The Berghaus brand is synonymous with the great outdoors. Busines Editor Kate Bowman talks to brand president Richard Cotter about the Sundeland company's plans to break into the Chinese and US markets.
BERGHAUS has come a long way in its 41-year history. What began as a small venture, set up by two friends, is now a £50m business, with plans to become a global brand leader.
Already a leading name in the UK and Europe, the outdoor clothing and equipment specialist now wants a share of the booming market in China - a move that could double turnover. The company has also set its sights on what brand president Richard Cotter describes as the biggest prize of all . . . the US.
Here in the North-East, where Berghaus was founded in 1966, the company is about to grow and create jobs when it opens a flagship store in the Gateshead MetroCentre in September.
Berghaus - German for mountain hut - dominates the market in Britain and is one of the biggest brands in Europe. In the past five years, sales have doubled to £50m. Richard plans to make Berghaus a global leader and, by developing markets in the Far East, Australia, and the US, he hopes to push turnover through the £100m barrier by 2012.
Richard says: "For us, there are probably three opportunities. The first, to continue to develop in Europe, introduce new products, and create a bigger market share. The second is the Asian market, which over the next five years is going to explode. China is going to be the second biggest retail market by 2010, behind America."
Berghaus has 30 stores in South Korea, and is set to launch in Japan in September. Its collection, designed in collaboration with British designer Jeff Griffin, will initially sell through concessions in 12 of Japan's Marui department stores over Christmas, expanding in the spring to a further 15 stores.
Richard says: "In China, we will look to follow the Korean model by getting a master licensee and introducing the brand by opening single-brand stores. We expect a high level of demand in China and we are well advanced in discussions with three potential parties, and we hope by the end of the year to have signed a contract.
"In brand terms, China is going to be nearly as big as America in three years' time, and we could create in China a market as big as our European business in a three-to-five year period. If we deliver China successfully, the same as in Europe, then we could double the business there alone.
"But I don't know if that is do-able, because the brand is as yet unknown, and the value level of consumption in China is lower than in Europe. I think what that means is that we will have to adapt the product offering, both in the context of fashion and price."
Richard says Berghaus' third opportunity is America, but warns the costs could be huge.
"America is the hardest market in the world to crack, first because of the sheer size of it, and, second, because of the strength of the indigenous American brands, which are huge. The money they have invested in their brands over the past 20 years . . . we would have to spend just as much to get a share," he says.
But Richard believes Berghaus can make it in the US, if it tailors the product for a niche market.
"There is certainly a huge opportunity. America is the biggest prize, but the toughest one to get," he adds.
Back on home ground, Richard knows the name Berghaus, like Barbour, brings a degree of kudos to the region. The company employs about 120 people, including many designers, at its offices in Sunderland, and the figure is expected to keep growing as the firm expands overseas.
The company's first UK store, at the MetroCentre, is due to open in the Red Mall in September, and Berghaus has employed retail experts Caulder Moore Design to design the store and set it apart from the competition. Richard says the store will have a very different, contemporary look - not fitted top to bottom in wood, as with many outdoor retail outlets - and will promote Berghaus as a sexy, innovative, desirable brand.
He says: "We chose the MetroCentre because everybody knows it is the best retail centre in Europe, and it is right we start with the best. Also, it would be hypocritical to boast about the fact we are based here in the region and then put our flagship store somewhere else. Yes, we are looking at a possible site in London too, but we wanted to do this first here.
"This flagship store is a very exciting prospect, and provides us with an outstanding commercial opportunity. We will be able to present the brand in exactly the way that we want."
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