Outdoor Recreation Industry – The Outdoor Industry, or Outdoor Recreation Industry as it is also referred, is defined as a collective of companies and organizations concerned with “recreation and trade policy, sustainable business innovation and increasing outdoor participation” (“Who We Are.”, n.d.) The Outdoor Industry consists of companies and organizations, which support participation in “camping, fishing, hunting, motorcycling, snow sports, off-roading, trail sports, water sports, wheel sports, and wildlife viewing” (The Outdoor Recreation Economy, n.d.) Within this industry is the Outdoor Gear Market, which develops and sells “apparel and footwear” as well as camping and outdoor recreation gear such as “tents, backpacks and sleeping bags” (“Deep Dive: Outdoor Gear…, n.d.)
Business Situation for Outdoor Apparel Industry – The Outdoor Recreation industry is an ever-growing, profitable and economically-beneficial market in the United States. According to the Outdoor Industry Association, consumers are “spending $887 billion annually on outdoor recreation” (The Outdoor Recreation Economy, n.d.). Additionally, according to 2018 research from the NPD Group, the “$48 billion active apparel category is up 2 percent this year. And, sports outwear grew 3.2 percent” (Abrams, 2018) The Outdoor Recreation Industry also supports a robust selection of jobs and opportunities with over “7.6 million american jobs” dependant on outdoor recreation activities and businesses (The Outdoor Recreation Economy, n.d.).
The Outdoor Recreation Industry is also bolstered by an increase in America’s participation in outdoor activities. According to the Outdoor Industry Association, “145 million Americans participate in outdoor recreation each year” (The Outdoor Recreation Economy, n.d.). Outdoor recreation within the United States has also shown steady positive growth with “2 million more Americans taking part in outdoor activities in 2016 than in 2015” (“Deep Dive…”, n.d.).
The Outdoor Recreation Industry continues to contribute positively toward the United States economy and overall well being of citizens. Not only does the Outdoor Recreation Industry contribute “$125 billion in federal, state, and local tax revenue”, but it also contributes toward “healthy communities” which foster “high quality of life.” (The Outdoor Recreation Economy, n.d.).
Client Identification & Business Situation – Patagonia Inc. is an outdoor apparel and recreation company, that “makes outdoor and casual clothing which is both stylish and functional.” (Hepburn, 2013). Some products that they sell are, “outdoor clothing and gear for the silent sports: climbing, surfing, skiing and snowboarding, fly fishing,and trail running” (“Patagonia: Home”, n.d.). Patagonia prides itself in operating in an environmentally conscious manner that will “minimize environmental damage, promote sustainability, and encourage people to appreciate the wilderness and what can be experienced” (Vannini, p.72). Patagonia is active in environmental advocacy efforts and shape their company beliefs and values around environmental consciousness and sustainability. Patagonia is a voice in advocacy efforts to address “issues in the areas of land, water, climate, communities and biodiversity” (“About – Patagonia Action Works”, n.d.). According to Jeff Rosenblum, a contributor for the world’s leading progressive business media brand, Fast Company, “Patagonia’s audience trusts the brand, admires its values, and aspires to live by the same principles” (Lutz, 2014).
Patagonia’s profitability is clearly indicated through the organization’s consistent increase in product sales. Patagonia makes approximately “$400 million in revenue each year”, but has witnessed larger sale increases as the company has established itself as a competitor in the outdoor industry (Rosenblum, 2012). In 2015 alone, Patagonia’s annual sales skyrocketed to $750 million (irtori-Cortina, 2017). Patagonia is able to maintain popularity and interest among consumers through its constant innovation and development of new product lines. For example, in 1993, Patagonia was the first company to introduce a line of fleece products “made from post consumer recycled (PCR) plastic soda bottles.” (“Materials & Technologies”, n.d.).
Challenges Facing Patagonia
Unethical Sourcing Procedures and Labor Standards Impact Brand Image – Patagonia has struggled with unethical animal product sourcing procedures as well as unequal treatment in labor. As a company who strives to uphold a strict code of ethical production practices and vows to “cause no unnecessary,” unethical animal product sourcing procedures and labor concerns impacts the company’s attempt at developing a conscientious brand image that portrays ethical operations. With regards to unethical treatment of animals, “In 2010, German animal-rights group Four Paws said it found evidence that farms supplying down feathers to Patagonia were force-feeding geese to fatten their livers for foie gras” (Phillips, 2017). Additionally, in 2016, an investigation by PETA uncovered “…‘routine mutilation’ of sheep and lambs on two Argentine ranches, which supply wool to Patagonia”(Bain, 2015). Patagonia also suffered from ethical concerns regarding fair treatment of workers. The company “discovered brokers were charging migrant workers thousands of dollars for job placement at the company’s factories in Taiwan–a practice human-rights groups say is a form of slavery” (Phillips, 2017).
