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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
CASE SYNOPSIS
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.
CASE FACTS
• 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
GRADUATED INTO OFFERING 3 MAJOR USPS
Focus on
wilderness-
oriented
recreational
activities
Co-operative
corporate
structure
Economic,
Social,
Environmental
Sustainability
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
BUSINESS MODEL
UNDERCUT
COPY
MANUFACT-
URE
PRICE-OUT
REPLACE
PROBLEM DEFINITION
MEC EXISTS IN A HIGHLY SATURATED
AND MATURE MARKET WHERE
THERE IS FIERCE COMPETITION
BETWEEN COMPETITORS FOR
MARKET SHARE
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
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
CASE INFERENCES
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
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.
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
RECOMMENDATION
S
•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
THANK YOU

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Mountain equipment co. op private label - case analysis

  • 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
  • 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.
  • 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
  • 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
  • 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
  • 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