Patagonia SWOT Analysis

Our Patagonia SWOT analysis highlights the internal and external factors that affect Patagonia, such as Strengths, Weaknesses, Opportunities and Threats.

Patagonia is a heaven for adventure lovers. It is often said that adventure heads can be either seen participating in adventure activities or preparing for them at Patagonia's store.

If you are an adventure-loving person who often goes camping, climbing, or surfing, you have probably shopped at Patagonia to buy cool outdoor clothing and gear.

Patagonia is considered a renowned name in the sportswear industry. It is remarkable to see how almost a 50-year-old outdoor clothing brand is still relevant in the market.

This article will provide you with a detailed insight into your favorite outdoor clothing brand with the help of a SWOT analysis. This Patagonia SWOT analysis will highlight the internal and external factors that affect Patagonia. Make sure also to check out our PESTLE analysis of Patagonia.

All of you reading this article must be familiar with Patagonia, but do you guys really know how the brand came into being almost half a century ago? Don't worry, we will briefly tell you the history of Patagonia.

The founder of Patagonia, Yvon Chouinard, was an American rock climber. Initially, in the 1960s, he started a business selling rock climbing tools but later, he developed an interest in the clothing side, so in 1973 he laid the foundation of Patagonia.

Patagonia is more of a clothing brand, but they also provide equipment and gear used for different sports along with the clothes.

Although hundreds and thousands of clothing brands are in the market, what makes Patagonia different from others? Its entire focus is on the sportswear segment. Patagonia has always targeted the outdoor wear market since its vision was to provide comfortable clothes to the people doing different sports.

To date, Patagonia never shifted its vision. It is still selling only outdoor clothing and sports gear. Although it could have become a part of the mainstream fashion industry by selling formal or casual clothes, Patagonia is proud of its identity because that's what it is known for.

In 2021, Patagonia managed to generate revenue of $209.1 million. On the other hand, one of its renowned competitors, Puma, generated revenue of $7.91 billion. Looking at the difference between their annual revenue, we can conclude that Patagonia is comparatively a small clothing company. Still, it is giving a tough time to its competitors in terms of quality.

Patagonia has more than 70 stores across the globe. Other than the US, Patagonia operates in the Netherlands, Japan, South Korea, Australia, Chile, and Argentina. In addition, the outdoor clothing brand provides employment to more than 1000 people worldwide.

After sharing Patagonia's history and telling you where it stands currently, let's move on to see the strengths, weaknesses, opportunities, and threats that Patagonia has to face.

To discuss the internal and external factors affecting Patagonia, we will have to create a SWOT template of Patagonia that will highlight some of the factors that influence the growth of Patagonia.

Before starting off with Patagonia's SWOT analysis, we would recommend all our readers go through some of the examples of SWOT analysis to understand this article more deeply.

Patagonia Strengths

The strengths of any organization represent strong points that a company possesses. The strengths of any company help it increase its revenues and expand its operations. Companies try to have maximum factors as their strengths since strengths push the company towards success.

Privately Owned Enterprise

Private companies are the ones whose shares are not floated on the stock exchange. Although private enterprises have to undergo finance-related problems compared to public enterprises, on the other hand, owners of private enterprises are free to make decisions and change their policies without taking board members on board.

Since Patagonia is a private enterprise, its owner can make decisions and implement policies that he thinks are right. This is why Patagonia never compromised on its vision and remained connected with its roots.

International Presence

For the company's growth, a company must be present internationally. International presence helps increase the customer base and the company's revenue.

Patagonia realized the importance of international expansion timely and expanded its operations in different countries. Patagonia currently has over 70 stores worldwide; besides having retailing shops internationally, Patagonia also owns factories, farms, and mills internationally. Patagonia makes full use of globalization to benefit itself.

Environment-Friendly Approach

One of the biggest challenges that the world is facing currently is global warming. Although a lot of work is being done all over the globe to mitigate global warming, Patagonia is one of the companies that are taking practical steps against global warming.

Since 1985, Patagonia has given away 1 percent of its sales for preserving nature each year. Moreover, Patagonia is working to protect natural resources. All stores of Patagonia in the US and 76% of the stores operating worldwide are consuming renewable electricity.

This environment-friendly approach has kept Patagonia in the good books of pressure groups and has developed a positive image of the brand in front of the masses.

Good Reputation

Reputation plays an integral part in the success of a brand. Every company tries to earn a good reputation in the market, but only a few get it. Patagonia is one of the brands that has built a good reputation over the years through its acts and policies.

