Patagonia

FASM 430 NonTraditional Retailing Prof Grace Cannata Paige Homberg - Olivia Brandt Katie Schiewe - Alexandra Lang Isabella Costa

company overview page 2

market size page 10

strategic initiative page 26

operational & promotional plan page 40

proposed target customer page 33

table of contents company analysis page 12

market analysis page 32 financial plan page 54

visualization page 36

conclusion page 58

mission statement

“Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.�

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Going back to his consciousness about leaving the earth just has he found it if not better, he recreated the product so that it would no longer be damaging.

It is this innovative and mindful way of thinking that has helped him to create a brand that stays true to their mission of creating quality products that are built to last, that do no unnecessary harm. A man of many talents, when the company faced some difficult financial times he wrote the book “Let my People Go Surfing” to share where he stands in terms of ethics and what he has learned as a business leader and philanthropist. The book has been a success through and through and he has fully utilized the platform he has to show his commitment to doing good business and acknowledging corporate social responsibility.

company overview

Yvon Chouinard has always been the true Patagonia customer, it only makes sense considering he built the company because he saw a need for specific outdoor products. Chourinard was an avid climber as he was growing up in California.When he developed this love for climbing, the only pitons available were made of soft iron, placed once, then left in the rock. Ss Chouinard started to create pistons from hard irons from model A axles, creating the first reuseable pistons. This shows his care for quality products that reduce the impact on the environment. Years after finding success of his first product he realized that the pitons were damaging the rock they were climbing on.

1957 - Yvon Chouinard made the first reuseable pistons

1965 - He came in partnership with Tom Frost for large scale manufacturing to create Patagonia

1972 - Patagonia introduced the first ever “climbing clothing”

1980 - Patagonia began to intorduce more colors

options, products became less technical and more fashionable

1991 - Sales crimped during a recession 1996 - Distribution Center opened & all cotton sportswear becomes 100% organic

2003 - The Infurno Jacket, the first fully recycled waterproof rain jacket, is introduced.

2016 - Patagonia started new intiatives on Black Friday & Election day (See Appendix A for full timeline) page 5

Patagonia prides itself on being a B Corporation. Typically companies that are for-profit are named under ‘C corporations.’ These corporations are legally bound to have focuses and responsibilities to fully increase and benefit the shareholders financially. This is the norm of many businesses that are driven by profit. In the eyes of Patagonia, it is not all about the money and in 2011 they were first in line to become the new kind of corporation, the ‘B corporation that is.

The B in B corporation stands for “Benefit” which is exactly what the directives within the model do, benefit everyone involved not just in a financial sense. Being a B corp means the company will try to take into the environment and society and make decisions based on the best interests of everyone and everything. This includes taking into account non-financial interests and also the responsibility of conducting audits using third parties to obtain these standards.

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Patagonia’s growth plans do not take the form of your typical retailer, in fact it is quite the opposite. They focus on the idea of slow fashion instead of thinking in terms of profits. By doing this they create a trusting relationship with their consumers and it has the effect of reverse psychology on their new implementations that they conceive. Patagonia wants consumers to buy their products with the idea that it will last a lifetime, they do not want consumers to go purchase the same products over and over, but buy products you need and never have to buy them again. We saw this strategy take place in their “Don’t buy this Jacket”, by the company projecting an honest message, they saw a one third increase in sales over 9 months of the campaign being out.

Their newest growth initiative was introduced last month (January 2017) with their “Worn Wear” model. Consumers can now buy and sell their old gently used Patagonia products when you are done using them. This new concept from Patagonia is targeting a lower price point for products which caters to the millennial customer, a demographic the company has not specifically catered to in the past. Overall Patagonia is an innovative thinker when it comes to growing as a company and in profits. It is not so much of their future growth plans but more of how they will market an “Anti-Growth” strategy.

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future growth plans

Since Rose Marcario joined Patagonia as CFO in 2008, the outdoor outfitter has doubled its scale of operations and tripled its profits, with around $600 million in revenues in 2013.

Patgonia continues to grow and increases in sales.

Strengths Strong customer relationship Quality products Positive environmental involvement Brand transparency Extensive Research & Development Unique Marketing Strategies Low employee turnover Employee knowledge of products Customer service and experience

Opportunities Re-establish a phone app Further develop customer experience in the retail stores New consumer reach Further invest in technology Showing the life cycle of product so customers understand why products are more expensive Find a way to educate potential customers on brand initiatives Increase of the conscience consumer

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Weaknesses High production cost because of B corp and fair trade initiatives Limited outdoor Environmental focus limits flexibility Low promotion of events Potential customers are unaware of brand’s initiatives

Threats Consumer changes values of brand E-commerce threatens the brand’s experience driven retail environment North Face VR goggles allow customers to view different environments Cheaper alternatives of high quality

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market size

Adventuring into the great outdoors fuels the economy. In 2012, outdoor recreation product sales was $120.7 billion (The Outdoor Recreation Economy). This included apparel, footwear, equipment, and accessories needed for outdoor activity. In 2013, sales of outdoor performance apparel were growing at a rate of 6% in the US; by 2.5% in Europe; and by double digits in emerging economies (Outdoor Performance Apparel). Outdoor industry sales were outpacing fashion sales, driving an explosion of new brands and “performance� spin-offs, along with a vast expansion of outdoor retail sites and sales channels.These spin-offs have led to a growth in athleisure. So while interest in participation in the outdoors is growing, the outdoor consumer is beginning to change; becoming younger, more diverse and more social.

