*The graph gives an overview of the SWOT analysis. For a comprehensive version, please see the text below.
Patagonia Current Customer and Employee SWOT Analysis
Strengths:
- Privately owned company: The privately held nature provides many benefits for Patagonia to make changes to strategies and policies quicker compared to its publicly held competitors. There will also be less pressure from investors and the public when it does so.
- B-corp: Patagonia was the first-ever certified B-Corporation in California. It also has one of the highest overall B impact store with 151.4 out of 200. Patagonia is a true thought leader in the retail industry that advocates for sustainability.
- Purpose-driven business strategy: Patagonia is committed to preserve and restore the natural environment, and it pledge 1% of its sales to grassroots environmental NPOs every year since 1985. In the past decade, Patagonia’s sales quadrupled and recently surpassed $1 billion.
- Established reputation/Strong branding: Besides the above-mentioned Planet Pledge initiative, Patagonia also executed “DON’T BUY THIS JACKET” campaign and donated 100% of Black Friday sales to an environmental nonprofit. As the brand is constantly making efforts to its commitment, it is well-perceived by the public.
- Wide portfolio of products: The retailer offers gears and equipment for seven different sports. In addition, it offers free repair service to customers.
- Loyal customers: The brand has accumulated a loyal customer base due to its commitment to environment and sustainability as well as its constant innovation to reduce footprint.
- Employee loyalty: Patagonia has a 4% turnover rate compared to a 13% retail and consumer product sector average. The outdoor clothing company promotes women into leadership roles, provides access to on-site childcare, offers paid maternity and paternity leave, along with many other benefits. Patagonia also provides an inclusive and equitable company culture.
Weaknesses:
- Low market presence: Patagonia has 37 stores in the U.S., 2 stores in Canada, and a few stores around the globe. As the brand has a low market presence, customers are likely to buy from competitors because of easy accessibility.
- Weak global presence: Patagonia’s major source of revenue comes from the U.S. market. The company only has a few stores outside of the U.S. Competitors like the North Face has about 200 stores in the world, with 113 located in North America.
- Weak e-commerce: Patagonia relies on offline store experience, so it had not been building up its e-commerce channels as aggressive as its competitors, which put the brand in a less advantageous position even before the pandemic since more customers prefer to shop online.
- Heavy reliance on foreign vendors and suppliers: Although Patagonia operates two distribution centers, their productions are done overseas.
- Involvement in politics: The company’s articulation in politics is likely to draw criticism from the public who have different opinions on subject matters than those of Patagonia. Plus, the difference on opinions might shun potential employees away.
Opportunities:
- Booming online retailing: The pandemic has incubated the already popular trend of online shopping to a new level, so Patagonia should seize the opportunity to strengthen its online retailing channels to reach more customers.
- Environmentally conscious customers: Customers have become more environmentally conscious and are likely to choose a brand that is in align with their belief. Patagonia is a thought-leader on environmentalism and the reputation is helpful in attracting new customers and retain current customers.
- New technology: With the advancement of technology and emergence of new technology, the research and development of eco-friendly materials are on the rise, which will benefit Patagonia who source eco-consciously.
- Globalization: The company should focus on global expansion starting from Canada and Latin America.
- Social media: The various social media platforms provide Patagonia opportunities to raise brand awareness and engage customers effectively.
Threats:
- Competitors such as The North Face, Columbia and Amer Sports
- Declining retail sector: As the brick and mortar retailing is going down the hill, Patagonia is susceptible as it relies heavily on the in-store retailing and experience.
- Upcoming recession: The world is facing an upcoming recession induced by the global pandemic, so people are likely to lower their budget for outdoor apparels.
- Global pandemic: Patagonia had to shut down its stores due to COVID-19. Although some stores are open now, the company limits the customers to appointment only, which is a huge loss for Patagonia. In addition, the company had to shrink its crew size to stay in the market.
- Global warming: The outdoor company sources from the nature. However, with global warming, the raw materials supply will likely to be unstable.
- Foreign politics and trade regulations: The brand collaborates with 166 farmers to produce regenerative organic cotton pilots in India. However, the fluctuating state of foreign politics and trade regulations are likely to affect Patagonia’s supply chain.
- “Cancel culture”: Customers nowadays boycott brands for their inappropriate words and behaviors than ever, which post threat to an articulated brand like Patagonia.
- International talent acquisition: As the brand is likely to expand internationally, it need to find talent in local market but it has to make sure that its eco-friendly image remains the same across markets.
References
Benefits Business Insurance. (2016, June 29). 5 Companies that Offer Incredible Employee Benefits – INGUARD. InGurd. https://www.inguard.com/newsroom/5-companies-that-offer-incredible-employee-benefits/
Fisk, P. (2019, July 9). Loyalty beyond points . . . Patagonia finds a better way to engage its consumers in what they really care about. GeniusWorks. https://www.thegeniusworks.com/2019/05/loyalty-beyond-points-patagonia-finds-a-better-ways-to-engage-its-consumers-in-what-they-really-care-about/
MacLellan, L. (2020, March 9). Patagonia’s HR leader has been moved to tears in exit interviews. Quartz. https://qz.com/work/1574375/patagonias-hr-leader-has-been-moved-to-tears-in-exit-interviews/#:%7E:text=But%20exit%20interviews%20seem%20to,human%20resources%20officer%20Dean%20Carter.
Morin, C. (2020, June 24). Patagonia’s Customer Base and the Rise of an Environmental Ethos. CRM.Org. https://crm.org/articles/patagonias-customer-base-and-the-rise-of-an-environmental-ethos
NPD. (2018, January 30). Almost 1/3 of Online Apparel Buyers Purchased Outerwear Online. The NPD Group. https://www.npd.com/wps/portal/npd/us/news/press-releases/2018/more-u-s-apparel-consumers-are-opting-for-online-when-it-comes-to-outerwear-purchase/
Report Buyer. (2019, January 23). Outdoor Clothing Market – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2018 – 2026. PR Newswire. https://www.prnewswire.com/news-releases/outdoor-clothing-market—global-industry-analysis-size-share-growth-trends-and-forecast-2018—2026-300783039.html
Sebastio, F. (2018, March 27). Climate change is threatening the garment industry | Greenbiz. GreenBiz. https://www.greenbiz.com/article/climate-change-threatening-garment-industry
Statista. (2020, May 19). COVID Accelerates Declining Retail Industry. Statista Infographics. https://www.statista.com/chart/21764/declining-retail-industry/
Taylor, J. (2020, April 2). This crisis is different: E-commerce, coronavirus and the looming recession. SmartCompany. https://www.smartcompany.com.au/coronavirus/e-commerce-coronavirus-recession/
Thomas, L. (2020, March 13). Patagonia is closing all of its stores and shutting down its website because of the coronavirus. CNBC. https://www.cnbc.com/2020/03/13/patagonia-is-closing-all-of-its-stores-because-of-the-coronavirus.html
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