Woodward's observation touches on a common refrain about Patagonia's products: They may be good, but they sure are expensive. And with consumers facing some lean years ahead, price and value have become strong marketing considerations. In that context, Chouinard's "quality at all costs" tenet seems out of sync with the times. That dichotomy is best expressed by Patagonia's artful catalog of premium-priced clothing, set off by plenty of nonrevenue-producing editorial copy and white space.
Listen to Eddie Bauer's Wayne Badovinus, who says: "I'd love to do a catalog in which I don't have to worry about the productivity of each page, but in the current economy there's no opportunity to do that. The consumer is just too tough."
Or listen to Gary Snook, the founder of Performance Bicycle Shops, a $50-million discounter of quality cycling equipment and apparel, who rigorously tracks the selling power of each item in his catalog. "Price is important in the '90s. People are more and more value conscious all the time. Patagonia's stuff is beautiful -- and it's expensive."
Chouinard remains unfazed. Supply and demand is a nonissue; margins will not erode. Rather, he foresees an era when people "will consume less but consume better." They will come to Patagonia, "where we build clothes where the buttons don't fall off." Competition, as well, is beside the point; Patagonia has no pressing need to grow. "We don't have to worry about getting bigger. If I wanted to be a Nike someday, I'd be worried, but as it is, I have no clue what our competition is doing."
Well, what about his customers? Does Chouinard worry they might desert in a value-conscious time? In fact, Chouin ard wishes his best customers would go away. The reality behind the rugged Patagonia image is that the company's core market is affluent and urban, people who spend their days in high-rise buildings, not on the sides of mountains. Lamenting the company's direction in recent years, Chouinard says: "We outgrew our loyal customer base and increasingly were selling to yuppies, posers, and wanna-bes. These people don't need this shit to get in their Jeep Cherokees and drive to Connecticut for the weekend."
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Mixed Signals
A number of people interviewed for this story can recall times when Chouinard actually wanted everyone to wear Patagonia products. The vacillation between an elitist and a populist approach to clothing the ecobrigade jibes with one former manager's observation that Chouinard is given to mercurial shifts in thinking, often revealed at the last moment. "One thing that frustrated me about the company was its lack of constancy of purpose," the manager says. "One day we'd be learning how to do business the Japanese way; six months later we'd be on to something entirely different. It ended up confusing the employees."
Compounding the confusion, Chouinard was gone for at least half of each year. And yet, as Galliano Mondin notes, "he was still just a phone call away." Rarely, if ever, did designs escape Chouinard's approval, despite his intermittent presence in Ventura. "Yvon got so much respect in the company that people would listen to him over the professional managers."
In 1990 Patagonia began ramping up production in pursuit of $250 million in sales -- as the founder's thinking took yet another shift. Chouinard now says that a couple of years ago he began to read widely on the subject of Deep Ecology, an ideology that ascribes rights to all living things and demands that human activity be ordered around that principle. It is the philosophy that has driven his company since then.
Chouinard may have embraced Deep Ecology, yet he had, nonetheless, set in motion a process that was promoting deep consumption. He had set up a competitive, byzantine internal system that was beginning to produce a lot of similar product lines that would simply end up bloating the catalog and cannibalizing one another's sales. By 1991 the Patagonia catalog would feature 375 different styles, many of them "sport specific," rather than "multifunctional." One of the more frivolous examples, Chouinard now admits, was volleyball shorts. "Who needs those to play volleyball?"
Chouinard's private doubts about Patagonia's direction led him in early 1990 on a pilgrimage to Florida, where he met with Michael Kami, a former head of strategic planning for IBM. Kami put a lot of direct questions to Chouinard, the most basic being: Did Chouinard really want to be in business to begin with? And, if not, why not sell the company and set up an environmental foundation? Chouinard's response was less direct, according to Pat O'Donnell, who accompanied Chouinard and his wife on the trip.
"He decided to take a year off and head for Europe."
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The Crash
What Chouinard saw in Europe affirmed his gloomy -- and revisionist -- view of the company. He walked into stores where Patagonia products were poorly displayed or where he knew they didn't belong in the first place. Patagonia, he believed, was pumping out too much product for too many nonbelieving dealers to sell to too many mindless consumers. Three months into his yearlong sabbatical, Chouinard returned to Ventura.
At that point, the inclination of most managers might have been to stay close to home and batten down the hatches on the business. Instead, in January 1991 senior management went on a three-week retreat to Patagonia (the real place). There the prime topic of discussion was "the next 100 years." Chouinard's deep and ecological idea was to run the company along "self-sustaining" principles, and this was the notion he wanted to explore down at the end of the world.
Meanwhile, inventory was choking the company, a reality revealed by the numbers in February. They revealed zero growth in Patagonia's domestic business for the fiscal year ending in April, recalls Vincent Stanley, head of Patagonia's wholesale division. Senior management needed to start worrying about the next 100 hours.