High Accessibility

High Price

Low Price

Low Accessibility

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North

Face

has long been one of Patagonia’s competitors. Similar to Patagonia, North Face also sells merchandise to outdoor explorers. The company offers services like product repairs, fast shipping, and a rewards program. North Face has larger distribution channels and more retail locations.

Columbia Sportswear offers a large

REI is one of Patagonia’s strongest

Sorel’s popularity with winter boots

Under Armour is a larger athletic and

Mountain Hardwear manufactures

L.L. Bean has created a large customer

Poler is a startup company based in

Nike offers innovative technologies

Canada

competitors and because the two have similar product ranges and prices. REI has a narrower distribution channel because it’s only offered online or retail locations.

casual outdoor wear supplier. They have a fairly large footwear and outerwear selection. Under Armor doesn’t cater to the camper like Patagonia does because have no camping supplies in their product assortment. Under Armour’s biggest strength is their large distribution channels.

base and brand heritage, similar to Patagonias. Both have large camping, outdoor accessories, and clothing product ranges. LL Bean is not as expensive as Patagonia, but is known for their customer service.

and fabrics that are incorporated into their products. Nike’s hiking and outdoor category is not as broad as Patagonia’s.

The company’s share a similar price point and channel distribution.

product selection of outdoor clothing and accessories. Merchandise is made with Columbia’s innovative fabric, which makes it durable for the outdoors.

Columbia has a large Corporate Social Responsibility and takes steps to being environmentally friendly.

and jackets make have made it a top competitor for Patagonia. Sorel’s merchandise is at a higher price point, but is not as widely distributed.

high-tech outdoor clothing and camping accessories. This company’s prices are more accessible and they offer great services, like a rewards program and fast shipping. There is not a very large brand following due to the narrow distribution channels.

Portland, OR and Laguna Beach, CA, selling youthful outdoor clothing and camping accessories. Although this company is young, it is ambitious and capturing a younger market that similar brands are targeting.

Goose manufactures highend winter clothing for outdoor activities. The company’s products are sold at a higher price point and have a narrower distribution channel. page 11

competitive analysis

Patagonia is a longtime favorite and go to brand for all outdoor adventurers. The company’s environmentally friendly initiatives and transparency to its customers have helped cultivate loyal customer base. Through unique marketing campaigns and exceptional customer service, Patagonia has exceeded many expectations. In the current market, Patagonia is placed high on the accessibility axis, because its products are available in store and online.

On the price axis, Patagonia is placed on higher end because merchandise is more expensive than competitors, North Face and Under Armour.

current distribution

Patagonia is currently distributed in various channels.

They have a total of 144 point of sales. With 99 stores total around the globe and 60 stores in US, Patagonia is still continuing to grow. They currently own and sell 13 outlet stores, 5 of which are in the US and 8 outside the US. They also work with third parties to sell their product at their 14 partner stores. They explain, “Partner Stores offer the most comprehensive range of Patagonia products, a comfortable shopping environment, and excellent levels of customer service” (Patagonia).

Patagonia sells to 8 different wholesalers including REI, Dick’s Sporting Goods, Halfmoon Outfitters, Nordstrom, Macy’s, Urban Outfitters, MastGeneral Store, Sporting Life- Canada. They also sell wholesale to 6 other e-commerce retailers including, Logosoftwear. com, Zappos.com, MooseJaw.com, Backcountry.com, Walmart.com, WoodsNWater.com. Patagonia also sells their products on their own e-commerce site. They have a website titled Patagonia Provisions which “supplies ethically sourced and organically grown food in an easy shipment” (Patagonia). Another Patagonia operated e-commerce site is Patagonia Corporate Sales which “sells products that companies can customize by adding logo, etc to buy in bulk for their employees” (Patagonia).

To buy from Patagonia Corporate Sales, customer must order at least 50 products at first and all other orders preceeding have to be of at least 10 products.

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144 point of sales

joint venture funds Patagonia Works is the holding company which encompasses Patagonia Inc. (apparel), Patagonia Provisions (food), Patagonia Government Sales, Patagonia Media (books, films, multimedia projects), and Fletcher Chouinard Designs (surfboards). Patagonia also started their joint venture fund previously called $20 Million & Change and now titled Tin Shed Ventures. Tin Shed Ventures invests in “environmentally and socially responsible start-up companies” that have a positive impact in clothing, food, water, energy, and waste (Tin Shed Ventures). Tin Shed Ventures currently partners with Wild Idea Buffalo, TERSUS Solutions by CO2 Nexus, Bureo, Watershed Mills, Beyond Surface Technologies, Solar Funds, Yerdle, California Safe Soil, NuMat Technologies. These venture funds help the next generation of responsible businesses get on their feet and also reenforces Patagonia’s efforts to uphold their B-corporation standards.

