When Helgi skarsson and Bjarney Harardttir sold their home in Iceland to purchase 66North Company(66North)asmajorityshareholdersin2011,theyfeltagreatresponsibility.Theiconic66North business designed, manufactured, and distributed premium outerwear capable of keeping even the most extremecoldandwetweatherout.ItwassoeffectivethatIcelandicrescueteamsworeitandhaddoneasfar backasthe1930s.Indeed,thoseatthecompanysaidthat66North"existsbecauseitmust."2OutsideNordic countries, 66North had grown since 2013, especially following its shift to develop direct-to-consumer channels,butstillremainedasmallnichebrandrelativetoseveralmorewidelyrecognizedcompetitors.While inIcelanditwasstandardhouseholdgear,itsmarketpenetrationinlargeglobalmarketssuchastheUnited States remained low (see Exhibit 1). skarsson and Harardttir wanted to change that. Their goal was to becomeIceland'sfirstglobalconsumerbrandandtodosoinanenvironmentallysustainablemanner.

Tothatend,skarssonandHarardttirappointedMatthewWoolseyglobalpresidentofthe66North Company in the summer of 2019. The contrast between where Woolsey had grown upin considerably warmerCaliforniaandtheplaceofbusinessinthesubpolarclimateofIcelandcouldnothavebeenmore stark. Although working for an Icelandic firm was certainly new to him, Woolsey was no stranger to the industry,havingpreviouslyworkedinasimilarpositionattheluxuryfashione-tailerNet-a-Porter.Andhehad traveledinIcelandandknewthecompany."IfyougotoIceland,youcan'tmissthisbrandeveryoneonthe streetiswearingit,thepeoplereportingtheweatheronTVarewearingit,theborderpatrolattheairportare wearingit,"hesaid."ItwouldbeliketurningupinCharlottesvilleandnotnoticingtheUniversityofVirginia."

At this point, skarsson and Harardttir had closed the firm's investment with Mousse Partners and broughtonitsglobalpresident."It'slikeastart-upinthesensethatitisgoingfromasmallbusinesstryingto growinbigwaysinternationally,"Woolseysaid."Butit'sastart-upwitha95-yearhistoryandmatureprocesses aroundmanufacturing,retail,andmanagementpractices."The66Northbrandimagewasbelievedtobean importantcontributortoitssuccessovertheyears.3Thequestionnowwas:Whattodo?Whowasthebrand's customer?Whatwasthebrandpositioninginternationally?Andwhatwasthego-tomarket?

Industry

Theluxuryfashionmarketmightnothavebeenthesegmentthat66North'sfoundereverenvisionedfor hiscompany.Yetby2019,thebrandhadsomeperceptualassociationsthatwereconsistentwiththecasual luxurystreetwearcategory.Itwasalsoclearthatfornon-Icelandiccustomers,thebrand'sassociationswith Iceland were an important aspect of its brand image (see Exhibit 2). Fashion luxury had undergone a shift manycalledthe"cross-pollination"ofluxuryandlifestyletoattractmillennialswhohadstreetweartastes.4Most ofthewealthyconsumersofluxurygoodslivedineitherNorthAmericaorEurope(75%),althoughChinawas "theworld'smostlucrativeandfastest-growingluxurymarket,"accordingtoMcKinsey.5Thefashionbrand leaders in outdoor wear internationally were Canada Goose andMoncler.

Anothermajortrendinoutdoorapparelwastheperformanceoftencalledtechnicalmarket.Although fashionstillplayedaroleinthissegment,itwasabrand'stechnicalelementsthatdroveconsumers.Technical featuressuchaswhetherazipperfunctionedeffortlesslyorfrozeinsubzeroweatherconditionsbecamemore important.66Northhadtechnicalandoutdoorbonafides,butbecauseoftheclothingrequirementsrelated totheclimateinIceland,italsocrossedoverintoeverydaywear.OutsideofIceland,thoseconsumerswho wantedtechnicalperformancedidnotnecessarilypurchaseapparelaspartoftheircorewardrobe.According totheoutdoorindustryassociation,consumersoftechnicalgearpurchasedroughlyhalftheirgearatbrick-and- mortarstores.6"There'salsoachallengeinthepuretechnicalmarketwhereitstartstolookliketheaudiophile market,forexample,"Woolseysaid."Audioconsumersoftenobsesswithsingleelementsoftheirspeakers whenthere'snopossiblewaytheycanhearthatdifference."Thebrandconsideredmoretechnicalinouterwear internationallywasArc'teryx,withNorthFaceandPatagoniabeingmorewell-knowninternationally.

