When Canadians succeed, foreign capital sees it before we do. For instance, ‘80s upstart retailer Club Monaco was purchased last year, by Ralph Lauren the New York fashion magnate, for eighty million dollars. Said Lauren, “What Club Monaco is about is a much more advanced, much more hip sensibility that covers the other spectrum of what I think the consumer is at right now, and is a growing area.”

And Wallpaper*, the magazine sensation of the late ‘90s, started and run by Canadian Tyler Brûlé, was purchased by TimeWarner, after only five issues . Richard Atkinson, President of Time Inc. Atlantic, stated, “We strongly believe that Time Inc.'s international sales and distribution network will enable Wallpaper* to become a truly global brand.”

We often rationalize that ours is a relatively small economy, and that therefore, scale does not permit production of unique brands of merchandise. Yet Sweden, with one-third the population of Canada, has Ikea, Volvo, and Saab. Even tiny Switzerland has Nescafe and Rolex.

To understand this, a little background in the art and science of “branding” is required. There is no physical element you can lay your hand on and say, “this is a brand”. True, you can have symbolic representation of a brand—for instance most people in our culture would recognize the encircled three-pronged chrome motif of Mercedes Benz. But saying this icon is the brand is no more accurate than saying that a statue of Buddha is Buddhism.

A brand is something potentially quite fluid over time. The highest valued brand in the world— Coca Cola —with an estimated brand value $83.8 billion, or 59% of its total market capitalization —was originally marketed partially on the (supposed) health benefits of the beverage. Nowadays it would be ludicrous to suppose nutritional advantage is an aspect of Coca Cola’s success. The product itself in this case has changed little. People’s perception has.

This helps us understand what a brand is. A brand is simply the common perception of a named commercial product or service controlled by a single entity. For your local corner store, common perception is a few hundred people’s experience within a kilometer’s radius. For a particular automobile, common perception is the perception and experience of millions of people in several countries.

Are brands good for the customer? By creating genuine brands, companies reduce friction and increase efficiency in the market, allowing customers to quickly, and reliably, purchase goods and services at reasonable cost. In a world without brands a routine trip to the supermarket would become a frustrating experience. Instead of recognizable labels and names, shelves would simply be stacked with similarly shaped packages with bland descriptions of their contents. Not only would the trip down the aisles take substantially longer, but also the experience of consuming goods purchased in this manner would be unreliable from one time to the next. It would be difficult, if not impossible, to ensure that goods matched your tastes, and budget, from day to day.

Branding plays a vital role in our industrialized world, shaping our everyday experiences and adding real value to our lives. Effective branding allows a company to efficiently target marketing to those most likely to find it useful, and then, allows you, the customer, to target their goods or services from that point forward. In other words, brands work both ways. You are attracted by a splashy advertising campaign describing the service of a local supermarket—but if the branding is effective, the brand experience will prompt you to come back again and again.

A cautionary tale: recently the Hudson’s Bay Company, the largest and oldest Canadian retailer, embarked on a new venture. HBC Outfitters opened last fall, and was to embody the long history of the company, especially its Canadian aspect. According to Vice-President, Bob Peter, a 29-year company veteran, the new store would carry higher end, original merchandise certain to appeal to “rich Americans” and souvenir-hungry Asian tourists. Last month the HBC Outfitters store closed permanently. What happened?

The answer is an all-too common one in Canada. Reality bit. Although the store was richly decorated and beautifully designed (including an indoor waterfall, and a bush plane hanging from the rafters, the merchandise was similar to the middle-of-the-road product carried at The Bay. “Canadian” crafts were as likely to be sourced in the U.S.A. as in Canada, and many of the souvenirs were made in Asia. In addition, presentation and advertising were stymied by the heavy-handed corporate culture of The Bay, ensuring bland conformity with their existing, and often inappropriate, aesthetic standards. The only thing up-market about the brand, in many cases, was the price. Finally, service levels were based on those at The Bay—that is to say minimal.

Customers can’t be fooled, and at HBC Outfitters, customers quickly discovered the reality didn’t match the hoopla. The root problem can be fixed, of course, but the cost of changing people’s perceptions, once disappointed, can be prohibitive, even for very large companies.

Recent Canadian examples in the same sector include Bretton’s, Woodward’s and most recently, Eaton’s. Time and again Canadian brands are devalued only to be “rescued” by new, well-intentioned management teams. More often than not, these efforts fail, not for lack of care, but because once the damage is done to a brand, fixing it usually requires more commitment, and patience, from stakeholders than they are willing to invest.

The solution: retain a clear vision and purpose of the brand and brand perception won’t be lost in the first place. In the global marketplace there isn’t room for brand owners who disappoint their customers.