Patagonia's maternity leave policy brought a good name to the brand. Giving 16 weeks of paid maternity leave to women and 12 weeks to men was a really kind and humane gesture by the company.

Furthermore, Patagonia was also appreciated when it took a bold step to pull its ads from Facebook, claiming that Facebook was not addressing the issue of hate speech. Both policies helped Patagonia build a good reputation in the market, providing it a competitive edge over its competitors.

Patagonia Weaknesses

Any organization in the market has both strengths and weaknesses. Weaknesses account for factors that hold back a company from achieving its goals. Of course, every organization tries to convert its weaknesses into its strengths, but for that first, it's essential to know what they are.

Limited Presence in the Market

Brands are always looking forward to increasing their market presence to increase their revenues. Although Patagonia has a significant market presence, still it is very much less than its competitors.

As we discussed earlier, Patagonia has 70 stores while it operates in 7 countries. On the other hand, one of its competitors, Zara, has nearly 950 stores opened in 64 countries worldwide.

Due to the limited presence of Patagonia compared to its competitors, Patagonia is missing out on so much.

Low Salaries

Companies need employees to get their work done. Since companies know that most employees are money-driven, they give high salaries to their workers. In such an atmosphere, an average employee of Patagonia makes $32,030 per year.

On the other hand, employees of another clothing brand, lululemon, make $115,673 per year, almost four times more than what Patagonia is offering. This difference in the salaries will encourage the employees of Patagonia to move to some other brands, which will not be beneficial for Patagonia.

Controversies

Controversies bring bad names to the brand; brands are always looking for ways to avoid the trouble. Unfortunately, Patagonia has been a part of some controversies that have damaged its image one way or another.

In 2011, shocking news came out that Patagonia's supply chain was involved in human trafficking. This left its consumers in shock, causing damage to the reputation of Patagonia.

Moreover, recently a lawsuit was filed against Patagonia, claiming the brand exploited labor in Xinjiang, China. This lawsuit also caused damage to the image of Patagonia, which was built through hard work over the years.

Patagonia Opportunities

Opportunities are the chances that lie ahead of a company. Availing them can make a company grow. In this section, we will talk about the factors that can help Patagonia become a number one clothing brand.

Increase Market Presence

If you scroll up, you'll remember we have talked a lot about the weak market presence of Patagonia, but Patagonia has the opportunity to turn this weakness into its strength.

Patagonia can expand its operations to new untapped markets. This expansion policy will help Patagonia capture new markets and increase its market share.

Extension in Product Line

There are excessive brands in the market, but their product line actually distinguishes them from each other. So the very first thing a customer looks at is a brand's product line.

For nearly 50 years, Patagonia has offered almost the same product line. However, since Patagonia only provides outdoor clothing and sports gear, this has attached a stigma to the brand that it's only for people who do sports actively.

To change this perspective, Patagonia should include casual wear, formal clothes, and other types of clothes in its product line. This will attract more customers, and as a result, the brand's growth will be observed.

Converting to Public Limited

At some point in time, companies that are private limited choose to be public limited to solve their financial problems.

Since Patagonia is listed as a private company, it has the opportunity to list itself as a public limited company. This will not only solve its financial problems, but it'll also bring some fresh brains as shareholders to the company. This change can turn out to be really beneficial for the brand.

Patagonia Threats

No matter how big an organization is, every organization has to face threats from the external environment. Threats are the factors that can halt a company's growth, and if these threats are not countered on time, they can be pretty damaging for the company.

This section will discuss some of the threats that Patagonia faces.

Pandemic

After COVID-19, the pandemic is considered a constant threat by businesses. Operations had to be stopped all over the world due to COVID-19 which resulted in great losses for the companies.

Patagonia also suffered a lot due to COVID-19. Due to the lockdowns imposed by the government, Patagonia went through severe financial troubles. During the COVID-19 crisis, the brand closed its 39 stores in North America.

Although a drop in the COVID cases has been observed and life is turning back to normal, the pandemic threat is still there.

Climate Change

Climate change is considered a global threat. Although it is a threat to the entire planet, it affects some industries directly.

Climate change is a threat to the garment industry. Extreme weather causes harm to the yield of cotton, which is the prime input of the clothing industry. Shortage of cotton will cause disruption in the supply of cotton, and operations of Patagonia will be affected.

Tough Competition

There are a lot of clothing brands that offer similar products at quite similar price ranges as Patagonia, such as The North Face, Columbia Sportswear, and Marmot. As time passes, the competition in the clothing industry is increasing day by day.

Such a competitive environment is a threat for Patagonia since this competition can even push Patagonia out of the market. To counter this threat, Patagonia must think of ideas to look different.