The Canadian Apparel Market A Guide for Potential

The Canadian Apparel Market A Guide for Potential Colombian Apparel Exporters Prepared By Colombian Presentation 1

Introduction Purpose of today's presentation ¨Introduce Trendex North America ¨Review the history of Colombian apparel exports to Canada ¨Overview the Canadian retail apparel market ¨Identify potential opportunities for Colombian apparel manufacturers in Canada ¨Describe what a Colombian apparel supplier has to do in order to enter and be competitive in the Canadian apparel market Colombian Presentation 2

Trendex North America An apparel marketing intelligence and consulting company focusing on the Canadian and Mexican apparel markets. As an industry specialist Trendex offers companies unique value added insights based on both working with apparel retailers and suppliers and its continuous propriety research information services. www. trendexna. com Colombian Presentation 3

What is Canada? Canada World Rank Colombia World Rank 34, 568 #37 45, 370 #29 Yearly Pop Growth Rate 0. 78 #136 1. 13 #104 GDP (U. S. $Trillions 2012) $1. 4 #14 $0. 5 #29 GDP Per Capita (U. S. $2012) $41, 500 #27 $10, 700 #112 Retail Apparel Sales (US$Mill) $27, 420 - $9, 600 - $793 - $211 - Population (000) Apparel Sales per Person (US$) Source: Statistics Canada/ CIA Fact Book Colombian Presentation 4

What is Canada? Largest Provinces Ontario 13, 472, 000 Quebec 8, 028, 000 British Columbia 4, 606, 000 Alberta 3, 847, 000 Largest Metropolitan Markets Toronto 5, 839, 000 Montreal 3, 909, 000 Vancouver 2, 420, 000 Calgary 1, 265, 000 Ottawa 1, 259, 900 Edmonton 1, 196, 340 Source: Statistics Canada Colombian Presentation 5

Canadian Apparel Importing Patterns CANADIAN TOTAL APPAREL IMPORTS ($ Millions) 2012/2011 Change $9, 118 Source: Statistics Canada Colombian Presentation 6 +0. 8%

Canadian Apparel Importing Patterns Imports of Apparel Into Canada January – December 2012 Percent Change 14. 6% Total Imports USA Vietnam Pakistan Cambodia Honduras Turkey Bangladesh Mexico China Source: Statistics Canada Colombian Presentation 7 India

Canadian Apparel Importing Patterns IMPORTS OF APPAREL INTO CANADA January – December 2012 ($ Millions) Source: Statistics Canada Colombian Presentation 8

Canadian Apparel Importing Patterns Largest Latin America Apparel Exports to Canada 2012 C$ (000) Amount % Change 2012/2011 Mexico $322, 307 +4. 5% Honduras $84, 625 +7. 7% El Salvador $37, 635 +49. 2% Guatamala $34, 001 -7. 9% Peru $29, 703 +13. 3% Nicaragua $26, 102 +51. 7% Haiti $24, 380 +36. 5% Dominican Republic $19, 548 +24. 2% Colombia $9, 295 +16. 1% Costa Rica $5, 914 -3. 8% Country Colombian Presentation 9

Canadian Apparel Importing Patterns Colombia’s Apparel Exports to Canada Canadian Dollars (000) % Change 2012/2011 +16. 1% Source: Statistics Canada Colombian Presentation 10

Canadian Apparel Importing Patterns Colombia’s Apparel Exports to Canada 2012 Canadian Dollars (000) Distribution of Exports Hosiery/ Workwear/ All Other 0. 2% Children’s Men’s/Boy’s 16. 8% 45. 1% 38. 0% Women’s/Girl’s Colombian Presentation 11

Canadian Apparel Importing Patterns Colombia’s Apparel Exports to Canada Canadian Dollars (000) 2008 2009 2010 2011 2012 % Change 2012/2008 Men’s $3, 454 $2, 641 $3, 113 $3, 262 $4, 190 +70. 7% Women’s $2, 611 $2, 879 $2, 570 $2, 964 $3, 700 +41. 7% Childrens $380 $223 $188 $216 $20 -95. 0% All Other $1, 546 $1, 267 $1, 322 $1, 563 $1, 386 -10. 4% Segment Colombian Presentation 12