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advertising activities Patagonia’s mission to solve problems in the world is very much a part of how they engage with customers. Because of this reason, that engagement puts a low priority on advertising. It’s the “dead last” thing Patagonia wants to do. Patagonia spends approximately 20% of it’s annual revenue on advertising annually.

Patagonia’s advertisements are always meaningful and serve the purpose of helping in the conservation of the environment. Because of the way in which their campaigns are elaborated, Patagonia’s purpose is never to sell a product but rather send a message to encourage their customers to shop only if they really need to, and to repair, reuse and recycle old products instead of buying new ones. Patagonia’s very well-thought campaigns strive to change shoppers’ mindsets and to raise consciousness about environmental issues and the impact that clothing has on the environment.

Patagonia’s advertising activities are executed through both traditional and digital forms of communication, being digital the main focus. Patagonia has a strong social media presence. Instagram and Facebook are the most strong, with 2.4 Million and 889,938 followers respectively. Their presence in Twitter, YouTube, Vimeo and Pinterest is also active, continually growing and cohesive with all other platforms and channels. Another of Patagonia’s biggest assets is the Patagonia Ambassadors, who share their experiences and performance of their products through videos on all of Patagonia’s social media platforms as well as in The Cleanest Line, Patagonia’s blog. page 14

D on’t Bu y T his Ja cke t

This 2011 Patagonia advertisement showed the cost to the environment of one of their bestselling sweaters, inviting consumers to reconsider before buying the product and instead, opt for a used Patagonia product. As a result, the company’s revenue increased about 30% reaching $543 million in 2012 and a 6% growth in 2013. It was featured as a print full-page ad in The New York Times and also shared through digital channels.

Worn Wear P ro gra m

This was series of events in which consumers are taught to fix their old, used clothing (Patagonia or other). Consumers can share their stories through the Worn Wear blog and Instagram. Patagonia also has a truck that goes across the country to repair and recycle used clothing and customers can sell their used Patagonia gear back to them. The most recent tour is the Spring 2017 Worn Wear College Tour.

Ant i-Black Fr iday

In 2016, Patagonia held a campaign against Black Friday. This campaign encouraged customers to get their items repaired instead of buying new ones. It received a lot of buzzed and ironically boosted Patagonia’s sales. page 15

current target customer

Age: 26-50 Sex: Male and Female Relationship Status: Single or Married

Income: $60,000-$100,000 Education: college educated Location: lives somewhere in close

proximity to a beach, mountain, or lake

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Patagonia’s target customers are overall very active people who love being outdoors. Whether it is fishing, hiking, surfing, or climbing, customers are 100% committed to their sport. Patagonia customers live a healthy lifestyle and care about not only what is being put into their body but also what is put on their body. They are activists for the environment and want to find solutions for problems in the world. They advocate for sustainability and conservation of the environment and voice their beliefs and morals.

Customers are environmentally conscious and often times seek out organic products when purchasing items. When shopping, they look for quality, durability, innovation, and overall products that won’t harm the environment. Patagonia customers are willing to pay more for quality products that last long.

At the same time these customers are also very conscious consumers who don’t overbuy products and make sure their purchases are bought for a purpose. Patagonia customers seem to be very loyal to the brand and come back year after year for their quality products.

Patagonia customers aren’t big on technology usage because they are a slightly older demographic.

But they do acknowledge technology when it serves a bigger purpose. Patagonia’s target customers appreciate technology in performance fabrics and they use technology to increase performance in a certain sport. Customers incorporate technology into their lifestyle when they believe that it can benefit the future of our environment.

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Shawn Ellis Age: 26 years old Sex: Male Relationship Status: In a relationship Occupation: Research and Developper at Water and Conservation Center Income: $60,000 Education: studied Enviromental Science at University of Ohio Location: Santa Monica, CA

Shawn truly lives and breathes surfing. He finds himself constantly chasing the waves. He has his own YouTube channel where he posts surfing videos as well as videos where he speaks out about global issues. He also frequently stops back in at University of Ohio to talk about his surfing experiences and how he has directly seen an impact on the environment while in the water. When Shawn is at home, he enjoys hanging out with his girlfriend and skateboarding on his self-built halfpipe in his backyard. page 18

Lena Caldwell Age: 35 years old Sex: Female Relationship Status: Married Occupation: Environmental

Consultant Income: $100,000 Education: Received her undergraduate degree at University of California - Santa Barbara, received her Masters in The Master of Environmental Science and Management (MESM)-The Bren School of Environmental Science & Management

