Columbia Sportswear Case Analysis

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Suppliers

Columbia outsources all of their product manufacturing to Asia-based independent manufacturers in an effort to provide production flexibility, maximize efficiency and improve product pricing through the cost savings achieved. Although the benefits of outsourcing can be realized in the short-term there are causes for concern as many of their competitors’ products are produced by the same manufacturers, with five companies accounting for 25 percent of global production in the industry, and it leaves them completely reliant on the ability of the suppliers to ensure that product delivery is done on time and as efficiently as possible which is risky due to the seasonal sales variations in the industry. Complete dependence on outsourced Asian-based manufacturing also makes Columbia more susceptible to the volatility of commodity prices, delay delivery of new products to the marketplace, and increases the risk, and ease, of counterfeiting of new product innovations and technology, which results in both financial losses and brand equity damage.

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Market Analysis

Target Consumer

The primary market segments targeted by Columbia, and its primary competitors, are all consumers involved in any outdoor-related activities who are looking for quality apparel, equipment, footwear and accessories. This demographic is composed of all levels of outdoor enthusiasts and nature lovers who participate in a variety of outdoor activities as well as recreationalists, eco-terrorists, fitness-oriented individuals, extreme sport athletes and anyone else looking for products to protect them from the elements, whether hot or frigid, wet or dry.

Product Benefits

Marketing Strategy

Distinctive Competence

Columbia is a leader in both quality and innovation and technology

Current Strategy Evaluation

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General/Global Business Environment Analysis

Demographics

Economic

Political/Legal

Sociocultural

Technological

Global

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Company Analysis

Current Strategy

SWOT Analysis

Financial Analysis

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Strategic Alternatives

There are several strategic actions that Columbia could undertake to address the main strategic issue of expanding product exposure and increasing direct consumer access to their products while simultaneously maintaining their current profitable, yet competitive, retailer relationships in a manner that reduces the power of those retailers.

The first alternative is to make substantial investments into the design, development, and implementation of an information technology infrastructure that enables the firm to develop both a highly accessible, state-of-the-art e-commerce platform and a product management system that encompasses all aspects of the value chain, from design to consumer. This would also enable them to more effectively manage every aspect of the product-lifecycle of each of their brands, coordinate inventory levels with retailers, increase efficiency and reduce costs in manufacturing via supplier-partnerships, substantially increase the global reach and awareness of their products, and earn the higher margins available to them through direct-to-consumer channels. It would also enable them to compete more effectively in the marketplace with REI and L.L. Bean, both of whom have a strong e-commerce presence.

The second alternative is to increase product exposure and accessibility outside of major retailers and specialty stores through expansion of their own retail brick-n-mortar presence, which is currently comprised of 114 brand and outlet stores worldwide, to levels superior to those of their competitors in both international and domestic markets with an emphasis on brand stores internationally and a mix of brand and outlet stores domestically. This would enable Columbia to fully advertise and promote their entire portfolio of brands and products, provide control of the customers’ brand experience and expand their market reach while also earning higher margins than wholesale distribution channels.

A third alternative is to expand and diversify their product lines into other growth-oriented market segments through brand expansion and strategic partnerships in the value-oriented market segments. Columbia has both the experience and expertise necessary in innovative product development and design to successfully develop new product lines and should consider expanding both their wholesale and direct-to-consumer channels via strategic partnerships with non-specialty retailers large enough for Columbia to earn higher than average margins. Potential retailers would include TJ Maxx, Ross, and Marshalls, or other similar retailers with both brick-and-mortar stores as well as an e-commerce presence. This segment of the market, although value-oriented, could provide stability for Columbia in terms of seasonal sales and seek to introduce new customers to the brand.

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Strategic Recommendations

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Implementation Plan