Canadian Apparel Importing Patterns Largest Latin America Apparel Exporters to Canada 2012 Dollars (Millions) Men Women Juvenile All Other Country Sales Mexico $194 Mexico $62 $0. 6 Mexico $65 Honduras $56 Honduras $15 El Salvador Honduras $12 Haiti $22 Guatemala $11 $12 El Salvador $18 Peru $9 Nicaragua $17 El Salvador $6 Dominican Republic $14 Nicaragua $5 Guatemala $13 Colombia $3. 7 Peru $12 Dominican Republic $3 Colombia $4. 2 Colombian Presentation Guatemala $0. 5 Mexico $0. 4 El Salvador Honduras $0. 2 Peru $8 Colombia $0. 2 Nicaragua $3 Peru $0. 1 Nicaragua $0. 1 Dominican $2 Republic Dominican $0. 1 Republic 13 Costa Rica $2 Colombia $1. 4 Brazil $0. 8

Canadian Apparel Importing Patterns Colombia APPAREL BALANCE OF TRADE WITH CANADA Thousands of Dollars Total Exports Total Imports Source: Colombian Presentation 14

Canadian Apparel Suppliers What can be said about Canadian Apparel Manufacturers? • The number of manufacturers and their sales have decreased by 35% - 45% over the past ten years Colombian Presentation 15

Canadian Apparel Suppliers Canadian Apparel Manufacturing Sales Seasonally Adjusted (Millions of Dollars) % Change (N. A) (-27. 2%) (-16. 4%) (+3. 8%) (-2. 2%) (-13. 9%) Previous Year Colombian Presentation 16

Canadian Apparel Suppliers What can be said about Canadian Apparel Manufacturers? • The number of manufacturers and their sales have decreased by 35% - 45% over the past ten years • Have changed from manufacturers to suppliers • Are focusing increasingly on exporting with mixed success • Have become more marketing oriented • Are totally dependent on the U. S. market, as they have been unable to develop consistent sales in other markets Colombian Presentation 17

Canadian Apparel Suppliers TOTAL CANADIAN APPAREL EXPORTS ($ Millions) Total Exports United States Exports U. S. Share (91%) (89%) (88%) (85%) (83%) Source: Statistics Canada Colombian Presentation 18 (81%) (80%)

Canadian Apparel Suppliers Largest Canadian Apparel Suppliers 2012 Company Products Channel Country Gildan Underwear Discount U. S. /Canada Peerless Men’s Suits/sportcoats Department U. S. Nygard Women’s coordinates Dept/Spec/Disc Canada/U. S. Levi Strauss Canada Jeans/casual pants Dept/Spec/Disc Canada Point Zero Sportswear Dept/Disc U. S. Roots Sportwear/activewear Dept/Spec Canada/U. S. Hanesbrand Canada Lingerie/underwear Dept/Spec/Disc Canada Warnaco Canada Jeans/lingerie Dept/Spec/Disc Canada Fruit of the Loom Canada Lingerie/underwear Discount Canada Canadian Goose Outerwear Dept/Spec Canada/Developed Countries Western Glove Jeans/outerwear Dept/Spec Canada/U. S. Stanfield Underwear Dept/Disc Canada/U. S. Colombian Presentation 19

Canadian Apparel Suppliers Canadian Domestic Apparel Manufacturing Base Merchandise Category Example Fur coats Many small suppliers Winter outerwear Canadian Goose Mid priced suits and sport coats Peerless Mid and better priced dress slacks Ballin Women’s mid priced coordinates Nygard Women’s mid/better priced women’s lingerie Adorable/Arianne Women’s tights/pantyhose Doris Hosiery Men’s underwear Stanfield Colombian Presentation 20

Nafta Overview NAFTA MARKET OVERVIEW 2012 Population (Millions) Colombian Presentation GDP (U. S$Trillions) 21

NAFTA Overview Total Retail Apparel Market 2012 (US$ Millions) Colombian Presentation 22