Lena met her husband Brett in Santa Barbara while finishing her master’s degree. She enjoys weekend getaway trips with their 3 and 5 year old sons, Clark and Blake. Lena shops Patagonia because she knows she can get quality products for any activity for the whole family. When they can get their sons off the ocean, they head upstate for skiing but they always look forward to their week camping excursion with old friends from college every summer. page 19

Steve House Age: 48 years old Sex: Male Relationship Status: Married Occupation: Professional Mountain

Guide, Climber, Author, Patagonia Ambassador Income: $80,000 Education: Received his Bachelor of Science in Ecology from The Evergreen State College Location: RIdgeway, CO

Steve has led the charge to climb bigger routes faster and with less equipment than anyone before. He also co-founded and co-operates a non-profit organization to mentor young climbers to safely become better alpinists. In 2010, Steve fell approximately 25 meters while lead climbing on mount Temple and broke six ribs, collapsed his right lung, fractured his pelvis and several vertebrae in his spine. Shortly after his recovery, he set off for the Himalaya to climb Makalu, the fifth-highest mountain in the world. page 20

omnichannel audit

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874,301 followers Facebook is one of Patagonia’s largest platforms with 889,938 likes and 874,301 followers. Patagonia posts daily about what is happening in their company, products, brand ambassadors, the environment and travel. Posts are very engaging and Patagonia is very responsive to commenters. Patagonia also posts about upcoming events and outdoor activities they are posting. There is a direct link to Patagonia’s website and products are shoppable from Facebook.

2.4 million followers Patagonia’s Instagram is the platform with the biggest following with 2.4 million followers. Posts are diverse content of environmental shots, current initiatives, products, and brand ambassadors. Patagonia is engaging and responsive to follower comments.

Instagram aligns with all other platforms and what is posted on Instagram will appear on other platforms. Patagonia should look into making their products shoppable through Instagram.

340,000 followers Patagonia’s Twitter has 340,000 followers and is continually growing. Although it’s not a leading platform, there is a large following and high engagement levels, with many likes and retweets. Patagonia tweets daily about a variety of topics from products, politics, and the environment. Patagonia also uses this platform to respond to customers who tweet them with questions regarding returns or future purchases.

668,416 followers Patagonia’s Google Plus platform has a large following of 668,416 followers with cohesive content as other platforms. The platform has not been updated since December 2016 and Patagonia should consider if it’s still relevant.

# of followers unknown Pinterest is used as a platform that’s dedicated to products and inspiration. These posts help relay the brand lifestyle and vision. Patagonia’s pinterest has 48,900 followers and high user engagement levels with lots of repins. Products being posted should adapt a shoppable link.

80,294 followers Youtube is a growing platform for Patagonia. They have created playlists with videos that cater to a specific activity that a viewer may be interested in, such as, trail running or surfing. They have also created videos showing off their products. These videos demonstrate the fit and functionality of specific products and highlight what they are best for. These videos are great for shoppers who do not live near a Patagonia store, but are still willing to spend the money on their products. Lastly, Patagonia’s Youtube is very cohesive with their other social media accounts. It highlights their current initiatives and links to all other social media profiles. page 22

When entering the website the hero banner rotates newest collections, learn about new technologies with CTAs like “See the whole System�- shows their willingness to educate customers. The strongest element of the site lives at the top header of all pages it is the main navigation with a clear drop down menu for retailing and a separate one for company information and initiatives. The top bar allows consumer to navigate which type of experience they want being retail or research. With Patagonia has so many initiatives including their food line called Patagonia Provision and it lives on a different website. It’s a seamless transition between Patagonia. com to Patagonia Provisions that creates ease not confusion.

Patagonia stay true to their ethics and brand by posting their mission statement on the dropdown menus, a place every user will see. Search bar is highly visible which is necessary with the high amount of products and information but can be overwhelming if you are just browsing the site and not looking for a specific product. Online customers can chat live with Patagonia Customer Service Reps Monday-Thursday from 6am to 8pm, Friday from 6am to 7pm and weekends from 7am to 5pm (PT). The Live Chat button will appear under the question mark (top-right corner of the page) when their representatives are available. In terms of products, a multitude of visuals are provided for each product, most also have videos explaining the product in depth. In depth description of fabrics and technologies and what it will do for the body or sport are all available on the product page. The best part? They have free shipping on orders of 75 and up! page 23

retail space audit

Patagonia truly goes above and beyond when it comes to being environmentally friendly and ethically sound. They not only think about the products they are producing but also their stores. All of their stores are made using recycled materials or materials that are ethically and locally sourced. The New York store in Meatpacking is a great example of this. The store was made using wood that was, “salvaged from warehouses standing along the nearby High Line” (Badore). They also used reclaimed tin and windows that they found on site. In addition, Patagonia worked with manufacturers in Brooklyn, “to minimize the embedded energy costs of shipping as much as possible”. All the signage in store are also made from recycled materials. Patagonia does a really good job of educating their customers when they are in a Patagonia store. Not only do the employees know everything about all the products, but they also provide signage that educates the customer on the type of fabric or water waste that goes into making a product.

