lucky as a golf or soccer clothing manufacturer wouldn't have the credibility for rugby clothing. And we are quite lucky for the rugby and the southern hemisphere endorsements.
What are the next steps in growing the brand? You have grown significantly in the last few years.
We need to slow down, is the honest answer. It took 90 years to go from starting, to kitting out the Olympic team. In this market we do not want to confuse the consumer by being in 2005 a rugby company and then by 2008 being a company who is all things for sportsmen. So we have plenty on our plate, we have more than enough going on. We need to slow down the growth and we need to get better, and avoid any crashes from our weaknesses. If you talk to some retailers our service record is not what it should be as we've outgrown the capability to cope with that, so we need to slow down the growth in the top line and improve the operational efficiency. Just doing that will drive profit and growth.
I'd like to take this opportunity to speak to the guys we supply to and apologise, and ask that we can talk about this issue. When I joined the company two-and-a-half years ago, our Manchester headquarters was then the UK headquarters, and now it is the global headquarters. It had less than 20 people working there then, and we are now just going to go over the hundred mark with staff. We had a computer system that was over 25 years old, which will be changed in two months' time. So really the company went on steroids overnight and we had this very fortunate thing happen to us which I have described, with base layers. The growth has been unbelievable and the infrastructure couldn't cope with it. For 12 months prior to this Autumn we thought we were coping with these drawbacks, but then the World Cup hit and it overloaded the network and I appreciate it has been very frustrating for our retailers.
So we have new ERP system to handle all the finance operations, inventory planning, your supply, purchasing planning, warehouse and packing. Your retailers get paperwork from a system that is 25 years old and that is just embarrassing. So we have a new system and new people, we have a supply chain and have bought in a lot of skilled people from other sportswear companies. Two years ago we were investing in people around research, technology and sales. Now we have got out of synchronization, we needed to move all the areas of the company forward together, so we didn't have the sales faster than the supply chain could catch up with. So that's my issue now, but you have to realise that it is no use having a great supply system when there's no sales. There will be more of that disciplined process approach.
How do you work with retailers in terms of stock et cetera, and looking forward to when your fulfillment issues are sorted?
With our base layer program we use principles from the Fast Moving Consumer Goods industry [FMCG] which I brought in from my days at Levi Strauss. Our whole industry is based on forward ordering 6-9 months in advance. With core product, basic base layer, basic tracksters it shouldn't be necessary, so we offer a system where you don't have to forward order you can just replenish on a weekly basis. At this point the retailer will tell you that we can't deliver but we will be back on track with that. So number one, we offer the principles that come with the FMCG industry.
How do you support the independent stores?
By giving them the most innovative product, good design, quality and the reassurance the product is being worn by athletes; they're all value added aspects of the brand. We don't compete on price, we're just not the cheapest brand, but that is where the independent retailer doesn't try to compete either. So the main thing we offer them is product. Number two is that we focus our distribution efforts on the independent channels. We do not focus on the larger retailers as they work in different ways.