NAFTA Overview TOTAL APPAREL MARKET 2012 Dollar Sales Department Stores Discount Stores Apparel Specialty Stores Sporting Goods Stores All Other Outlets Colombian Presentation 23

NAFTA Overview CANADIAN RETAIL CHANNEL DEFINITIONS Department Stores Sears Discount Stores Walmart The Bay Aubiererie Other Better Clothing Other Notable Clothing Chains Stores Holt Renfrew Femme de Carrier Costco Harry Rosen H&M Superstore Mark’s Target Laura Winners Northern Reflections Giant Tiger Reitman’s Croteau Simons Zara *Store Only Colombian Presentation Sport Chek/Experts 24

MERCADO TOTAL MEXICANO DE ROPA PARA DAMAS 2012 Posicionamiento del Detallista Ingreso Familiar Alto Palacio de Hierro Liverpool Sears Zara The Bay Ilusion Vicky Form Martí Suburbia Andrea Medio Bershka C&A Sears Canadá Avon Coppel Price Shoes Comercial Mexicana Wal-Mart Soriana Bodega Aurrerá Bajo Más Joven Colombian Presentation Media Edad Media 25 Más Viejo

NAFTA Overview TOTAL APPAREL MARKET 2012 Dollar Sales Largest Retailers United States Canada Mexico Walmart 8. 0% Walmart 10. 1% Suburbia 10. 6% J. C. Penney 7. 6% Sears 9. 5% Coppel 5. 7% Target 5. 9% The Bay 8. 1% Liverpool 5. 6% Kohl’s 3. 0% Mark’s 5. 8% Walmart 4. 8% Sears 2. 8% Winners 4. 3% Zara 3. 2% Macy’s 2. 7% Reitmans 3. 8% Sears 3. 0% T. J. Maxx 2. 5% Old Navy 3. 6% Bodega Aurrera 2. 7% Kmart 1. 8% H&M 3. 3% Soriana 1. 4% Nordstrom 1. 7% Gap 3. 1% C&A 1. 3% The Gap 1. 3% Moores 2. 5% Colombian Presentation 26

NAFTA Overview How is Canadian apparel retailing different from American apparel retailing? Compared to the United States, Canda: • Has sales disproportionately smaller at the better end of the market • Has fewer channels of distribution • Has a higher degree of retail concentration • Has more promotional activity • Has a higher percentage of independent apparel retailers (especially in Quebec) Colombian Presentation 27

Canadian Retail Apparel Market CANADIAN TOTAL APPAREL MARKET 2012 Estimated Canadian Retail Dollar Sales (C$Millions) $27, 422 Colombian Presentation 28

Canadian Retail Apparel Market TOTAL CANADIAN APPAREL MARKET Retail Dollar Sales January - December Department Stores Apparel Specialty Stores Discount Stores Sporting Goods Stores All Other Outlets Colombian Presentation 29

Canadian Retail Apparel Market Canadian Apparel Market 2012 Retail Dollar Share Department Stores Discount Stores Apparel Specialty Chains Independent Specialty Stores Sporting Goods/Pro Shops All Other Outlets Total Colombian Presentation Total 17. 5% 21. 8% 48. 1% 5. 7% 3. 6% 3. 5% 100% Men 18. 0% 18. 7% 47. 8% 4. 3% 5. 1% 6. 1% 100% 30 Women 18. 5% 19. 0% 50. 4% 6. 0% 2. 2% 3. 9% 100% Juvenile 13. 8% 40. 4% 31. 7% 4. 1% 3. 0% 6. 2% 100%

Canadian Retail Apparel Market TOTAL CANADIAN APPAREL MARKET January - December 2012 Retail Dollar Sales Retail Concentration Top Ten Retailers 54% Colombian Presentation Largest Ten Retailers Walmart Sears (Total) The Bay Mark’s Winners Reitman’s Old Navy H&M Gap Moores All Other Retailers 46% 31 10. 1% 9. 5% 8. 1% 5. 8% 4. 3% 3. 8% 3. 6% 3. 3% 3. 1% 2. 5%

