Complete SWOT Analysis of Patagonia – One Of The Most Sustainable & Eco-Friendly Retailers

Quick Stats on Patagonia

Founder	Yvon Chouinard
Year Founded	1973
Origin	Ventura, California, United States
No. of Employees	1,000+
Company Type	Private
Market Cap	$ 21.09 Million (2021)
Annual Revenue	$ 209.09 Million
Net Income/ Profit	$ 1 Billion

(Give Back At Patagonia, Source: Instagram)

Products of Patagonia

• Outdoor Apparel
• Outdoor Shoes
• Backpacks
• Sleeping Bags
• Second-Hand Clothes & Give Back

Competitors of Patagonia

• North Face
• Marmot
• Amer Sports
• Columbia Sportswear
• Canada Goose

After having a deep insight into the company’s core business, let’s delve into the SWOT Analysis of Patagonia.

SWOT Analysis of Patagonia

A SWOT analysis consists of a company’s strengths, weaknesses, opportunities and threats. It’s an excellent measure of determining a company’s growth and where it falls short thus providing insight for the company to develop and grow.

To better understand the SWOT analysis of Patagonia, refer to the infographic below:

So let us first start by looking at the strengths of Patagonia from the SWOT analysis of Patagonia.

Strengths of Patagonia

Strengths are the organisation’s unique capabilities that give it an advantage in attaining more market share, attracting more customers and maximising profits. A brand strength, closely related to brand equity is the value carried by a brand and is of utmost importance for any company to attain the heights of success.

Following are Patagonia’s strengths:

• Follow 5P’s Strategy: In the generation of social media consciousness, the impact of brands is as important to consumers as the actual product. The innovative customer-driven strategy of Patagonia uses the 5Ps strategy including purpose in its 4Ps that is product, price, place and promotion.
• A Private Company: Patagonia has its own privately owned business which gives it an edge over other public competitors. The company can formulate its strategies and change them according to its advantage and convenience.
• Outstanding Business Philosophy: Patagonia follows its tagline “buy less, buy quality” philosophy which encourages its customers to buy its second-hand products instead of buying new ones. This strategy enabled the company to increase its revenue by about 30%.
• Environment Friendly: Patagonia is an environment-friendly brand that devotes 1% of its revenue to environmental groups via one percent for the planet.
• Effective Marketing: Patagonia has excellent marketing strategies which target its customers to buy environment-friendly products and create a sense of consciousness among the customers towards a sustainable environment.

(Patagonia’s Instagram, Source: Instagram)

• Strong Social Media: Patagonia social media presence is fascinating with 4.7M followers on Instagram & up to 2M followers on Facebook. It also has a considerable presence on Twitter. With their business to save our home planet, it has grown this community and its sales with environmental connection with people.

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• Group Centric: Patagonia is a brand that puts the interests of the community above profits and has donated $10 million to community-based environmentalists and activists.

Weaknesses of Patagonia

Weaknesses are the negative aspects of a business or brand which should be improvised and improved. Working efficiently to identify the weaknesses of a brand and then taking corrective majors to improve it will lead the brand to great success. The major weaknesses of Patagonia are as follows:

• Lack in E-commerce: As social media is Patagonia’s strength on the other hand it lacks in the adoption of e-commerce, Patagonia continues to struggle to increase its online sales on e-commerce platforms such as Amazon, Etsy, Walmart etc. Patagonia is more focused on retail selling which has led to a major weakness of the company, particularly in the current pandemic-hit society where consumers prefer to shop online.
• High Dependency on Suppliers: Patagonia excessively relies on suppliers from Asia. Due to overreliance on supply chains, it is exposed to an array of issues.
• Presence in Market: With Patagonia’s low market presence consumers are compelled to go to competitors. Patagonia has only 37 stores spread across the U.S., 2 stores in Canada and a few stores in several countries around the world.
• Huge Dependence on the US Market: Due to the high dependence of the company on the US retail market, it is exposed to the vulnerabilities of the market.
• High Product Price: Eco-friendly production of Patagonia makes Patagonia products one of the most expensive products which target only rich class people as its target audience. More customers will look for budget-friendly deals while buying clothes.
• Limited Advertising Campaigns: For a good brand to gain recognition, the right marketing strategies are very important. To create an impact and to spread brand awareness every company uses advertising as its tool but Patagonia’s limited advertising campaigns are a significant weakness for the brand.

Opportunities for Patagonia

Opportunities are potential areas of focus for a company to improve results, increase sales, and ultimately profit. Companies can work on their weak areas to increase their opportunities and chances to lead the market. For big companies like Patagonia, there are many opportunities that they can use to retain their position.

• Double the Stores: By building more stores will strengthen the market presence and allow the company to capture and serve more customers. At present Patagonia has around 37 stores scattered across 20 states in the US.
• Global Recognition: The outdoor retailer operates in the US and Canada yet there is a high demand for outdoor apparel across the world. By a global expansion, Patagonia will benefit from having several regional streams of revenue.
• Utilize E-Commerce Platforms: Most outdoor apparel prefers to shop online, which serves the company an opportunity to grow. It can exploit e-commerce channels more effectively to increase online sales.
• Diverse Product Line: Patagonia offers a wide range of outdoor apparel and other outdoor-related products. The retailers can extend their product line to include everyday clothes, sportswear and secondhand clothes.

Threats to Patagonia

Threats are harmful factors that can affect the company’s growth. The following are some of Patagonia’s threats.

• Business Depend on Climate: Patagonia’s products are environmentally friendly and are made from natural products like features and wool which makes it more vulnerable to climate change. Hence the availability of these raw materials will become highly challenging due to prolonged droughts and flooding.
• Recession: Many businesses across the world are sliding deeper into recession. In times of financial crisis, consumers reduce their expenditures on several essential items like Patagonia’s outdoor offerings.
• Declining Retail Sector: Since the past five years, the retail sector has declined and was accelerated by the pandemic. The decline threatens Patagonia’s profitability and long term sustainability.
• Global Pandemic: Patagonia suffered huge losses due to the pandemic and was forced to close its stores and suffered huge losses in millions. The possibility of a second wave of a virus threatens its revenue and profits once more.
• Tough Competition: Just like any sector, Patagonia has several competitors like North Face, Marmot, Amer Sports, Columbia Sportswear, Canada Goose and so on who compete against each other for market share.

This ends our broadly covered SWOT analysis of Patagonia. Let us conclude our learning below.