Professor of the Practice @ The Fletcher School at Tufts University | Sustainable Business Dynamics
Patagonia is betting on second hand fashion as the next strategic sustainability win-win solution. According to the company’s CEO “Resale is top of the list for me,” he said. “At scale, I would like to really make it a central part of the business.” Really? Patagonia deserves enormous plaudits for lots of things including its early commitment to organic cotton, it enduring climate advocacy, its support of the New York Fashion Act and its reorganization as a trust that feeds profits to environmental causes. It also deserves credit for its pioneering Worn Wear program started in 2013. However… 🛍️ Notwithstanding ThredUp's Annual Resale Report that hails the “seismic shift to a more #circular business system” and reports that resale grew at 15X faster than the broader retail clothing market in 2023….there is no evidence that the sale of “new” products is contracting. In fact, the advent of instant fashion (e.g. SHEIN and others) puts pressure of resale by selling such cheap disposable products. 👖Worn Wear likely represents less than 3% of Patagonia revenue. I would guess that over the past decade “new” product sales have grown by $1b while Worn Wear sales likely remain below $25M (it was $5M in 2021 according to the company)….IF true, more than 50X more growth from new products as compared to Worn Wear. Growth of #resale represents progress toward fashion’s quest to become more sustainable. That said, alone, it does not represent circularity. At the same time, selling a unit of 1 is full of friction. Until that friction goes away, it is hard to see Resale as fundamental contributor to fashion #sustainability. Oh….and...Worn Wear is now selling merchandise at 50% off. No doubt, that will accelerate sales…but….not likely in an economically sustainable way. I welcome feedback. James Reinhart Andy Ruben Maxine Bédat Samantha Taylor Livia Giuggioli Firth Ryan Gellert Matt Dwyer Ellen MacArthur Foundation Elizabeth Segran, Ph.D. Matt Powell Brett Mathews Allen Zelden Sarah Kent Clément Chenut Joel Makower Franklin Holley Katy O'Brien Lydia Brearley Deanna Bratter https://lnkd.in/epipjScX
Joel Makower
2w
This is yet another one of those cases of a progressive company getting a lot of kudos for doing good things for people and the planet — but whose efforts cover only a small fraction of its impact. See: Unilever, Ben & Jerry's, Interface, Tesla and others. The question, and the challenge, is how much to beat them up vs. cheer them on — that is, how to push them to go further, faster, while acknowledging their innovation. And, meanwhile, to go hard after their competitors that are doing far, far less. It's an open question with no right answer. I'd be curious to hear what Andy Ruben has to say about this.
Lisa Kjerulf
2w
If businesses don’t start somewhere how will we ever achieve true circularity? The fashion industry is a deep web of problems and for things to change for the better it requires action from all stakeholders in the supply chain (brands, suppliers, governments, consumers, marketers, etc) to reinvent, materials, designs, infrastructure, human rights, etc etc… Agree resale is far from perfect, however it’s one piece of the puzzle to slow items from ending up in landfill and constricting household incomes and the growth of an environmentally conscious generation (gen z and y) indicates that there is huge opportunity for resale, particularly for high quality, well made products like Patagonia that can last through numerous lifecycles vs a cheap SHEIN product which you can’t even compare - customers who are shopping at SHEIN are not likely shopping at Patagonia. Furthermore, resale is still in early adoption by brands - they haven’t even fully marketed it correctly to give the resale channel a chance. If they are truely going to go all in with resale, then their complete brand and channel strategy needs to shift and with it the marketing that will make it a success..
From my experience, I think Resale is an easier model for brands to adopt and bring to market, as it's easier to deal with all the clothes already out in the world, than the challenge of designing and developing products which are inherently 'circular' or 'sustainable' and the costs and complexities of sourcing within supply chains. Although resale engages with consumers, and for a brand is 'step' towards embedding circularity, but a lot of brands are just seeing this as another revenue stream and not actually reducing the volume of 'new' production, most not even mentioning this. I'm also seeing brands rebrand sale as things like 'Archive' as secondhand is becoming so aspirational now! Circularity is literally becoming a 'viscous circle'!