Canadian Retail Apparel Market Canada’s Largest Apparel Retailers 2012 Retail Sales Men Mark’s Sears The Bay Walmart Moores Zellers Winners Colombian Presentation Women Sears Walmart The Bay Winners Reitmans H&M La Senza 32 Juvenile Walmart Zellers Sears Children’s Place Winners Old Navy Superstore

Canadian Retail Apparel Market Income CANADIAN WOMEN’S APPAREL MARKET 2012 High Holt Renfrew Banana Republic Costco H&M Average Le Chateau Dynamite The Gap Independent Retailers Laura The Bay Winners Mark’s Mexx Sears Reitmans Old Navy Superstore Penningtons Walmart Garage Aeropostale Low Young Average Age Colombian Presentation 33 Older

Canadian Retail Apparel Market Income CANADIAN MEN’S APPAREL MARKET 2012 High Harry Rosen Holt Renfrew Banana Republic Sport Chek Tip Top American Eagle The Gap Winners Average Costco Eddie Bauer The Bay Moores Mark’s Le Chateau Old Navy Sears Retail Superstore Zellers Walmart Low Young Average Age Colombian Presentation 34 Older

Canadian Retail Apparel Market Largest Apparel Specialty Chains 2012 Stores Retailer Stores Mark’s Reitmans Le Chateau Suzy Shier La Senza* Northern Reflection* Penningtons Smart Set Garage Rickis* Stiches La Vie En Rose Moores* Addition Elle Jacob Tip Top Mexx* 384 362 241 190 185 160 152 150 147 142 136 128 116 102 99 91 *Foreign Owned Colombian Presentation 35

Canadian Retail Apparel Market Largest Apparel Specialty Chains 2012 Stores Men Women Juvenile Unisex Mark’s 384 Moores 119 Tip Top 99 Randy River 39 International Clothiers 32 Jack & Jones 31 Ernest 27 George Richards 23 Mr. Big & Tall 19 Reitman’s 362 Suzy Shier 190 La Senza 185 Northern Reflections 160 Penningtons 152 Smart Set 150 Garage 147 Rickis 142 La Vie En Rose 128 Children’s Place 85 Gymboree 39 Bonnie Togs 37 Clement 30 Carters/Osh Kosh 28 Souris Mini 28 OK Kids 24 Siblings 23 Le Chateau 241 Stiches 136 Bluenotes 125 Warehouse One 113 Bootlegger 93 Mexx 91 Danier Leather 89 Urban Planet 88 Colombian Presentation 36

Canadian Retail Apparel Market Canadian Men’s Apparel Sales Retail Dollar Sales % of Dollar Sales Merchandise Category 2008 2009 2010 2011 2012 Men's Outerwear 12. 2% 12. 9% 14. 3% 14. 4% 13. 9% Men's Suits, Sport Coats 9. 2% 8. 9% 8. 6% 9. 4% 9. 2% Men's Pants and Tops 55. 3% 54. 4% 53. 3% 52. 8% 54. 3% Men's Underwear, Sleepwear & Socks 8. 3% 8. 1% 7. 2% 7. 5% Other Men's Clothing 5. 7% 5. 9% 6. 1% 5. 8% 5. 6% Men's Accessories 9. 3% 9. 6% 10. 4% 9. 5% 100% 100% Source: Statistics Canada Colombian Presentation 37

Canadian Retail Apparel Market Canadian Women’s Apparel Sales Retail Dollar Sales % of Dollar Sales Merchandise Category 2008 2009 2010 2011 2012 Women's Outerwear 10. 5% 8. 8% 9. 1% 10. 3% 10. 5% Women's Dresses & Suits 7. 5% 8. 1% 7. 6% 7. 3% 7. 6% Women's Skirts, Pants & Tops 56. 8% 57. 5% 57. 2% 57. 0% 55. 2% Women's Hosiery 2. 8% 2. 7% 2. 5% Women's Lingerie 10. 9% 11. 1% 11. 2% 10. 4% 9. 9% Other Women's Clothing 3. 3% 3. 7% 4. 3% 4. 5% 5. 1% Women's Accessories 8. 2% 8. 1% 8. 0% 9. 2% 100% 100% Source: Statistics Canada Colombian Presentation 38

