Posts Tagged "MHE retail"

Patagonia, is a symbol as an innovative brand and pioneer in the proactive environment protection . With more than 45 years behind it, it is the ultimate exponent of a company that assumes as its authentic mission its own the value of the durable, “Patagonia is in business to save our home planet”.

Impact Environment-patagonia

Far from being a passing fad, Patagonia has dedicated, for more than fifteen years, 1% of its sales to finance and promote initiatives directly aimed at reducing the human impact on the environment.

Through its Patagonia Works entity, it selects, organises and develops all kinds of activities to reduce the impact on the environment with professionalism, rigor and at the same time, proximity and with activism, sometimes not complacent with the established status.

It develops more than 2,500 activities a year with strong involvement of local communities.


Outdoor Segment

It is not by chance that the founder of this company specialised in Outdoor is passionate about mountaineering. The same is true of other companies such as Mont Bell (Japan) and Rei (US) where the business’s precursors are in themselves, genuine passionate about free- to- air activity and develop their businesses with an exquisite proactive defence of the front-patagonia

With strong larger competitors like Columbia, North Face, Patagonia has made progress in revenue and profitability. Its positioning with a price level slightly higher than its two main rivals has been no obstacle to continue to count on the loyalty of its costumers.

It hasss a small network of about 50 own stores, direct ecommerce and maintain the wholesale channel as its main distribution route.PVP medio-ingles-min


Amplitud Opciones ingles-min


Mhe works for major chains and brands improving retail strategy and operations 

Retail Operations


Product Assortment

Each product they incorporate is audited in detail to ensure that it is designed and produced with the least impact and that it fulfils, in a lasting way, the functions to which it is intended.

The progressive use of recycled materials for its products is a reality.

material recliclado ingles-min


In addition, Patagonia proactively promotes the arrangement of those garments that for their daily use need a repair so that they continue to be used, either by its original customer or through its “Worn Wear” service by another customer thus giving a second life to the garments.

Repairs are carried out through its Central Specialised Center (Reno), as inside its shops and flying workshops with planned itineraries.

Patagonia WearWorn-patagonia


Given the importance of food, Patagonia has introduced a newline of business (Provisions) to offer an environmentally friendly assortment specially designed for use in outdoor activities.


Patagonia Provisions Food-patagonia


Innovative initiatives for its employees

The working environment for its employees is consistent with the values it pursues and has a number of innovative initiatives that have managed to provide the lowest turnover rates in its USA sector:

  • 100% of women with maternal leave return to work
  • Own facilities and services for the care of younger children
  • Flexibility to enjoy with 21 weekends (three days) a year to be able to develop free-to-air activities with their families
  • 1.5 million km reduction in car journeys by its employees

Transparency and best practices for the outside

Patagonia has a clear policy of transparency and shares its best practices with other companies, including competitors, to the extent that it results in less impact on the environment. Altruism well understood.

Key findings

  • Genuine matters
  • Not always happy with the current situation
  • Innovating always chasing the durable. A certain taste of RETRO
  • A well-understood activism to defend values is not against  profitable commercial business and in fact facilitates a strong bond with your customers.

We need more “Patagonias” in other sectors!



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Continous increase of e-Commerce sales participation in all retail sectors than comes with an slight Ebitda reduction during the last five years


Restoration Hardware

  • Tell me in which retail sector you are and I will tell you what percentage of your sales should come from eCommerce (from 4% in mass market sector up to 22% in leisure/technology . Also what growth perspective you should have.
  • MHE, retail consultancy, has analysed the results and eCommerce performance in 55 retail chains representatives of major sectors such as fashion, leisure/technology, home, health and beauty and mass market formats in USA during the last five years (2016-12). This market provides good and consistent data and available to the public. 



e-Commerce participation  as a % of total salesTarget-electronics-Interior

  • e-Commerce already represents 9% of total sales in the whole group of retail chains selected
  • Leisure/technology sector keeps on heading the group (22 %) without any surprise in the sales
  • Starting point was not very similar depending on which sector you are but as time goes on, a convergence of major retail sectors can be perceived. Home sector, with an outstanding +23% eCommerce CAGR sales growth is catching up quickly
  • Health & Beauty are coming closer and closer in many aspects and eCommerce is not an exception for this merging trend.



e-Commerce CAGR sales growth  per retail sector in period 2016-12 

Yearly growth rates across sectors can be grouped in three bands:

  • Home goods with 23% CAGR
  • Leisure/technology with 16% CAGR
  • Fashion, heath and beauty and mass market with 11-12% CAGR


Impact on Ebitda

  • Ebitda has suffered an small erosion during the period 2016-12 reaching 6% of sales in year 2016
  • Negative correlation is shown below between eCommerce sales share and achieved Ebitda. This reduction can be caused by several factors including lower prices, higher operation costs (certainly at the incipient eCommerce phase) and potential store sales productivity linked to eCommerce cannibalization


“Winners” segment

  • We have identified a group of retail chains (winners) that are over performing in the period of 2016-12 to check how eCommerce is doing in these organisationsulta-beauty
  • e-Commerce sales mix (15%) in 2016 is much higher than the average for the whole companies group (9%)
  • Winners are enjoying a higher substantial CAGR in sales over the period (2016-12). What really makes “winners” different is the CAGR sales growth for their physical stores 12%. Therefore, it is clear that their good performance is not only based upon eCommerce activity but improving significantly also their stores productivity
  • On the other hand, Ebitda has suffered during the same period from 19% on sales to 16% in year 2016

Future developments in the retail sector will not be purely eCommerce based, spite of its continuous sales growth. The transformation should include as well a clear physical store improvement task.

The main challenge ahead in a growth mood will be to sustain the current Ebitda (as % of sales) and satisfying at the same time new Omnichannel customer expectations.


MHE retail consultancy, works for major brands and retail chains to improve strategy and operations in an Omnichannel environment.

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