Company Overview
The North Face is an outdoor brand specializing in “mountaineering equipment and apparel including sleeping bags, hiking packs, tents, skiwear, and high-performance outerwear, as well as performance apparel, footwear and equipment for explorers, climbers, and endurance runners (among others).” (High Snobiety, 2022). The company was started in 1966 by a husband-and-wife duo who are passionate about creating a product that is durable, waterproof, and good for the environment. Towards the end of 1990, the customer pool had expanded so much so for The North Face that one of their jackets was featured in a Wu-Tang music video is launched a drastic increase in demand and business expansion.
Does the company have a comparative advantage over its rivals?
The North Face is a leader in standing behind its core values and purpose. Their brand strives to bring together a community through being outside in nature. One way that they have a comparative advantage over their competitors is through their commitment to sustainability. Their current goal by 2023 is to use recycled material for over 90 percent of their merchandise. This percentage is higher than any of their other rivals such as Patagonia, Columbia Sportswear, and Nike. Another comparative advantage The North Face has is its outspokenness in the political arena on hate speech and standing up for improving constructive speech on various social media platforms. Because of the company’s drive for sustainability, it has created a brand for itself. ““We try to use our scale for good,” North Face’s Global Brand President says.” (Mainwaring, 2020). As mentioned above, some of The North Face’s biggest competitors are Patagonia, Nike, Canada Goose, and Columbia Sportswear.
Explain the supply and demand for its key product or service.
One of the most popular products that The North Face has to offer is the Nuptse Puffer Jacket. This product was originally made in 1992 and has become so popular that famous labels and brands are proud to wear this jacket and it is often seen on the runway. Although supply was less when this jacket was first launched, because of the 30-year credibility it has quickly become the most popular product the business has to offer. For reference, the number of sales that The North Face has made in 2022 is around $11.8 billion which is a 28% increase from the previous years. As demand for The North Face’s products continues to grow, the company has launched a program called The North Face Renewed program that focuses on taking used products and repairing them to resell. This program has led to an increase in sales as consumers can not buy their products at a lower cost.
Provide the GDP of its home country and a key market (country).
The North Face’s home country is the US with revenues of The North Face’s biggest market is the global market, specifically in Europe, the Middle East, and Africa with more than 40% of revenue growth coming from that region. By 2022, the company’s current amount of revenue is $2.8 billion globally.
(Statista, 2022). The GDP of The North Face globally is 11.8 billion.
How do fluctuations in GDP, economic growth, investments, and patents affect the company’s profitability?
While The North Face has a large market in the US, most of its sales come from other countries around the globe. Because of this, there are tariffs, exporting and importing laws, etc... that influence the profits and revenue of the company. Along with selling internationally, Covid-19 has played a major role in affecting the supply chain and created a decrease in production. While The North Face does not know all the lasting effects that Covid-19 caused, they have done extremely well in maintaining the company’s profitability by creating the Renewed Program which has led to them having one of the most successful years of sales.
References
High Snobiety. (2022). The north face. https://www.highsnobiety.com/tag/the-north-face/
Mainwaring, S. (2020, Oct 23). Purpose at work: how north face builds movements to accelerate growth and impact. Forbes Magazine. https://www.forbes.com/sites/simonmainwaring/2020/10/23/purpose-at-work-how-north-face-builds-movements-to-accelerate-growth-and-impact/?sh=3f9867111ed6
Sabanoglu, T. (2022, Jun 8). The north face brand sales increase worldwide from 2019 to 2022, by region. Statista. https://www.statista.com/statistics/1011877/revenue-growth-of-vf-corporation-s-north-face-brand-worldwide-by-region/
Hey Kris, this was a great post covering North Face from an economic position. I myself love the outdoors so the North Face brand is one that I’m very familiar with. I learned some new things about the brand from your post, such as the origin of the brand. I agree with you pertaining to the comparative advantage that North Face holds over competitors with their commitment to sustainability. Identifying their puffer jacket as one of their most popular products was fantastic. Identifying that majority of North Face’s sales come outside of the U.S. is important when keeping tariffs and other external factors in mind. Identifying this and COVID-19 as big factors in a decrease in sales was fantastic. This was a great post pertaining to a great brand that I love.