Canadian Apparel Retailer Profile Department Store Colombian Presentation Sears Canada 39 Sales (2011) C$4. 3 Billion Stores 118 Department Stores 48 Sears Home Stores 269 Sears Dealer Stores 11 Outlet Stores Headquartered Tornoto, Ontario (416) 362 -1711 www. sears. ca Strengths Women’s Intimate Apparel, Women’s Plus and Petite sizes, Men’s Workwear, Private Label brands National Brand/Private Label Apparel Ratio 45%/55% Private Labels Nevada, Jessica, Arnold Palmer, Kenise, Mac & Jac, Protocol Possibility of Sourcing from Colombia 30% - 40%

Canadian Apparel Retailer Profile Department Store Colombian Presentation The Bay 40 Sales (2011) C$3. 2 Billion Stores 90 Headquartered Toronto, Ontario (905) 792 -4400 www. hbc. com Strengths Men’s Suits Brand Selection Private Labels Joint Venture with Top Shop/Top Man National Brand/Private Label Apparel Ratio 90%/10% Private Labels Hudson North, Black & Brown, Hudson Bay Signature Possibility of Sourcing from Colombia 20% - 25%

Canadian Apparel Retailer Profile Discount Store Colombian Presentation Walmart Canada 41 Sales (2011) U. S. $22. 4 Billion Stores 209 Walmart Supercenters 170 Walmart Stores Headquartered Toronto, Ontario (905) 821 -2111 www. walmartcanada. ca Strengths Apparel basics Childrenswear Low price perception National Brand/Private Label Apparel Ratio 10%/90% Private Labels George, g 21, Athletic Works Possibility of Sourcing from Colombia 10% - 15%

Canadian Apparel Retailer Profile Apparel Specialty Store Reitman’s Canada Montreal Quebec www. reitmans. ca Sales (2012) C$1. 1 Billion Stores Total 959 Stores Colombian Presentation 42 Banner Type 363 Reitman’s Women’s 167 Pennington’s Women’s Plus Size 163 Addition Elle Women’s Plus Size 68 RW & Co. Unisex 152 Smart Set Younger Women 76 Thyme Maternity National Brand/ Private Label Ratio 0%/100% Possibility of Sourcing from Colombia 5% - 10%

Canadian Apparel Retailer Profile Apparel Specialty Store Colombian Presentation Mark’s 43 Sales (2011) C$1. 02 Billion Stores 386 Headquartered Calgary, Alberta (403) 255 -9220 www. marks. com Strengths Men’s Causalwear, Men’s Workwear, Scrubs/healthcare apparel, Work/safety footwear, Product Innovation National Brand/Private Label Apparel Ratio 10%/90% Private Labels Denver Hays, Wind River, Clothes That Work, Dakota, Mountain Gear, Work Pro Possibility of Sourcing from Colombia 15% - 20%

Canadian Apparel Retailer Profile Apparel Specialty Store Colombian Presentation Simons 44 Sales (2011) C$750 Million Stores 8 Headquartered Quebec City, Quebec (418) 692 -3630 www. simons. ca Strengths Casual Wear Private label 18 – 29 year old segment National Brand/Private Label Apparel Ratio 10%/90% Private Labels Simons, Contemporaine, Guepiere, Le 31, Lingerie twik Possibility of Sourcing from Colombia 10% - 15%

Canadian Apparel Retailer Profile Apparel Specialty Store Colombian Presentation La Vie En Rose 45 Sales (2011) C$400 Million Stores La Vie En Rose 91 La Vie En Rose Aqua 23 La Vie En Rose Outlets 40 Headquartered Montreal, Quebec (514) 256 -9446 www. lavieenrose. com Strengths Private Label Lingerie Swimwear National Brand/Private Label Apparel Ratio 5%/95% Private Labels La Vie En Rose Possibility of Sourcing from Colombia 20% - 25%

Canadian Apparel Retailer Profile Apparel Specialty Store Colombian Presentation Groupe Bikini Village Inc 46 Sales (2011) C$44 Million Stores 52 Headquartered Ste-Julie Quebec (450) 449 -1310 www. bikinivillage. com Strengths Swimwear (largest swimwear specialty chain), Beachwear National Brand/Private Label Apparel Ratio 85%/15% Private Labels Bikini Lounge Possibility of Sourcing from Colombia 10% - 15%