Whatdroveeachgeographicmarkettendedtodiffer.Tothatend,consumersfromtheUnitedStateswere inclinedtoseekoutqualityandstyle.ForAmericanconsumerslookingtokeepwarm,fabricandtechnical propertieswerekeyreasonsforbuyingtheapparelin2019(seeExhibit3).7Incontrast,Germanconsumers' keydriverswereexclusivityandstyle.8AuthenticitywasaconsiderablefactortoEuropeanconsumersaccordingtotheCEOofCanadaGoose.9Andtheywerewillingtopaymorefortheirloyaltytospecificdesignersthan to"internationalpowerhouses."10Lifestylebrandsandathleisurecollectionswerepopular.11Especiallyinthe luxurysegment,regardlessoftheproduct,successinsharingthesocialexperiencewasofgrowingimportance. Indeed,itcontributedto"youngChinese"consumers'willingnesstopurchase.12Brandnamewasthekeydriver forChineseconsumersacrossgenerationsandfabricandpriceweretheleastimportantfactors.13SeeExhibit4formore.

Topurchaseluxuryitems,shopperstraditionallysoughtoff-lineoptionssuchasretailstoresorglossyprint catalog.14Theshifttoonlinepurchases,drivenbyhigh-net-worthindividualsinChinaandSouthKorea,forced the industry to change its approach and embrace online options.15Still, for those seeking the luxury "experience"thestoreremainedhighlyrelevant.Forexample,LeicaCamera(Leica)repositioneditsbrand, openingretailstoresgloballyandallowingconsumerstoexperiencepicturesinagallerywhilesippingcoffeeor wine.AtLeicastores,consumerscouldattendaphotographer'slectureortakephotographyclassesandmake an evening out of the store visit. One of 66North's competitors, Canada Goose, featured items crafted by FirstNationsandotherindigenousartists,givingtheirstoresanartmuseumatmosphere.Andin-storecold rooms for customers to try out Canada Goose apparel made visitspopular.16

Whethershoppingforapparelonlineorin-store,inNorthAmerica,Europe,orAsia,forluxuryortechnical performance,consumerswereincreasinglymotivatedby"socialmediadriversandinfluencers"accordingto industry insiders.17See Exhibit 5for market values. The overall global outdoorapparel market was USD25billion.18

Iceland

Icelandhadarichhistoryofsurvivingonitsown.LikemostNordiccountries(Denmark,Finland,Iceland, Norway,andSweden),andthoseborderingtheNorthernAtlanticOcean(Canada,Greenland,andRussia), extreme,unpredictablecoldweatherconditionsimpactedthewaypopulationslived.Therealitywasthatmore peoplediedfromextremecoldweather(hypothermia)thanextremewarmweather.19Giventhelong,harsh wintersandislandliving,Icelandersdependedupontheirownresourcefulnessforsurvival."Weareafishing culture,"authorAndriSnrMagnasonsaid."Whentheherringisthere,wetakeit."Whetheronelivedalife ofsustenanceorsubsistence,keepinghypothermiaawaywasabasicnecessity.

Despitetheweatherandremoteislandlocation,Icelanddevelopedamoderndayattractionfortourists.It wasthefilmingsiteforthepopulartelevisionseriesGameofThrones.20Themajorityofvisitors(23.4%)were fromtheUnitedStates,asshowninExhibit6.21Nearly90%oftravelerstothecapitalcityofReykjavikdidso for vacation, 3.5% were there to visit friends and relatives, 3.3% came for health or education reasons, 3% traveledtoconductbusiness,and0.7%weretemporaryworkersorstoppedoverattheairportwithoutspending the night. Those who did stay tended to be there for at least five days, but less than a week. Perhaps unsurprisingly, most visits were between the months of June and October. As tourists quickly found out, Icelanderswereproudoftheircountry,people,andbusinesses.Infact,thelocalpaper,IcelandReview,even wroteaboutcelebritieswearingfashionbrandsfromIceland.ApparentlyMattDamon,JakeGyllenhaal,Scarlett

Johansson, Beyonc Knowles, and Quentin Tarantino had been seen wearing 66North parkas.22And Gyllenhaal actually visited the store while in Iceland!23

Inadditiontotourism,theIcelandiceconomywasdrivenbyitsfishingandaluminumindustries.The2007 globalfinancialcrisishitIcelandespeciallyhard,withseveralbanksfolding,debtlevelsdoubling,itscurrency collapsing(70%trade-weightedbasis),24wagesfalling,banksdefaultingontheirbonds,pricessoaring,and storesclosing.25Overatwo-yeartimeperiod,GDPdecreased10%andtheInternationalMonetaryFund(IMF) steppedintosavetheeconomy.26Aftermuchsuffering,theeconomyrecoveredandGDProse7.2%by2016 thanksinlargeparttovisitors.27Indeed,by2019,Icelandhadthefourth-highestrealGDPpercapitaamong the 149 countries the IMFconsidered.28