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catalog audit

The catalog has visually appealing content; award-winning images captured by some of the world’s best outdoor photographers. If viewing the catalog on a computer, smartphone, or tablet, images are clickable and direct the customer to shop on the website. Detailed information about size, fit, color and price is included. Short essays on the environment and field reports from Patagonia ambassadors, customers, friends incorporate information about the products, their properties and performance. The catalog educates the customer about products and philosophies, and is also consistent with all other channels.

“We publish catalogs throughout the year that reflect what we love: quality outdoor clothing for a wide range of sports, award-winning images captured by some of the world’s best outdoor photographers, essays on the environment and field reports from Patagonia ambassadors, customers and friends.” -Patagonia

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Introducing...

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virtual reality at patagonia The strategic initiative that we plan to implement in Patagonia is an in store VR experience. We plan to simulate the experience of surfing, climbing, fly fishing etc in a Patagonia garment. The objective of this project is to increase the customer experience within the Patagonia retail environment. We also want to reach the millennial customer base through integration of new technology and providing an experience that will capture the attention of the current customer. This VR experience will allow customers to experience a location and sport that they might normally be able to experience. We plan to push social media marketing to attract the millennial customer while still communicating with Patagonia’s current target customer. This VR experience will create an initiative for customers to come into the store more frequently and purchase products or just interact with the brand. Many loyal Patagonia customers, find themselves only coming into the store once or twice a year, because the product are of such high quality and durability.

But, we believe that by incorporating an interactive technology in the retail space will help bring customers in the store more frequently. page 28

justification Through the implementation of the VR experience for Patagonia, the main objective is to attract the millennial customer while still communicating with Patagonia’s current target customer. By offering unique in-store VR experiences in which the customer will be the protagonist, customers will be able to put their Patagonia products of interest to test while experiencing exciting adventures in our stores. Through this initiative, Patagonia will be able to engage the millennial customer, who is curious, technologydriven and often seeking for exciting experiences. With the implementation of the VR technology we are also addressing the technology and VR industry trends as well as best practices from other companies such as Charity Water, The North Face and The New York Rangers.

The long term benefits of the VR experience for Patagonia include establishing relationships with the millennial customers by evoking interest in Patagonia’s culture and lifestyle while demonstrating that our approach to product is focused on simplicity and utility.

We also want our customers to know that in each sport, reward comes in the form of hard-won grace and moments of connection between us and nature. Our purpose is also to change the mindset of consumers by raising consciousness about the impact of the apparel industry on the environment, encouraging them to think before purchasing a product. By enabling the customer to visualize products and their performance in real environments through an exciting experience, this initiative also holds the company even more responsible for creating high-quality sustainable products. The implementation of a VR experience for Patagonia also encourages other companies to be more innovative and transparent and challenges our competitors to take similar initiatives.

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supplier We Make VR is based in Amsterdam and is a company that considers themselves a key player in the virtual reality market. WeMakeVR ”is a pioneer in the world of Virtual Reality and has been creating VR-experiences since 2013. We want to bring you true moments of joy with the greatest virtual reality experiences. We created a revolutionary camera system to produce true immersive 3D films for virtual reality” (WeMakeVR). They have previously worked on projects with Tommy Hilfiger and Ecco to create a virtual reality experience in their stores. They are a full service VR company that offers everything from video concepting and production to building the in space for an in store experience. Last year the productions that the company created cost their clients around $10,000-$210,000. Patagonia’s VR project would cost the company roughly $20,000-$60,000 to create a film and also install the store structure through WeMakeVR. WeMakeVR would handle the video production, editing, and installation. They provide the VR goggles as well as headsets. We chose WeMakeVR because they were one of the less expensive companies to work with compared to other companies that we had researched (See Appendix B). We believe that their prior experience making a VR retail space makes them the perfect company to collaborate with. WeMakeVR seemed very knowledgeable in their field and was a company who we communicated with easily. They were very willing to answer any questions we might have as well as educate us further on the process that it would take to make VR in Patagonia stores.

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x in collaboration with

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market analysis

Virtual reality (VR) immerses a user into an imagined world or simulates presence in the real world. This technology was listed as one of the mega trends for technology in 2017. According to Goldman Sachs, revenue from VR and AR hardware and software is expected to reach from $80 billion to $182 billion by 2025. Many retailers are already implementing this technology into their stores. Lowes has done this by allowing customers to view their remodeled space through VR. Many fashion retailers have also begun implementing this technology. In 2015, Tommy Hilfiger invited shoppers to immerse themselves in the Autumn/Winter show through VR headsets in store.

Patagonia’s direct competition The North Face has also used VR. Partnering with Jaunt VR, The North Face has created multiple videos allowing the customer to feel as they are in that environment.