Canadian Apparel Retailer Profile Sporting Goods Store Colombian Presentation FGL Sports Ltd. Sales (2011) C$1. 55 Billion Stores Total 534 Athlete’s World 48 Atmosphere 62 Sport Chek 165 Sport Mart 41 Sports Experts 71 The Tech Shop 3 National Sports 18 Intersports 47 Headquartered Calgary, Alberta (403) 717 -1400 www. fglsports. com Strengths Number of Stores Largest seller of sports apparel National Brand/ Private Label Apparel Ratio 85%/15% Private Labels Firefly Possibility of Sourcing from Colombia 10% - 15% 47

Canadian Apparel Retailer Environment Compared to the U. S. apparel retailers Canadian apparel retailers: • Have chains with a fewer number of stores • Are less dependent on their POS data for decision making purposes • Have not been able to build their private labels into true private label brands • Are not leveraging social media for marketing • Have either no loyalty programs or the ones they have do not effect a consumers shopping behavior • Charge higher prices/have greater margins Colombian Presentation 48

Canadian Apparel Retailer Environment Why are prices higher in Canada than U. S. ? • Protectionist policies between Canada and other countries and between Provinces • Less advantageous economies of scale • Higher transportation costs • Bilingual packaging requirements • Higher mall rents • Higher labor costs for retail workers • Less competition Colombian Presentation 49

Trend’s in Canadian Apparel Retailing • Increasing presence of international retailers Colombian Presentation 50

Trends in Canadian Apparel Retailing A. Increasing Presence of International Retailers American European Abercrombie & Fitch Gymboree Oakely Benetton Aeropostale Hollister Old Navy American Apparel Hot Topic Pink Escada American Eagle J. Crew Talbots Ann Taylor Jones New York The Gap Anthropoligie Juicy Couture Tommy Bahama Lacoste Banana Republic Justice Tommy Hilfiger Mango BCBG Max. Azria La Senza Tory Burch Olsen Europe Bebe Lucky Brand Jeans True Religion Brooks Brothers Maurices Urban Behavior Carters Mexx Urban Outfitters Children’s Place Michael Kors Victoria Secret Top Shop David’s Bridal Shop Moores 7 For All Mankind Zara Eileen Fisher Motherhood Forever 21 Colombian Presentation 51 H&M Jack & Jones Scotch & Soda Steilmann

U. S. Retailers in Canada 2013 Colombian Presentation 2014 52

Trend’s in Canadian Apparel Retailing • Increasing presence of international retailers • Declining share of department stores and independent specialty retailers • Increasing share of private label apparel brands Colombian Presentation 53

Trend’s in Canadian Apparel Retailing Private Label Growth Colombian Presentation 54

Trend’s in Canadian Apparel Retailing Increasing Share of Private Label Brands Canadian Retail Apparel Market 2012 Dollars Private Label’s Market Share Canadian Total Retail Apparel Market Dollar Share Private Labels National Brands Men Colombian Presentation 55 Women Juvenile

Trend’s in Canadian Apparel Retailing • Increasing presence of international retailers • Declining share of department stores and independent specialty retailers • Increasing share of private label apparels • Emergence of new apparel sectors Colombian Presentation 56

Trend’s in Canadian Apparel Retailing Canadian Apparel Market Distribution of Retail Sales Apparel Segment 6% 2% Luxury Better 8% 6% 67% Middle 60% 2% Fast Fashion 5% 23% Mass 21% 2009 Colombian Presentation 2013(E) 57 Source: Trendex

Trend’s in Canadian Apparel Retailing • Increasing presence of international retailers • Declining share of department stores and independent specialty retailers • Increasing share of private label apparels • Emergence of new apparel sectors • “Fast Fashion” effecting all facets of the market Colombian Presentation 58

Trends in Canadian Apparel Retailing Growing Importance of Fast Fashion Colombian Presentation 59

