1. MOUNTAIN EQUIPMENT CO-OP
THE PRIVATE LABEL STRATEGY
C A S E S T U D Y A N A L Y S I S
Presented By:
Chitwant Tahalyani
Dr. Swati Gogawat
Kedar Risbud

2. CASE SYNOPSIS

3. The case details the current scenario of the sports equipment
market in Canada vis-à-vis MEC’s strategies.
Mountain Equipment Co-op (MEC) is a well-known Canadian retailer
of gear for mountaineering , rock climbing, ski touring, hiking.

4. CASE FACTS

5. • Owns the mainstream name-brand market
• Market leader - 20 % share of industryFORZANI
• Entry-level mainstream -Hockey, Football,
Basketball
• 10% share of market
• Employs young adults, pays minimum wages
WALMART
• Focus on niche sports -Scuba Diving, Running,
Biking
• Higher-end, higher-priced
• Employs active sports participants
INDEPENDENT
STORES
MEC HOLDS ONLY 1.2 %
OF THE MARKET
HIGHLY FRAGMENTED
MARKET
SPORTING GOODS
MARKET VALUED AT
$7.5 BN A YEAR
M A J O R C O M P E T I TO R S

6. GRADUATED INTO OFFERING 3 MAJOR USPS
Focus on
wilderness-
oriented
recreational
activities
Co-operative
corporate
structure
Economic,
Social,
Environmental
Sustainability

7. 15 stores across
Canada
Online & physical
revenue - $248mn
1,387 employees
Retail wage of $10 to
$11
To break the
mold of a
‘knock-off-
artist’
Built design team
in 2003 for
developing private
label
Not
mainstream
Hiking
Camping
Climbing
Snow sports
Water sports
Green building
Community grants
Canada-wide parks
Brands:
Arc’teryx
Black Diamond
Patagonia
Prana
38 % OF SALES OWING TO
PRIVATE LABEL

8. BUSINESS MODEL

9. UNDERCUT
COPY
MANUFACT-
URE
PRICE-OUT
REPLACE

10. PROBLEM DEFINITION

11. MEC EXISTS IN A HIGHLY SATURATED
AND MATURE MARKET WHERE
THERE IS FIERCE COMPETITION
BETWEEN COMPETITORS FOR
MARKET SHARE

12. PEOPLE MACHINESMETHODS
MATERIALS MANAGEMENTENVIRONMENT
• Shortage of willing
employees in Canada
• Cheaper labor available in
Asian countries
• $19 CAD vs. $0.6 CAD
per hour
Developing
private
brands
Cost of material
higher in Canada
• Extended lead times in
Canadian factories
• Less responsiveness to
market demands
• Moving manufacturing
away from Canada
• Pricing competitors’
brands higher in
category of own private
labels (thermarest)
• High-handed behavior
with suppliers
Acquisition of
cheaper machines
in overseas markets

13. EFFECT
•Private-labeled products eating into other brand sales in its
own stores
•Seen as infringing on intellectual property owing to copy-
>replace model
•Negative public perception owing to cutting of Canadian jobs
•Souring of relations with suppliers
•Seen as not abiding by its own highly vaunted policies and
only seeking profits

14. CASE INFERENCES

15. CANADIAN MARKET SHARE BY COMPETITORS
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
Forzani Total Canadian Tire Walmart MEC Independent
Stores
Others
MARKET PLAYERS
MEC IS COMPETING IN HIGHLY FRAGMENTED MARKET
IT ENJOYS ONLY 1.2% OF THE TOTAL MARKET SHARE

16. COUNTRY OF ORIGIN
Canada
30%
Other
70%
PRODUCT ORIGIN
Canada Other
MOST OF THE PRODUCTS ARE GETTING MANUFACTURED IN ASIA BECAUSE
OF LOW COST, LABOUR, MANUFACTURING COST ETC.

17. PRODUCT CATEGORY
PRICE RANGE (CAD)
PRIVATE LABELS OTHER BRANDS
WEEKEND & ALPINE BAGS 69 - 144 123 - 198
WOMEN’S HIKING CLOTHING 25 - 55 73 - 79
PRIVATE LABELS ARE CLEARLY SOLD AT A MUCH LOWER PRICE THAN
OTHER BRANDS

18. RECOMMENDATION
S

19. •MEC must refrain from unethical practices like
selling competitor’s brands at higher prices
•Improve relations and work practices with local
suppliers
Abstain from handing out threats of lawsuits
•Build a positive public image and brand equity by
standing by their company philosophies
Leveraging social media to connect with their
customers and appease them

20. THANK YOU