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proposed target consumer Steph Augustine Age: 23 years old Sex: Female Relationship Status: Single Occupation: Marketing Coordinator at Earl & Brown, a virtual supply company Income: $60,000 Education: Received her Bachelor’s

in Marketing from Concordia University Portland Location: Portland, Oregon Belmont Neighborhood At work Steph has accounts like Amazon and Nordstrom, she finds the world of these larger scale companies gives her insight on how the industry runs behind the scenes and how ethics can be so important. She likes to give back to her community by shopping local because she works with big retailers all day. Her weekends are spent being active and outside with her pup, Kylo and getting to Stumptown Coffee on Sunday’s before the line gets too long is a must. She can never decide if yoga or pilates will be her workout of choice before work but she loves that she can book all classes on her phone through an app, technology is a convenience she can’t live without.

We believe it is a strategic move for Patagonia to target the millennial generation when starting a VR project in their retail space. Through research of consumer trends and retail environments, it is evident that millennials are experiencers. In A recent survey, Almost three-quarters of Millennials are interested in virtual reality, with Gen X right behind them. Boomers make up a slightly smaller number” (GBrief). Millennials want to go into a retail space that is engaging and utilizes technology to create an experience, which is the goal of putting VR in Patagonia stores. Another key factor about millennials is that they don’t have the means to spend money on VR technology. GBrief explains, “Millennials are known to have thrifty spending habits, due to both growing up in a recession and having the highest student debts in history. Considering that a VR headset like the Oculus Rift is set to cost $599 at launch, that puts it outside of the price range that most Millennials are going to be comfortable with” (GBrief). By putting VR goggles in the Patagonia store, we are giving millennials a reason to come into our stores and use the VR technology that they have been wanting to get their hands on. We hope that through this strategic initiative we will be able to attract millennials to the stores and start a relationship between millennials and Patagonia. page 33

virtual reality storyboard: pick your experience

Introduction What do you do in your Patagonia? Footage and B Roll of stores, products, and people using the gear with voiceover.

VR Option 3: Climbing Climbers can see what its really like to be on the mountain, before the climbing looking at the journey up or after the climb embracing the feeling of victory when reaching the top.

VR Option 1: Surfing For the consumer interested in surfing gear, this video will allow them to visualize being inside some of the best swells while wearing our products.

VR Option 4: Fishing This fishing visualization will take the consumer from a day of wading in the river fly fishing, to a boat trip filled with great net catching. We left out the gory details for those with a softer stomach. page 34

VR Option 2: Hiking The hiking customer can be in the market for a multitude of products. This VR hiking experience takes them through rough terrain, icy paths, and going off the path for a quick swim.

W h a t ev e r a c t i v i t y, Patagonia is a good fit.

Conclusion of the products living within the retail space and the customer interaction with them. VR experience will shed light on the possibilities of what you can do wearing Patagonia.

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VR video concept

The Virtual Reality experience for Patagonia will consist of 4 options for the customer to pick from before they put on the VR goggles. We have decided to base our initiative around allowing the consumers to choose what kind of interactive virtual world they would like to be transported to. Since launching this concept in the spring, the 4 videos will be summer activities that Patagonia sells products for, those being: Surfing, Hiking, Climbing, and Fishing. When trying on different products, the customer can actually wear the merchandise while experimenting with the VR, allowing them to experience and visualize how the vest or shirt would feel while hiking or fishing. This variety in experience can increase the consumer connection and reaction because they can chose something they are interested in and wearing pieces that relate to what they are seeing through the VR goggles.

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user attention span

The user attention span in the digital media market has been on a decline since the launch of the internet. With microsoft releasing a study that says “the human attention span shortening from 12 seconds to eight seconds in more than a decade.�( Medical Daily, 2015). With this information it creates a bigger incentive for marketers to create compelling content. Luckily for Augmented and Virtual reality content, we find more engaging. With a recent study comparing three types of medias, traditional 2-D, flat 360-degree video and true VR, the results were promising for VR. It seemed to hold a 27% higher reaction from the test subject and they were engaged for 34% longer than the other medias presented (Marketing Dive, 2016).

With this information we feel like VR is the right choice for our in store consumer experience and a great way to engage our customers by telling a story. It is crucial to understand though that we must be strategic in the run time of our experience.

Even with engaging components, if too long we can lose user attention. When discussing with WeMakeVR, they recommended an average of 3-5 minutes. On the other hand the VR experiences we were inspired by and fit with our storyboard range from 6-9 minutes. Collectively we feel that with this research and consideration of our concept that we will aim to create a 5-7 minute VR experience and that is from putting the goggles and headphones on.

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the in store experience set up We have looked into other VR initiatives that were successful such as Charity Water and the New York Rangers (Appendix D), and decided on a smaller, well branded, semi-enclosed space with these other brands success in mind. For our initiative the semi enclosed space that we have created will flow with the branding of the Patagonia retail store. It was also important to have two stations for customers to use so that there is less wait time and they do not lose interest if one station is occupied. We have created a VR square that allows the customer to walk within a 4ftx4ft space so they feel comfortable while participating in the experience. This space is created by railings made of wood and metal, the same materials already used within Patagonia stores. Merchandised on the railing will be products that the customer can try on and wear during the VR video. Located in the three story NYC Soho store, the mock up created reflects the architecture and charm of this retail space.