Trends in Canadian Apparel Retailing Fast Fashion/Supply Chain Canadian Fast Fashion Retailers Total Atlantic Quebec Ontario Praries British Columbia Forever 21 25 - 5 12 4 4 H&M 61 2 14 30 8 5 Zara 19 - 7 7 3 2 Retailers Colombian Presentation 60

Trend’s in Canadian Apparel Retailing H&M Canada Total Revenue C$ (Millions) Total Sales +10. 0% +5. 2% +19. 6% +20. 3% +22. 4% Stores 61 58 55 52 43 Sales Per Store $6, 956 $6, 488 $6, 494 $5, 737 $5, 766 (000) Colombian Presentation 61

Trend’s in Canadian Apparel Retailing • Increasing presence of international retailers • Declining share of department stores and independent specialty retailers • Increasing share of private label apparels • Emergence of new apparel sectors • “Fast Fashion” effecting all facets of the market • Small but increasing share for internet retailing Colombian Presentation 62

Trend’s in Canadian Apparel Retailing E-Commerce Sales of Apparel/ Accessories E-Commerce Sales of Footwear 2011 US$ Billions $34. 2 $7. 8 Colombian Presentation 63

Canadian Consumer Apparel Behavior What can be said about a Canadian consumers apaprel purchasing behavior: • Price Sensitive • Driven by promotional activity • Looks for value • Not loyal to any retailer • Cross channel shopper • Is not concerned with the country of origin • Shops in the U. S. , affected increasingly by U. S. apparel trends/media Colombian Presentation 64

Canadian Market Entry Plan Phases I. Research the market / Identify a niche Colombian Presentation 65

Canadian Market Entry Plan Identify a possible niche in terms of • Products • Price Points • Styling • Fabrications • Retail Channels / Retailers Colombian Presentation 66

Canadian Market Entry Plan Canadian Women’s Lingerie Market 2012 Largest Retailers Estimated Sales (Millions) Channels Dept Stores Discount Stores Apparel Specialty Stores All Others Colombian Presentation 67 Retailer Stores Walmart 379 Sears 118 La Senza 159 La Vie En Rose 91 The Bay 90 Penningtons 167 Addition Elle 163 Jacob 123 Lilliane Lingerie 32 Costco 82

Canadian Market Entry Plan Women’s Jean Market 2012 Estimated Sales (000) Retailer Stores Walmart 379 Sears 118 Mark’s 386 Discount Stores The Bay 90 Penningtons 167 Apparel Specialty Stores All Others Reitman’s 361 Winners 222 Old Navy 65 Bootlegger 95 Garage 147 Channels Dept Stores Colombian Presentation Largest Retailers 68

CANADIAN WOMEN'S JEANS MARKET January - December 2012 Retailer Positioning Average Price High Levi 1850 Bootlegger American Eagle The Gap Le Chateau Holt Renfrew The Bay Sears Retail Average Dynamite Old Navy Garage Stitches Mexx Pennington’s Bluenotes Wal-Mart Northern Reflections Mark's Winners Costco Low 20 Colombian Presentation 41 Average Age 69 62

Canadian Market Entry Plan Men’s Jean Market 2012 Estimated Sales (000) Channels Dept Stores Discount Stores Apparel Specialty Stores All Others Colombian Presentation 70 Largest Retailers Retailer Stores Walmart 379 Sears 118 Mark’s 386 The Bay 90 American Eagle 94 Winners 222 Old Navy 65 Costco 82 Bluenotes 125 Bootlegger 95

CANADIAN MEN'S JEANS MARKET January - December 2012 Retailer Positioning Average Price High Holt Renfrew Bootlegger American Eagle Harry Rosen Levi 1850 The Bay Levi's Only Stores The Gap Mark's Winners Average Sears Retail Old Navy Sears Catalog Bluenotes Stitches Wal-Mart Costco Low 19 Colombian Presentation 39 Average Age 71 59

