SIvey | Publishing Hill 234 School of Business ‘9B15M049 NEECHIE GEAR: PIVOTING IN AN ABORIGINAL START-UP ‘Professor Peter Moroz Simon C. Parker and Edward Gamble wrote this case solely to provide material for class aseusson. The authors do not intend to llustate ether effective ar heffectve handing of a managerial station The authors may have disguised ‘certain nares and chr identiying infomation fo protect confidentially. This pubiation may not be trensmited, photocopied, dgaed orlotherwso reproduced in any form or by any means without the ‘permission ofthe copyright holder. Roproducton of this meteial Is net covered under auiharizalion by eny reproduction rghls ‘xgenization, To order copes or request pormission fo reproduce materials, contact lay Pushin, Ivey Business Schoo), Wester University, London, Ontario, Canada, NOG ON; () 510.551.2208; ) casao@@vey.co; www.iveycasss.com. Copyright © 2016, Richard Wey School of Business Foundation Version: 2016-06-08 INTRODUCTION Kendal Netmaker, the sole proprictor and chief executive officer (CEO) of Neechie Gear, an award- winning, for-profit lifestyle apparel company, was driven by a mission of empoweriig Aboriginal and First Nations youth through sports, leadership and advanced education. Since he first opened a Saskatoon shopping mall kiosk in 2012, his business model had shifted significantly. Netmaker had made profits in 2013 from a retail model, but recorded a much smaller profit in 2014, when he attempted to pivot his business to a wholesale model. In those two years, he had also contributed more than $15,000" in donations to help more than 2,500 youth across Canada take part in sports, It was now 2015, and he had several challenges to overcome. Netmaker sensed the need to once again pivot to new opportunities to grow the business: doing so would likely mean significantly changing or even abandoning his existing business model. Netmaker first needed to test some of his assumptions about the opportunities he had identified. BACKGROUND “L would definitely not be where I am without sports.” - Kendal Netmaker Kendal Netmaker and his three sisters were raised by their mother in the small community of Sweetgrass First Nation (population 515) located 50 km west of North Battleford, Saskatchewan. A big emphasis on family ties, traditional activities and working together compounded by a set of worldviews that placed much importance on culture, lifestyle and heritage, provided Netmaker with an upbringing much different ‘from that of the non-Aboriginal kids living in the towns and cities outside the reserve.” The few businesses operating in his community were collectively owned and administered by the local band council, with revenues often being used to support community initiatives. Thus, Netmaker had few if any entrepreneurial role models to emulate, Moreover, his likelihood of attaining a postsecondary education was much lower "All currency amounts are shown in Canadian dollars unless otherwise nated. * Michael Anthony Hat, “indigenous Worldviews, Knowledge and Research: The Development of an Indigenous Research Paradigm,” Joumal of Indigenous Voices in Sosial Work, 2070, Vol. 1, Issue 1, pp. 1=16. 2 06, 2018 to Dec 19,2018, Use outils these parameters a copyegnt vilaton. ‘Authorize fr use ont byPage 2 9B15M049 than the average youth in the non-Aboriginal population.” In fact, for most First Nation youth, the odds of completing high school were much lower than the odds of ending up in jail.‘ One of the disadvantages of living on reserve was having to be bused to school in nearby Cutknife, which ‘made it extremely difficult for Netmaker to participate in after-school sports. When a friend learned that ‘the Netmaker family lacked the resources to enable Netmaker to play the sports he loved, the friend’s family, recent émigrés from South Aftica, offered to both pay his fees and provide Netmaker with rides to and from practices and games. Netmaker and his family gratefully accepted the offer, solidifying a lifelong fiendship. The opportunity motivated Netmaker to excel in both school and atbletics. By Grade 9, ‘Netmaker, then over 180 cm (six feet) tall, was a highly skilled athlete and received scholarship offers to play a variety of sports, Netmaker eventually chose to enroll at the University of Saskatchewan to take up ‘an education degree. One of the main reasons for pursuing a degree in education was his interest in teaching, mentoring and coaching underprivileged youth so he would be able to “give back” to his community, ‘THE OPPORTUNITY Since his childhood, Netmaker had been an admirer of lifestyle apparel brands, especially FUBU (for us, by us). The creator of the FUBU brand, Daymond John, was an African American youth from New York ‘who sought to use fashion to empower inner-city, altemative and minority youth. FUBU’s focus on “inner city” target segments created a grassroots appeal that cut both ways: the brand’s authenticity quickly won over a small underserved niche that had not been effectively represented, but alienated a much larger ‘mainstream market, The inner city roots of the company thus caused wholesalers and retailers to ignore and/or discriminate against it. Not until the singer LL Cool J wore FUBU clothing did the brand rise to mainstream recognition through a highly emulated ahd powerful rap and hip hop social paradigm shift into the mainstream. Netmaker recognized that Aboriginal youth culture shared several similar patterns with the inner city culture of African Americans; these pattems were very influential in the ideation process: 1) more than half of Canadian Aboriginal peoples live in Canada’s larger cities, not on reserves, 2) Canadian Aboriginal people were a small minority and had suffered much at the hands of the dominant (colonial) society and 3) there was a dearth of positive lifestyle brands for empowering, Aboriginal youth. Netmaker also observed that niche