Reliance on High Prices – Patagonia struggles with asking a high price tag for their organic and ethically crafted products in a market that is populated with brands that offer similar products at lower prices. Patagonia’s survival is dependant on customers, who are willing to pay higher prices to support the company’s fair-trade, organic, and environmentally-conscious products. Founder of Patagonia, Yvon Chouinard indicates that, “The use of organic cotton will result in increased cost, something he is asking his customers to help offset.” He explains that, customers must be willing to pay high prices, as a way of investing in the survival of the company. Surveys have identified “about 30 percent of the population of the United States as people who, next to price and quality… the next item, for 30 percent of the people, is responsible reputation of the company. It’s a big target market for a company like Patagonia…” (Gallagher, 1996). Patagonia will constantly need an influx of loyal consumers willing to pay higher prices, not only, for products, but also for a company’s reputation and brand.
Taking a Political Stance – Patagonia risks losing customers who do not align with their political stance. The company’s political activism has resulted in the organization making enemies within the political realm. As a result of Patagonia’s steadfast efforts to support public lands and the preservation of national monuments, “…the Trump administration hit back. Mr. Zinke and Republicans in Congress accused Patagonia of playing politics to sell more clothes, and the hashtag #BoycottPatagonia began circulating on Twitter”(Gelles, 2018). According to research from Sprout Social regarding customer opinions on political positions, “20% will publicly criticize a brand if they disagree with the stance they’ve taken and 53% will purchase less from it” (Howland, 2018). This mentality of customers poses risk to Patagonia as their political beliefs could have an impact on the demographics of customers who purchase their products and support the company.
Patagonia’s anti-marketing tactics – Patagonia anti-growth marketing tactic, poses a possible challenge for Patagonia because this type of marketing tactic will either encourage or discourage sales based on customer behavior. “Patagonia’s anti-growth position, ‘which seems counterintuitive, makes the brand far more interesting’…But if it is seen as just a marketing ploy, it could backfire horribly” (Voight, 2013). According to Joy Howard, VP of Marketing at Patagonia, “The best way to get people’s attention is to be useful and show useful information that enhances people’s lives but also shows real news”( Voight, 2013).
Strategic Communication Efforts – Patagonia’s strategic communications efforts aim at promoting a sense of outdoor exploration, adventure, and recreation while contributing toward a bigger movement to protect and preserve the wilderness and landscapes at risk of destruction or human-triggered interruption. Patagonia has ingrained environmental protection, land preservation, reuse, and fair trade into all their strategic communication efforts, which resonates with outdoor and environmentally conscious consumers; the target market of the Patagonia brand (Rayl, 2016). As a result of Patagonia’s strategic communication and social responsibility efforts, the brand has been perceived more so as an international movement, than just a brand that sells products (Moore, n.d.). Patagonia’s communications efforts tend to focus primarily on the environmental values and actions of the brand with limited advertisement for the tangible products that are sold (Ritson, 2018).
Patagonia Product Marketing – Although Patagonia’s marketing tends to focus exclusively on environmental action with limited mention of products, the brand has developed campaigns that promote their goods, while still promoting sustainable action. During the 2011 Thanksgiving season, Patagonia launched advertising messages which encouraged consumers to reconsider their purchase of Patagonia’s products and identify whether their purchase is entirely necessary (Thangavelu, 2018). Patagonia’s ‘Don’t Buy This Jacket’ campaign recognized the impact of mass good production and encouraged consumers to be conscious of the products they are buying (Clarke, 2017). This effort displayed Patagonia’s larger brand goal of doing good and reducing the overall environmental impact the company has on the world. Consumers were receptive to the campaign because it displayed the brand’s dedication toward transparency and sustainability (Rayl, 2016).
According to an interview with Alex Weller, European Marketing Director at Patagonia, “The real message of ‘Don’t Buy This Jacket’ – and it continues to be the real message of Patagonia in terms of consumption – is don’t buy this jacket if you don’t need it … And if you do need a jacket, make sure you buy something that is thoughtfully produced, is built to be repaired, has a clear purpose. So it’s not about encouraging people to not own things; it’s about changing people’s relationship with stuff, and being not just thoughtful consumers but thoughtful and careful owners of stuff” (Clarke, 2017). The success of Patagonia’s ‘Don’t Buy This Jacket’ campaign aligns with their genuine, transparent, do-good approach to marketing, which appeals to the environmentally conscious consumers that shop at Patagonia.