The only part of resale that appears to be working (i.e. making a profit for platforms and sellers) are independent, peer-to-peer (P2P) third party platforms like Craigslist, Ebay, Meta and other aggregators. Existing brand platforms and consignment are going no where. But these P2P's are being disrupted by the Vinted model, where there are no platform fees (only value-added services these platforms provide). EBay UK has switched to this model and I expect more will follow. As the U.S. economy worsens over this decade and we enter a severe recession, I expect recommerce P2P platforms to explode, further cutting out brand manufacturers from any secondary market revenue and decimating their income statements and balance sheets. Hard/soft goods, especially the outdoor/active lifestyle industry and even Patagonia, with 10+ year shelf lives, are at significant risk of seeing revenue evaporate as their products are all sold on recommerce platforms. Unless, however, royalties take hold, which funnels ~2% of secondary market sales, no matter where they happen, back to brand manufacturers. Emerging tech can make this work.
Sandra Rossi
2w
The most sustainable garment is the one we already own.
Ken Pucker in my experience with resale (fairly extensive going back to running EILEEN FISHER Renew 2015-2021) most resale programs represent 0-5% of a brand's revenue, depending on many factors, usually the biggest one being how much a brand is willing to support it and grow the program via full-file marketing. The degree to which a brand is willing to tell ALL of its customers to shop resale is the degree to which it will be successful, give or take. My thought on the Patagonia piece is that 3% of a billion dollar company is $30M. Yes, it's a small fraction of a billion, but I think the comparison actually hurts the significance that we are talking about tens of millions of dollars for resale. The fact that the CEO Is saying publicly that resale is on the list of the top most important issues at the company is HUGE. I liked how Kerry Docherty spoke about launching their Second Wave program, that it was an imperative part of their brand value, which is how resale should be approached. Lisa Diegel Grace Han Resale is part of a multi-pronged approach to prolong the life of brand product, and it is best done as a long game, which Patagonia is doing. Asha Agrawal Sam Brown
I’m of two minds. The % of 2nd hand business is unlikely to make a dent anytime soon, but we have to start somewhere. I’d rather see a bigger effort to spur demand for natural fibers and natural dyes, which would make the long term circularity of apparel less of a toxic cycle, laden with petroleum-chemicls. The circularity of “plastic” clothing ensures the they will keep cracking oil into plastic for apparel. It’s the same as CPG. Do we need better recycling? Or do we need upstream design change to design out fossil fuels? Is the paltry amount of recycling helping or confusing the problem? I know that Trove (formerly Yerdle) are rockstar environmentalists but, do they inadvertently give license for more plastic apparel?
You are correct on the current heart-breaking statistics, yet many things are developing. Firstly, few firms, including Patagonia, have marketed their resell anywhere near what they could. Much potential there. That has it's limits too though. Secondly, the EU CSRD, CSDDD, and forced labour regulation coming in can all slightly dampen the ability for extremely low-cost garments made without proper Supply Chains Environmental and Human Rights due diligence to undercut other brands as they currently do. That will take time, but even with the German law, is starting to have impacts. Civil Society will learn how to better use the law for the needed accountability which is increasingly scaring many potential Investors in firms like Shein (they already ask lots of concerned questions before there have even been any successful lawsuits or cases).
Kinsen Siu
1w
I think a useful litmus test is to imagine the CEO saying "Our program was so successful that resale has begun to cannibalize full price (and margin) revenue. That's why our sales are flat and our margins are shrinking." And then we can imagine how the board will react. And even how we in the public would react. If the board fires the CEO for those kinds of results, would we collectively shrug our shoulders and say "Yea, flat sales and lower margin. of course, he should be let go." After I go through this exercise, it seems like resale will always be balanced against full price, net new revenue. It's supposed to be additive to total revenue, not dilutive.
Ken Pucker I usually agree with you, but your critique of Patagonia baffles me. Here’s why: 1. Resale is Crucial: It’s a key part of any better brand future. My whitepaper with Worldly highlights the math behind the GHG importance of Resale in addition to supply chain (materials and energy). Patagonia is a prime example of brand with potential here. https://trove.com/decarbonizing-fashion/ 2. Genuine Intent: Many brands use Resale as PR. Patagonia is genuinely committed and even exploring new accounting methods for resale. Believe me I have spent time with more brand execs than most! 3. Need for Speed: No one is moving fast enough, including Patagonia. We should encourage them to accelerate, not criticize. Hence your post should push for more action. I’d like to understand your thoughts better. ... for anyone here, If this isn’t the right direction for Patagaonia, what do you propose? This is the key question.