From the elevated ceilings, the red brick walls, metal beam lined ceilings, and cohesive wood signage, this space truly reflects what VR could look like within the Patagonia retail environment.

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operational plan The operations for the VR initiative will begin with the VR concepting and contacting the Soho store to inform them of the upcoming project. The travel arrangements will be made for the Patagonia and WeMakeVR team during September 2017. The filming will take place in Argentina over the course of three weeks in October 2017.

January 2018 will be an important month for Patagonia.

This month will include the editing and finalizing of the film, finalizing and ordering the in store signage, ordering the mailing materials, and hiring a social media manager. This month the social media manager will develop the social media strategy for the initiative.

Prior to the launch the ad for Outside Magazine will be submitted for the April issue and software and VR film testing will begin. The month before the launch Patagonia will hire a in-store VR employee who will be in charge of helping customers with the VR goggles in store. The Google VR promotional goggles will also be sent out during April to start the buzz of the initiative.

One week before the launch on May 12th, 2018, Patagonia will fly out two WeMakeVR employees to help with the instore installation of the VR station buildout and connecting the VR headsets. During this time they will also train 5 of our employees; someone at corporate, the in-store manager, and three sales associates. The WeMakeVR employees will stay until the Monday after the launch to ensure all goes well.

Post launch Patagonia will work with WeMakeVR to fix any software issues and begin planning the installation plan for the next stores. Patagonia will also begin to concept ideas for the next set of VR experiences in store.

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PRELAUNCH

AUG '17 - DEC '17 JAN '18 FEB Preliminary Planning Hire In-Store VR Employee Hire Social Media Manager Travel Arrangements for filming Contact Patgonia Soho Store Order Mailing Material VR Video Concepting Content Development Film Edit and Finalize Film Finalize VR Video Finalize Instore Signage and Catalog Ad Finalize Outside Magazine Ad Print and Install Signage Development VR Testing VR Stations Store Buildout (4ft x 4ft) Develop SM Strategy with SM Manager WeMakeVr Train Patagonia Staff on VR Google VR Sendouts Technology Testing Software Install VR Stations VR Insurance page 42

8 FEB '18 MAR '18 APR '18

LAUNCH

POST LAUNCH

MAY '18 JUN '18/ JUL '18

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AUG '18 SEPT '18

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promotional plan The promotion for this initiative will begin in-house during August 2017, and continue through to the launch, and post launch.The concepting and planning for the film will take place between August and September.

Allowing for the filming of the VR experience to take place in Argentina in October. While in Argentina there will be four different experiences filmed. The will focus around hiking, fishing, climbing and surfing. By January 2018, the films will be edited and finalized.

In order to promote this initiative Patagonia will hire a freelance social media manager specifically for this initiative. Once hired in January 2018, the social media manager will begin designing the posts and creating a strategy. This initiative will be promoted through various platforms including digital media, print, and mail.

Beginning in March 2018, the social media manager will begin posting the created content. This will include Instagram promos, 3 weekly Facebook posts, 1 daily tweet, a new teaser clip to Youtube every month and email blasts. We will also ask our brand ambassadors to promote on their personal social media pages and blog. As for print, we will be putting an ad in Patagonia magazine, as well as, the April issue of Outside Magazine.

One month prior to the launch, Patagonia will send out cardboard VR goggles to the top customers in and around New York City. When they receive the goggles they will be able to preview a one minute teaser of the in-store video. The recipients of these goggles will include, Patagonia Brand Ambassadors, social media influencers, and frequent customers of the Soho store. By using influencers to promote the initiative it will create a buzz and curiosity in their followers.

The launch will be held on May 12th, 2018 on World Fair Trade Day at the flagship store in Soho, NYC. Fair trade is something Patagonia prides itself on and will be discussed and shown in the VR videos. Combining the two makes it the perfect day to launch this initiative.

After the launch, Patagonia will continue to post on social media to keep up the buzz. Results will be measured and Patagonia will plan for any software updates that need to be made. In order to bring customers back in-store after the launch, a mailer promo for back to school shopping will be sent out. After all updates are made Patagonia will begin rolling out this initiative to other top stores. The next roll out will include: Ventura, CA, San Francisco, CA, Seattle, Washington, and Denver, Colorado. The last roll out will include: Portland, Oregon, Austin, Texas, Chicago (Mag. Mile), IL and D.C. page 45

PRELAUNCH AUG '17 - DEC '17 JAN '18 Preliminary Design Social Media Posts Hire Social Media Manager for Initiative Create Social Media Strategy Order Google VR Goggles Create Contact List of Top Patagonia Customers Send VR Goggles to Top Patagonia Customers Content Concepting Film Edit and Finalize Film Digital Media Instagram Promo Facebook Posts ( 3 posts weekly) Twitter Posts (1 Tweet Dailey) Youtube Teaser Clips (New Upload every month ) Email Blasts Website Homepage Brand Ambassador's Promote on Blog Print Shopping Incentive for Back to School (Mail Promo) In-Store Signage Catalogue Ad Print Ad in Outside Magazine Post Plan for Software Updates page 46