Canadian Market Entry Plan Men’s Swimsuit Market 2012 Estimated Sales (000) Colombian Presentation Largest Retailers Retailer Stores Channels Dept Stores Forzani Group 480 Sears 118 Discount Stores Apparel Specialty Stores Walmart 379 Winners 222 The Bay 90 Mark’s 386 Sporting Goods Stores All Others Mountain Coop 14 Roots 115 American Eagle 80 Old Navy 65 Costco 82 72

Canadian Market Entry Plan Women’s Swimsuit Market 2012 Estimated Sales (000) Retailer Stores Sears 118 Bikini Village 52 Walmart 379 Discount Stores The Bay 90 Forzani Group 480 Apparel Specialty Stores All Others Penningtons 167 La Vie En Rose Aqua 23 Roots 115 Costco 82 Winners 222 Channels Dept Stores Colombian Presentation Largest Retailers 73

Canadian Market Entry Plan Men’s Underwear Market 2012 Estimated Sales (000) Retailer Stores Walmart 379 Sears 118 Mark’s 386 Discount Stores The Bay 90 Costco 82 Apparel Specialty Stores All Others Winners 222 Giant Tiger 205 Simons 8 Real Canadian Superstore 111 Channels Dept Stores Colombian Presentation Largest Retailers 74

Canadian Market Entry Plan Phases I. Research the market / Identify a niche II. Develop a USP Colombian Presentation 75

Canadian Market Entry Plan Phase II – Develop a USP FACT Critical to success in the Canadian apparel market is identifying your company’s USP and developing a Canadian marketing plan Colombian Presentation 76

Canadian Market Entry Plan Developing a Unique Selling Proposition (USP) What is the need that we satisfy? What is our Raison d’être? What is our core competence? What are we really good at? What can we legitimately claim to be better at than anyone else? Colombian Presentation 77

Canadian Market Entry Plan Colombia’s Possible Strategic Advantages as An Apparel Supplier to Canada: • • Proximity/speed to market (Just In Time Delivery) Flexible quantities/small runs Free Trade Agreement with Canada Reputation for denim and fashion men’s underwear manufacturing and needlework capabilities • Experience in dealing with U. S. apparel retailers If your company cannot legitimately claim one or more of these strategic advantages… Colombian Presentation 78

Canadian Market Entry Plan Save your Money and Stay Home However, if your company has demonstrated a competitive advantage(s) in the U. S. apparel market it will almost certainly have the same advantage(s) in the Canadian market. Colombian Presentation 79

Canadian Market Entry Plan Dealing with Canadian Prospects If a Branded Manufacturer • Offer exclusivity • Offer marketing support money • Offer to warehouse product in Canada If a Private Label Manufacturer • Always quote in U. S. dollars • Emphasize small quantities/speed to market/flexibility In either case small minimums and speed to market will be seen as a competitive advantage Attendance at Canadian Trade Shows is not necessarily a must Colombian Presentation 80

Canadian Market Entry Plan Top Canadian Prospects for Colombian Apparel Manufacturers (Excludes Foreign Retailers) Product Area Top Second Third Men’s Jeans Mark’s The Bay Sears Women’s Jeans Mark’s Ricki’s Bootlegger Women’s Swimwear Bikini Village La Vie En Rose Reitmans Corp Men’s Swimwear Bikini Village Forzani Mountain Coop Lingerie La Vie En Rose Lilliane Jacob Men’s Underwear Holt Renfrew Simons Priape Women’s Casualwear Mark’s Reitmans Corp Northern Reflections Men’s Casualwear Mark’s Sears The Bay Colombian Presentation 81

Canadian Market Entry Plan Options for a Colombian Apparel Manufacturer in Canada • Supplier for Canadian retailers direct import programs • Subcontractor for Canadian apparel manufacturers • Agent/distributor for Canadian apparel suppliers in South America Bottom Line: Think Outside the “Box” Colombian Presentation 82

Bottom Line The Canada – Colombia Free Trade Agreement Offers Colombian Apparel Manufacturers a unique opportunity to increase its exports. The Colombian government has done its part, it’s now up to Colombian apparel manufacturers to take advantage of this new opportunity. Colombian Presentation 83

THANK YOU Questions about Canada or Mexico: Randy Harris, President Trendex North America Harris@trendexna. com Colombian Presentation 84