Patagonia: a pole star for global growth in 2023?

By: Danilo Cressman, Managing Analyst, White Space Strategy

Patagonia is one of the world’s biggest outdoor clothing brands. Their turnover is $1.5bn, and their distinctive mountain range outline logo adorns t-shorts, jackets and backpacks worldwide. Their brand stands for exploring the outdoors, getting back to nature, and being at one with the planet.

However, their brand has a problem: fashion is the second most polluting industry in the world after oil. Patagonia has worked extremely hard to square this circle by building a business model based around sustainability. I think this is relevant to every company, as we move into 2023 – when the world, and its companies, will be badly in need of sustainability.

Cut from a different cloth

This 80 second video’s amazing. It’s been viewed almost 1m times on YouTube.

In short: Patagonia has set itself apart from other fashion brands by sticking to sustainability and ensuring social and environmental value creation trickle to every part of the business:

Patagonia started in 1973 and from its onset it had an affinity with the outdoors. Its environmental focus has been rooted into the company’s history, with it being the first California company to use renewable energy sources. In 2012 it also became one of the first B-Corps in the state. This allowed Patagonia to write social and environmental values into their articles of incorporation and communicated they were holding themselves more firmly accountable to impact metrics beyond financial gain.

Patagonia continues to meticulously build sustainability into its brand identity. Its drive for a circular supply chain; it’s messaging and its ability to involve the customer provide great learnings. They show how Patagonia associated itself with sustainability, become more sustainable and boosted customer loyalty. Moving in lockstep these elements demonstrate sustainability and growth can go hand in hand. We’ll now look at each element separately and underline what actions Patagonia has taken in each area to lead to success.

Say what you mean and mean what you say

Beth Thoren, director of environmental action at Patagonia, notes that:

“We’re in business to save our home planet, that is our purpose. Part of that is being a responsible business and minimising our footprint. But the other side to it is using our voice. Whether that’s to lobby for good regulation to protect our natural world, or actually campaigning”

Patagonia uses its position as a retail heavyweight to echo climate justice messages.

It used Trump’s tax cuts to fund environmental and social projects as well as investing all their Black Friday revenue into the environmental. Marketing itself as an environmental company gained Patagonia consumer attention, however, its actions have gained it consumer admiration and with that loyalty.

Circularity in Supply

The most effective way of closing the loop in retail is focusing on your supply chain and raw materials. Patagonia supply chain is responsible for 97% of its carbon footprint with 86% stemming from raw materials alone.

Patagonia tackle this by focusing on both materials and manufacturing. They consolidated manufacturing where possible and increased efficiency practices such as scrap collection in garment creation. Materials have shifted away from virgin to recycled using partnerships such as that with Finish-based Infinited Fiber that transforms waste into new fibre. Pursuing these new practices have also resulted in new areas of opportunity. Recycled wool, for example, is cheaper than its virgin equivalent, bringing down overheads.

Patagonia’s following and sales have steadily increased year on year despite the retailer decreasing its ad spend. Reduce, re-use and recycle are now more than just slogans, they are values through which consumers select brands. Patagonia’s actions and messaging have clearly resonated with the green consumer.

This short company video explains how they go about doing this in more depth:

Involve the Customer

Second hand is no longer second best. Consumers are increasingly interested in being part of the circular economy. According to ThredUp resale grew 25 times faster than traditional retail in 2019 and is poised to hit $64 billion by 2024.

Patagonia’s Worn Wear initiative responds to this demand. So far, the initiative has proven itself to be both a good marketing and environmental move. Creating a marketplace for second hand allows more customers to buy into the brand and avoid the more affluent prices of first-hand.

Through partnerships with AwayCo Patagonia has also started a new rental program for mountain bikers. Rented clothing reimagines the purpose and use of clothing, driving against standard consumerism and disposability.

These programs give customers the power to directly take part in a sustainable initiative. It strengthens the association with environmental action and highlights Patagonia’s durability. Worn Wear also holds a mirror to the retail industry and ask the question of how our relationship with clothing needs to change.

Finding Success

Patagonia may or may not be well placed to succeed commercially in 2023. Their prices are high – over £250 for a jacket – which could be unaffordable for some of their customers as their household costs rise.

However, environmentally, they will remain a success story. It’s this environmental success story that will be interesting to other companies, in 2023 and beyond.

What, in a nutshell, underpins it?

Working within their supply chain allows Patagonia to target their greatest source of emissions and discover the new way of doing things in retail. It gives them the opportunity to grow and set the roadmap others will follow. Their messaging and corporate actions advertise their stance on sustainability. Together the two send a clear, easily understandable messages to consumers: “We are going to be the example“. And being the example in sustainability is great. Consumers want to be part of that example and Patagonia also gives them the chance to do that.

Success comes from these elements working in concert.

Actions inform messaging which attracts attention. Attention then turns into involvement. Customers want to share in the brand reputation and are given the option to take part in sustainable initiatives.

Other companies around the world could benefit from adopting a similar mindset, whatever industry they’re in.

About the author:

Danilo Cressman

Managing Analyst, White Space Strategy

Danilo relocated from Rome to join White Space, and is heavily involved in the company’s international strategy projects. He contributes to a broader range of blogs and publications that focus on innovation, and is an emerging thought leader within the tech innovation space.

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