EIGHT

“Don’t Buy This Jacket”: Subverting Retail Expectations

CHAPTER SUMMARY: This brief chapter covers business-model innovation as practiced by a highly regarded clothing manufacturer and retailer and the ways in which turning traditional business models on their head (and even doing things that would seem to cannibalize the existing business) can yield strong positive outcomes.

It may have been the first time that an upscale global retail brand vehemently and publicly urged its customers not to purchase its products on the biggest shopping day of the year (Figure 8.1).

But that’s precisely what Patagonia did on Black Friday in November 2011, with a splashy ad campaign bearing a subversive message to shoppers: “Don’t Buy This Jacket.”¹ The ad spot, which ran in The New York Times, was the Southern California company’s cheeky way to draw attention to Patagonia’s newly launched Common Threads environmental initiative.

The ad went on to detail the environmental impact of each one of the R2 jackets pictured in the ad: 135 liters of water (enough to meet the daily needs of 45 people) used in manufacture, and nearly 20 pounds of carbon dioxide (nearly 24 times the weight of the jacket) released in transporting it. The copy on the ad went further with an anti-consumption message. “Because Patagonia wants to be in business for a good long time—and leave a world inhabitable for our kids—we want to do the opposite of every other business today. We ask you to buy less and to reflect before you spend a dime on this jacket or anything else.”

The goal of Common Threads was to encourage people to consider buying used clothing in order to maximize the environmental awareness of apparel making. Earlier in 2011, Patagonia had teamed up with eBay to launch a branded store for reselling gently worn Patagonia clothes and gear on eBay. To encourage adoption, Patagonia elected not to make any money on the transaction; eBay users were selling just as they would normally. All that was required for them to list or shop on the microsite inside eBay was that they sign the Common Threads Pledge, in which they pledged to buy and sell used Patagonia clothing to each other whenever possible rather than buy a new item.

A decade later, that counter intuitive thinking has created a growing new revenue stream for Patagonia, burnishing its environmental reputation by pursuing a fast-growing consumer trend: re-use and resale of high-end clothing. Patagonia has an entire section on its website dedicated to the resale of used clothing that meet high standards (in some cases, even reconditioned by the company).

And when you walk into the Patagonia store on Pearl Street, a shopping stretch in Boulder, Colorado, popular among the well-to-do, you will find the first permanent location of the descendant of the original Common Threads initiative, Patagonia’s Worn Wear program. The store within a store is a resale boutique, likely to be the first of many in Patagonia’s U.S. stores. The Boulder store incorporated its permanent Worn Wear boutique after the brand had tested the concept in dozens of pop-up shops around the country. The slogan of the Worn Wear program is clever: “These clothes are made from other clothes.”

Patagonia has been living up to its environmental values (and using them as marketing tools) for many years. It first began recycling clothes in 2005. It also takes back and melts down polyester products to re-use the materials in new products. But recycling, the company concluded, was not as effective in environmental conservation as simply encouraging greater and lengthier use of Patagonia clothes.

At its Boulder Worn Wear shop, Patagonia runs a consignment store where shoppers can trade in, repair, and shop for used items. Ironically, this may actually encourage more shoppers to buy the expensive Patagonia items, because they calculate that it will be easier (and less of a hassle) to return them to Patagonia for store credit. Patagonia repairs more than a hundred thousand articles of clothing each year, most worth greater than $50 on the resale market. Though Patagonia does not disclose revenues, this new revenue stream is likely to bring the brand millions of dollars in “found money” annually—and retail analysts believe that the Worn Wear program has only boosted sales of new Patagonia clothing.²

A (Business) World Turned Upside Down—And That’s a Good Thing

As Patagonia exemplifies in telling shoppers not to buy its product, the best ways of fostering innovation may not be obvious at first glance. More often than not, the very best innovation ideas come from an unexpected contributor, a branch office, or an afterthought. (As our journalist friends often say, the best quotes come the minute you shut off the recorder.) We chose the Patagonia example because it is so striking and yet so satisfying, in that it has nearly ideal outcomes though the tactics to get there are certainly not standard business-school fare. In the remaining chapters, we will investigate how to apply these ideas and make them work; but let’s first look at why it is that these new business models are dominating innovation.