lifestyle brands were often adopted by mainstream consumers, not just by those individuals ‘whom the brand sought to empower. These successful brands could then ride the wave of emerging cultural, social and ethical trends in fashion (e.g., hip hop, Nike N7, Tentree, etc.) and create even greater profits for the company—along with greater social purpose and cultural impacts. Merging these observations with his own youth experiences and the growing Aboriginal population, Netmaker saw what he felt to be a real market gap. He decided that a positive lifestyle brand for Aboriginal youth could be alloyed with a mission for facilitating youth sport and leadership opportunities. Netmaker saw both that too many Aboriginal youth were still being excluded from participating in sports due to their socioeconomic circumstances and that sports was a real solution to a real social problem: kids who participated in sports were more likely to gain the skills needed to achieve higher education outcomes than those that did not. Moreover, as a First Nations athlete who had excelled at the high school and university * For mors information on Aboriginal education and employment circumstances, see Statistics Canada, “Aboriginal Peoples Survey 2012: Highlights,” wn. statcan.ge.ca/pub/89-653-1/201300'/h-6-eng him, aooessed Apri 19,2015, * Chiefs Assembly on Education, “A Portrat of First Nations and Education,” www.afn.calyploadsMes/eventsiact_shoet- ccoe-3,pf, accessed Api! 19, 2015. 1 Sep 06,2018 to Dec 19, 208, ‘Use ouside these parameters ea coryrght volaton, ‘Authorized for use only byPage 3 9B15M049 level, he knew his story would resonate with Aboriginal and non-Aboriginal people alike. After world- renowned Aboriginal author, Neal McLeod heard of Netmaker’s idea, he approached him with a great ‘name for his brand: Neechie, a slang term for “my friend” or “my partner” that is based upon the Cree ‘word nichivakan, After realizing the potential of hamessing this brand name to his nascent business model, the company Neechie Gear was bom in late 2011, THE LIFESTYLE AND ETHICAL APPAREL INDUSTRY, Globally, the appare! market was projected to grow to USS 2.1 trillion by 2025.5 A report developed by Industry Canada stated that niche brands are “constantly being developed in North American and global ‘markets” and that “young new entrants have proven an ability to rapidly gain market share.” Furthermore, 54 per cent of future marketing efforts by these new entrants were focused on creating a brand for & namowly defined target market with nearly 20 per cent of firms selecting channels other than retail or institutional/corporate for attracting consumers. An important component of niche branding was the lifestyle or ethical apparel category, where companies could spend upward of 41 per cent of their net revenues on advertising, Of firms operating in the Canadian environment, the two most important arcas of value chain development were deemed to be marketing (82 per cent) and sales (77 per cent), followed by design (63 per cent), distribution (42 per cent) and mamufacturing (20 per cent)” A lifestyle brand could be dofined as a symbolic means for framing, articulating, capturing and/or promoting the ideals, attitudes, culture and worldviews of a specific group or community of people. To be successful, a brand needed to be formulated on an identity that was linked to a specific comnmnity based fon an entrepreneur's experience, background, ethnicity, subculture, nationality or any other niche means for self-identification, For example, surfers had started surf lifestyle apparel brands such as Billabong and O'Neil. In effect, a lifestyle brand signalled to consumers that the brand itself was embedded within and/or ‘was part of a group identity, and thus acted as an emotional connection between consumers and their desire to be perceived as belonging to or having the qualities/worldviews of that group. The functional qualities of the product were usually less important than how the product enabled consumers’ self-expression. Lifestyle brands oftea sought to: inspire pride within a certain group or community; motivate others to ‘become part of the community; or provide a commentary on a specific way of life in an effort to create a trend or social phenomenon recognized beyond the defined community itself. Lifestyle brands could also capitalize on creating a negative image of a community that was part of that community’s identity. The end goal of most lifestyle apparel movements was to create and sustain legitimacy as the embodiment of a certain group lifestyle. This process could be perilous to a commercial venture: the company and community needed to be viewed to be one and same; otherwise, the legitimacy of the brand, and thus its ‘value proposition, would quickly erode. This unity could be fragile, especially when trends moved a brand from niche to mainstream. It could also be tenuous when the essence of the lifestyle shifted or became tamished in some way, either through individual or group actions or even through large external social movements. With respect to individual © Wazir Menagement Consultants, 2014, The Road fo 2025: Toxile and Apparel Sector Trends, ow. weazininfodts/Tha% 20Ro=d%2010%4 202026%420-%.20Weir%20Advisars.pd accassed Api! 19, 2015. * Mlstein & Co Consulting Inc, A Canadian Approach fo the Apparel Global Vaive Chain, Industy Canada, Ottawa, 2008; oni. ge.ca/oe/sta/026.nstvwaplepparel-vetement qvo-vmeeng.pdlSfie/apparel-vetement-qvo-vme. engrpdf, accessed Abr 18. 2016. "industry Canad, "A Canadfan Approach to the Apparel Giabal Value Chain,” 2008, wwr.le.ge.caolete026.netivwap/ gperel-vetement-gvo-vms_eng.pdtSfe/apparel-vetement-guc-vms_eng.pdf, accossed Apr! 19, 2016 “lerander Chemev, Ryan Hanilion and David Gal, “Competing for Consumer Identity: Limits to SeltExpression and the Perils of Uestyle Branding,” Journal of Marketing, 2011, vol 75, no & pp. 65-82.