Environmental Advocacy and Marketing Strategies – Patagonia’s dedication toward starting a movement of active, environmentally-conscious individuals drives much of the brand’s marketing efforts. Patagonia actively participates in advocacy efforts to address national and international environmental actions including: “Preserve American public lands”, “Stop new offshore drilling”, “Protect the Arctic Refuge from future oil or gas drilling”, “Protect the Tarkine”, “Save the Blue Heart of Europe”, “Stand with Salmon”, and “Defend the Boundary Waters”. (Environmental Campaigns…n.d.) Patagonia’s ability to positively impact environmental movements is pivotal, as the company has developed a cult-like following of consumers that are more concerned with environmental sustainability and preservation rather than reasonable pricing or flashy marketing (Moore,n.d,).
Relevant Trends – In a press release of the expansion strategy being taken by Upventur, a company looking to foster connections in a digital space for all kinds of outdoor enthusiasts, it is noted that the outdoor industry has been showing rapid growth recently, especially among millennials and those in generation-z. “Outdoor industry growth is rapidly outpacing overall economic growth and other recreational activities in the US. The outdoor recreation market trends transcend global regions and are cross-generational,” the article quotes (“Upventur Announces…”, 2018). Market analysts have forecasted the industry to grow throughout 2018 to 2022 based on “previous growth patterns, the growth drivers and the current and future trends” (ReleaseWire, 2018). On a separate occasion, Director of Public Lands at the Center for American Progress, Matt Lee-Ashley, claims the outdoor recreation industry to be “a powerful and fast-growing sector” (States News Service, 2015).
In the financial climate of the economy, the U.S. House of Representatives has published a report detailing the rising costs of higher education. They note that this financial burden is caused by the expansion of college administrations as well as a lack of state funding (“The Rising Costs…”, 2015). A recent USA Today article that was published on September 12th claims that “Americans hold roughly $1.5trillion worth of student loan debt” (Dunn, 2018). This financial pressure may lead many to opt out for less expensive hobbies. Since outdoor recreation activities may not be the cheapest options for spending free time, this is a reason to foresee a stunt in growth of the outdoor industry that was mentioned before.
Looking at economic trends in a broader context, the world is in the midst of a Fourth Industrial Revolution, as explained by business expert Charles Franklin. (Franklin, 2017) This period is marked by the increasing speed of networks to communicate and produce as well as the rise of automation. Looking forward, he writes that wealth gaps will remain unstable, with the looming prospect of a major imbalance due to the unknown future of automation (Franklin, 2017). In an article published by The Financial Express, economists also note that automation is looking to replace many human workers, which is likely to result in increase financial inequality. (The Financial Express, 2018) The Bangladeshi news agency also writes that the Fourth Industrial Revolution will result in much more efficient logistics and supply-chains as a consequence of automation. They say that the rapid growth and innovation that comes about as a result of such technological advancements may leave behind many companies that rely on only human brain-power (The Financial Express, 2018). The evidence behind a Fourth Industrial Revolution suggests that an increase in future standards for efficiency will push a portion of companies out of business as a consequence of competition. Earlier this year, Rebecca Rasch, a social scientist at the U.S. Forest Service, published a paper reviewing studies in, “An exploration of intergenerational differences in wilderness values”. (Rasch, 2018) This source points to several factors that may contribute to the differences between generations in how they feel about wild environments, resulting in both positive and negative impacts on people’s perception of such environments. As the United States develops and towns and cities encroach on what otherwise would be wild territory, the scarcity of natural environments has resulted in increased value by younger generations (Rasch, 2018). It looks as though this inverse relationship will continue to exist well into the future, or as long as the population of the country continues to grow. The paper also points out negative trends on people’s perception of the natural environment. As the prevalence of technology has habituated humans into a lack of outdoor exposure, it has been shown that people are losing the capacity to connect to natural places and attribute meaning to experiences and things in the natural environment (Rasch, 2018). In a paper published by the Vanderbilt University Law School, it is suggested that economic incentive has a greater influence on people to recycle items as opposed to the values of each household resulting in such behavior on their own (Viscusi, 2010).
Competitor Analysis
The North Face – The North Face is an outdoor apparel and recreation gear company, which sells “an extensive line of performance apparel, equipment, and footwear” (“The North Face Story”, n.d.) Like Patagonia, North Face is a member of the outdoor recreation industry, and they also create products for recreational activities such as, “training, running, hiking, climbing, skiing, and snowboarding” (Bloomberg, n.d.). The North Face’s mission is to, “provide the best gear for our athletes and the modern day explorer, support the preservation of the outdoors, and inspire a global movement of exploration” (“The North Face Story, n.d.).