FEB '18

MAR

B '18

LAUNCH MAR '18

POST LAUNCH

APR '18 MAY '18 JUN '18/ JUL '18 AUG '18

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SEPT '18

instagram post

facebook post page 48

catalog ad

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mailer page 50

cardboard goggles

(See Appendix D) page 51

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executive plans The executive plans are a combination of the operational plan and the promotional plan. It includes the total timeline of the entire project from concept production to social media promotion. The executive plan gives us the picture of the project as a whole and the time frame that is needed to execute the project. After seeing success in the launch of the first store, Patagonia will assess the executive plans and make the necessary adjustments.

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PRELAUNCH AUG '17 - DEC '17 Preliminary Film Edit & Finalize Film Finalize VR Video Hire In-Store VR Employee Hire Social Media Manager for Initiative Create Social Media Strategy Concept and Finalize In-Store Signage Finalize Outside World Print Ad Order Mail Supplies for VR Goggles Digital Media Create Campaign Content Instgram Promo Facebook Posts Twitter Posts Youtube Teaser Clips Email Blasts Website Homepage Implementation Install VR Stations Send VR Goggles to Customers Testing Software Install Instore Signage VR Stations Store Buildout (4ft x 4ft) page 54

JAN '18

FEB '18

MAR

18

LAUNCH MAR '18

APR '18

POST LAUNCH MAY '18 JUN '18/ JUL '18 AUG '18

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SEPT '18

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financial plans The total cost for the Patagonia VR Experience will be $471,500. That cost can be broken down into two different categories; Operational and Promotional. The operational costs include paying WeMakeVR $60,000 to help film the video, edit it, and install the technology into the Soho store. The total filming production fees will be $150,000. This cost includes the flights and living expenses for 10 people that are part of Patagonia and WeMakeVR for three weeks time. It will also include any wages that need to be paid to Patagonia employees, getting special equipment and the shipping costs. For the launch of the initiative there will be various operational costs. The first being hiring a new employee to manage the VR stations costing around $32,000. Other expenses will include flying two employees from the WeMakeVR team to the Soho store for installation ($3,600), training five employees ($8,000) and the buildout for the two VR stations ($2,000). The total operational cost will be $255,600.

The total promotional costs will be $215,900. The largest cost will be the print ad in Outside Magazine and the Patagonia Catalog equalling around $100,700. A freelance social media manager will also be hired for six months costing $70,000. The social media advertising is around $40,000. This will include managing the cost of all social media platforms. Cardboard google VR goggles will be sent out as a promotional costing around $1,000 and $200 for shipping. Lastly, Patagonia will work with the IT and Graphic departments to create content for the interactive in store signage.

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Operational Operational Total Technology Total Technology Cost Cost Travel Expenses for WeMakeVR(Flights/Hotel) Travel Expenses for WeMakeVR(Flights/Hotel) Cost Training Training Cost In store VR employee In store VR employee Filming Production Fees Filming Production Fees Store Build Out Store Build Out Operational Operational Total Cost Total Cost

$

Promotional Promotional Hire Social Hire Media SocialManager Media Manager for Initiative for Initiative Print Advertising for Outdoor Magazine and Print Advertising for Outdoor Magazine and Patagonia Catalogue Patagonia Catalogue SocialAdvertising Media Advertising Social Media Cardboard VR Glasses Google Glasses Cardboard VR Google Store Signage (Interactive In Store In Signage (Interactive Screen) Screen) Order mail supplies Order mail supplies

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Promotional Promotional Total Cost Total Cost

$

Total Initiative Total Initiative Cost Cost

$

$60,000 WeMakeVR will film the video/edit/install technology at Soho Store $3,600 This includes a 2 round trip flights from Amsterdam to NYC, and hotel $8,000 Train corporate, store manager, and additional hire and three other employees. $32,000 Training employee on VR and hourly pay of $12/hr 40hrs a week $150,000 Includes flights and living expenses for 10 people (Patagonia & WeMakeVR) $2,000 4ftx4ft buildout for the two VR stations $255,600.00

$70,000 cost of freelance employee for 6 months $100,700 1 page ad in Outside Magazine and Patagonia Catalog $40,000 Includes the cost of managing and posting on all social media platforms $1,000 pricing for 100 Cardboard viewers at $8.95 a piece from DodoCase VR $4,000 In house development project from IT and Graphic Departments $200 cost of shipping and packaging of Google VR goggles $215,900.00 $471,500.00

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conclusion

By creating an in store VR experience, Patagonia will not only cater to its existing customer but also attracting the untapped millennial market. The integration of VR in a retail space brings forward the excitement that consumers feel when they wear Patagonia. By bringing technology to the shopping experience, customers will be able to see first hand how the products truly work in their respective environments.

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