Of the top sixty worldwide brands listed by Interbrand, a major strategic brand research and development company, none is Canadian. While brands from the U.S. dominate the list, over a third are from other countries, including Finland, Germany, Switzerland, Holland, Ireland and the U.K.

Toronto’s Bloor Street Yorkville area, the nation’s closest approximation to Beverly Hills’ Rodeo Drive or New York’s Fifth Avenue, is dominated by many of those same brands on Interbrand’s list, including Gap, Nike, Louis Vuitton, Chanel, and Rolex. While there are a number of Canadian brands on the strip, they are decidedly in the minority. More telling, is that of the Canadian retail brands in this strip, only three have a presence outside of Canada: M.A.C., Roots, and Club Monaco.

So why does Tiffany have an outlet on Bloor Street, while Holt Renfrew doesn’t exist beyond Canada’s borders? The answer may lie in two key elements of branding which have gained greater importance over the last few years. One: design has become a critically important element of a brand’s image and perception; and, two: the brand “experience” is now an absolutely vital element in any global brand.

Unfortunately, Canadians have a poor history in both of these areas. As the traditional “hewers of wood and drawers of water”, our resource-based history did little to foster a Canadian aesthetic. Furthermore, the rough and ready frontier mentality which was essential in uniting the least densely populated nation on earth had little need, or patience, for the niceties of urban “experience” such as was, and is, valued in other countries.

While Canada, in fact, has had its fair share of world-class artists and designers, from Emily Carr to Patrick Cox, the Canadian establishment has always tended towards conservative (read imperial) tastes. Thus, while Emily Carr was a fabulously talented artist, her work was unrecognized until she traveled to Paris, authenticating her talent.

Similarly, world-renowned Canadian shoe designer Cox makes his living in the U.K. Financially successful Canadian artists have always emulated their foreign counterparts. Today, this same trend is seen in the entertainment industry, where Canadian artists blend seamlessly with Americans.

But this “strategy” fails in one major regard. No Canadian aesthetic has been developed, and on the competitive stage of the world’s market Canadian brands lack an aesthetic differentiation, let alone advantage.

British teatime, the corresponding formal Japanese ceremony, and the rigid life of the French royal court; all share an important element—they have developed an appreciation for process and experience. Little wonder then, that French brands such as Louis Vuitton, Chanel and Moet & Chandon dominate the world of fashion and luxury retail where a complete experience has long been paramount. Today, this is more relevant than ever, since creating a brand experience (think Starbucks) has proven to be vital in establishing and growing a global brand.

In contrast, the most often-overheard complaint about Canadian retailers is a lack of service. This is very easily seen in comparing Canadian and American department stores, where the (relative) poor service of local stores is immediately apparent to anyone who has shopped south of the border.

Today, thanks in part to the globalization of world culture, Canadian customers are more sensitive to aesthetics and service than ever before. Proof is the dramatic success which foreign retailers and consumer brands who promote these values have had—and continue to have—in the Canadian market, at the on-going expense of home-grown brands.

Along with this new generation of customers, young marketers are developing work with a high design quotient, sensitive to the overall brand experience. Often, established brand-holders in Canada just aren’t interested, though. Asked in 1998 what sort of staff Eaton’s was looking for in rebuilding the brand image, a senior executive (who shall remain nameless) replied, “people with a department store background.” You can almost hear the axe fall.

As the co-founder of an innovative Vancouver-based retail marketing and design agency six years ago; I was constantly impressed with how new young retailers took immediately to our off-the-wall creative ideas—which together with well-established foreign brands such as Chanel and Virgin—formed the mainstay of our business.

What about mainstream Canadian retailers? They can’t get beyond the rigid thinking of their conventional marketing and media. This myopia has opened the way for a new breed of Canadian brands, from M.A.C., to Roots, which, using new or self-developed sources of capital, have proved beyond a doubt that Canadians are ready for great Canadian brands. Unfortunately, the news has reached many traditional Canadian brands too late. Wal-Mart and the Gap have taken massive market-share while traditional Canadian brands were busy navel-gazing, instead of dealing with fundamental issues of brand aesthetics (what do we look like?) and customer experience (what’s it like to buy from us).

So what’s the answer? Starting from scratch with new capital, new ideas, and new people is one way, as we have shown. But, where does that leave hundreds of existing consumer and retail brands? Stranded? The Canadian establishment—the decision-makers at the top, must wake up before the takeover. Design is not icing. Service is not an afterthought.

Developing a complete brand experience is not a luxury. Marketers who understand this must be rewarded and promoted—and capital must be invested in fostering these values within organizations. Customers will follow.