The North Face has made an effort to reach consumers with intrigue in their campaign, “Never Stop Exploring”, which calls outdoor enthusiasts to fully immerse themselves in outdoor adventure (Patterson, 2011). North Face has dedicated a lot of time and money on this campaign which Ad Age says “takes a more personal approach to encouraging consumers to explore the lands around them.” The Ad Age also mentions that the company sold $2 billion in retail during 2017 and has increased spending on their current campaign by a third compared to their last strategical effort (Rodriguez, 2014).
The North Face is one of the largest outdoor apparel companies, holding a massive $156.9 million in estimated average annual revenue. (“North Face Competitors…”, n.d.) The company has over 200 stores and witnessed an astronomical gain in revenue with a reported $2.3 billion earned last year (Meltzer, 2017).
The North Face sells products through two predominant methodologies, online sales and retail stores. The North Face has established retail stores and outlets in the United States, Canada, Europe, the Asia Pacific, and Latin America (Bloomberg, n.d.). The company has over 200 stores with a reported $2.3 billion in revenue last year, compared to Patagonia’s more modest $800 million with only 29 individual stores within the United States (Meltzer, 2017). Some challenges that North face has faced is that they have been under fire from animal rights organizations for using materials from animals that have been treated poorly, even though they claim that they only source cruelty free down for their products. In the article it says, “Animal rights campaigners found that the source of the clothing firm’s supplier was in fact Hungarian farms where geese are artificially fattened in order to make pâté de foie gras from their oversized livers” (Beckford, 2012). Like Patagonia, The North Face is active Both of these companies are advocated of environmental issues. The North Face abides to these actions by using recycled materials in their products. North face’s products uses, “top quality gear designed to withstand the harsh conditions and last a lifetime does not come cheap” (Meltzer, 2017). The North Face and Patagonia are fundamentally similar in that both companies foster, “ethical treatment of workers, minimizing emissions from company workshops, and transparency on business ventures are the orders of the day both the companies (Ryan, 2014).
L.L. Bean – L.L.Bean is, privately-held outdoor retail company that specializes in outdoor clothing and recreation equipment. (L.L. Bean, Inc., n.d.) LL Bean offers products in “children’s clothing, fly-fishing, outerwear, sportswear, housewares, footwear, camping and hiking gear” (L. L. Bean, Inc., n.d.) Domestically, L.L. Bean has established retail stores in the Northeastern United States and Illinois, while also establishing an international presence in Japan and China (L. L. Bean, Inc., n.d.). L.L. is trying to encourage people to go outside more often, no matter what their outdoor activity skill level is. They are successfully implementing this message through a strategic communication campaign called, “Be an Outsider at Work.” This campaign shifts the brand image toward focusing on targeting more leisurely outdoor activity and recreation. “L.L. Bean’s “Be an Outsider at Work” Campaign, is an aim to shift the company’s marketing strategy from the adventurous outdoor lifestyle to the everyday outdoor lifestyle. This campaign was created in an effort to in an reach a broader audience and change the way we think about what getting outside means” (Brown, 2018) L.L. bean has faced controversy when one the board of director’s political views were revealed as contradictory to the organization’s efforts. In an article by the New York Times, “The company was already facing a boycott from liberal customers after reports that Linda Bean, a granddaughter of the company’s founder, had donated thousands of dollars to a political action committee that supported Mr. Trump’s presidential campaign. (Victor, 2018).
SWOT Analysis
Conclusion – Patagonia’s primary issue is maintaining the brand’s ethical clothing production behaviors as the company begins to develop and grow into a larger organization. As the demand for Patagonia clothing increases and the company begins to expand, the organization will have difficulty maintaining their current small business mentality. Although Patagonia’s company issues reflect struggles with maintaining ethical business operation, our research objective is to identify to what extent consumers are actually influenced by ethical clothing production and business operations. In our analysis, we identified that it is unclear if individuals would not purchase Patagonia’s products if the company did not adamantly function as they do currently. We hope to acquire primary research from Patagonia consumers in order to answer the following question: To what extent do consumers actually consider ethical business operations and clothing production when they purchase the clothes they desire?
Throughout the primary research process, we will utilize focus groups and in-depth interviews of Patagonia Clothing buyers to determine consumer’s overall knowledge of Patagonia’s ethical business operations and determine which of Patagonia’s social factors and ethical practices contribute the most influence to individuals when buying Patagonia clothing. Furthermore, we will use a survey to determine the underlying reasons, if any, why people buy Patagonia’s clothing, while also identifying their knowledge of the company’s ethical practices and level of importance each ethical practice has on their decision to buy Patagonia’s products.
Sources:
https://www.patagonia.com/home/
https://outdoorindustry.org/wp-content/uploads/2017/04/OIA_RecEconomy_FINAL_Single.pdf
https://www.ukoutdoorpursuits.co.uk/