The Company

66North started in 1926 as a clothing product to keep fishermen warm. The name was a nod to the company'slatitudinallocation,whichwasthesameasthelatitudedefiningtheperimeteroftheArcticCircle. Thefounder,HansKristjansson,backeduphisclothingwithacommitmenttofixwithoutchargeanydefect nomatterhowoldtheitemwas.Thereason"webelieveproductsshouldlastalifetime."Thatpromisehadn't changed.AlmosteverythingabouttheclothingwasconnectedtoIcelandicheritageandvalues.Wordsand phraseslikeresilient,harmonywithnature,survival,durable,andnecessityweresimplypartofproductdescriptions.29According to one industry insider, 66North "knows what it stands for and communicates its values consistently."30Furthermore, the company "leverages the Iceland connection through the entire brand experiencewithimagery,tone,andcontent...itswebsiteislikeatourguide."31Balancebetweenamanufacturer andanenvironmentalistwasadifficultpositionforanybusiness.Yet66Northreachedcircularcarbon-neutral status in 2019 in its effort to reduceconsumption.32

Theshiftfromsensibleclothingandprotectivegeartofashionwasn'tanewconceptfor66North."Design isreallyyounginIceland.Therewasn'tevenawordforituntil1950;peoplethinkit'ssomethingtodecorate with,"IcelandDesignCentreprojectmanagerKristinGunnarsdttirsaid."It'sabouthowwecreatesocietyon goodvalue."33At66North,designdidcatchon.By2004,66Northhadgainedsomelimiteddistributionin theUnitedStates,workingprimarilythroughthird-partywholesaleagents.Drivinginterestfromnewcustomers internationally was not going to be easy. "Any company coming in [to the United States], especially an international one, has a daunting task in front of it to gain sufficient retail interest, media exposure, and advertisingpromotionstogeneratesufficientsalestojustifythelaunchoftheproduct,"oneindustryinsider

said.34TheproductsweresoldtoconsumersthroughdiscountretailerssuchasBackcountryandMoosejaw. ThisarrangementhadtheeffectofamodestincreaseinbrandpenetrationintheUnitedStates,butthemargins that accrued to 66North weredisappointing.

Thefollowingyear,alocalIcelandicmovieproducerandaninsurancecompanyacquiredmajorityshares of 66North. The CEO of 39 years was replaced by Halldor G. Eyjolfsson in 2006. In 2007, the company launcheditsown66NorthUSAsubsidiary.35Bythattime,thebrandwassoldin15countries.36Whennew ownersskarssonandHarardttirtookoverin2011,roughly20%ofrevenuecamefrommarketsoutside Iceland."Becauseofhowmuchtheybelieveditcouldbeaninternationalbrand,"Woolseysaid,"theywere willingtoputuptheirhouseandbecomerenterstogeneratethecash!"Afterinitialinvestmentfundpartners exited,skarssonandHarardttirwereontheirownskarssonwasCEOandHarardttirwasdirector ofbusinessdevelopment,brand,andmarketing.Yettheybelievedtogrowinternationally,theyneededinvestors andsearchedfortherightpartner.Thathappenedinthesummerof2018,whentheownersofChanelinvested inthecompany.Revenueshadgrownmorethan53%by2019fromwheretheywerewhenthemarriedcouple took over the business in2011.

66NorthwasheadquarteredinGardabaerMihraun,inthesouthernpartofIceland,ownedproduction facilities in Latvia, and contractedother production to other EU countries and China. The company owned andoperatedninestoresseveninIceland,twoinDenmarkandtwowarehousesinIceland.Thebrandwas almost on par with Nike as being the "coolest" brand inIceland.

Products

Historically,66Northproductswereforthosewhoworkedoutdoors,butwithtime,itsproductsbecame moretechnicallysophisticated.AsshowninExhibit7,productlinesincludedparkas,jackets,coats,andpants (46%);midbaselayers(16%);accessories(16%):tees,sweats,andknitwear(11%);andchildren'swear(11%). As Woolseyexplained:

Oneofthechallengesforbusinessesinourspaceisthetimethatittakestogofromadesignsketch toafinishedproductisclosetotwoyears.Partofthatisbecauseyouactuallyhavetoputittothetest. Isitactuallygoingtokeeppeoplewarminthewaythatweexpectthatitwill?Aretheshoulderfabrics goingtobeadifferentthanthechestfabric,differenceinbreathability?Istherestructure forcarryingabackpackthatwon'trip?Forexample,wehadAmericanphotographersrideabicycleon afour-dayjourneyacrossIcelandinfreezingandsub-freezingweather.Theyhadtochangetiresin those situations and had to know if their gloves allowed them to get into small mechanics and stay warmotherwisethey'dgetfrostbite.Theirjacketshadtokeepthemwarmbutalsomoveperspiration off of their bodies so when they got into camp they weren't soaking wet. There's so many characteristicslikethatwhicharequitetricky.Becauseyou'redealingwiththepotentialforlife-or- deathsituations,theproduct-developmenttimeframeisverydifferentthantraditionalfashionorfast fashion.

BrandpromotionsgenerallyincludedanembracementofIceland'senvironment,culture,andpeople.New collectionswouldoftenbeintroducedateventsservingIcelandicvodkaandtraditionalhorsd'oeuvres.37

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