How Nau? Interview with Eco Activewear Purveyor - Part 1
Nau, the Eco outdoor apparel company, has had a rather tumultuous year. The year began with them continuing to garner praise from all quarters not only for their highly designed and detailed clothing made only from sustainable materials, but also for their bold environmental business practices, like 5% corporate philanthropy and innovative 'webfront' retail stores, where customers received a discount for having goods shipped rather taking them home! But in May the adventure drew to a sudden close when, in a foretaste of the now familiar credit crunch, their venture capital funding dried up. Yet, six weeks later, it was announced that Californian outdoor lifestyle apparel company, Horny Toad, was throwing them a financial lifeline.
Last week they opened up the website of a brand new Nau and their Fall 08 line to their newsletter customers. Today it will go live for everyone else. (And come November Nau will also be in 10 retail stores.)
The site is no longer that slow-as-treacle Flash based thingamee of the past, now its heaps nimbler. Diehard customers will find some of their old favourites have returned (yes, the Rider jacket is back) and a few new styles as well. The colour palette is likewise a mix of the old and new. With the same being true for the pricing, some are up, while others have remained static. We caught up with head of marketing at Nau, Ian Yolles, to find out more about the metamorphosis from Nau 1.0 to the new Nau. (as with past interviews he consulted with the other staff, like Mark Galbaith and Josie Norris on some of the questions.)TreeHugger: Patagonia and others have been doing recycled fleece for decades, organic cotton Tees are now quite common place, the American market is awash with green fashion, umpteen companies are signed up to 1% of the Planet, ete, etc. So what was it about Nau 1.0 that so uniquely resonated with customers, that they responded with such an outpouring of angst when the company announced its closure? :
Ian Yolles for Nau: You're right, there are a variety of companies doing some pretty cool things in the sustainability space. From the beginning we never felt lonely. In fact, we felt as though we were a part of a larger emerging community made up of progressive businesses and organizations. Of course, Treehugger is a great example. We think of you as kindred spirits. We certainly feel the same way about Patagonia. In fact, we probably wouldn't be doing what we're doing without their pioneering leadership.
More specifically, I think we cultivated a strong community of interest in a relatively short period of time based on two primary factors. The first is our product. We knew we aspired to do some pretty interesting things, but from the beginning we recognized the single most important thing was to have a relevant, differentiated point of view when it came to our product. We set out to design product that seamlessly integrated beauty, performance and sustainability. Conventional thinking suggested that wasn't possible — that somehow when it comes to product design those things are mutually exclusive or antithetical to one another. But, we never accepted conventional thinking and the result is a product line that in many respects represents a new genre of apparel. It seems to have resonated with our growing community of customers.
Reason number two, perhaps, is that we did and how we did it was bold and audacious. We set out to design an entire company from the ground up with sustainability at the center of our thinking. We challenged conventional paradigms when it came to our approach to philanthropy, the notion of "business unusual" and the way we engaged with our community. In some ways it was the right set of ideas at the right time. It seems to have struck a chord. Of course, the irony is that although people responded to what we did and how we did it, that same bold audacious approach may have simultaneously contributed to the demise of Nau (version 1.0).
TH: With the benefit of hindsight, what might've been done differently to ensure longer-term success for Nau 1.0?
Ian: This question has been asked time and time again by multiple parties and, believe me, we've asked this question innumerable times ourselves to see if we can extract relevant learning's. In fact, I'm sure we'll continue to ask it.
One part of me thinks that had we done anything substantively different, it wouldn't be Nau. Sometimes innovation and disruption of entrenched thinking requires bold, audacious steps. Another part of me thinks the ideas were right, but some of the execution was flawed. One example - our website. From a usability point of view it didn't perform up to our, or our customers expectations. We certainly hope the new website we've just launched is a vastly improved user experience, although you should be the judge of that. Definitely let us know what you think.
In the bigger scheme of things, I think our ultimate Achilles heal was the aggressive nature of our business plan. When we were confronted with the dramatic and sudden downturn in the broader economic landscape, it proved not to be viable given our dependence on successive rounds of external financing. We learnt some hard lessons. As a result, we've now built a plan that is more conservative and has more built in flexibility so we can adjust to the nature of the response from our customer community.
TH: What general lessons were learned from Nau 1.0?
Ian: We've been humbled. Our original plan was bold, somewhat audacious and definitely aggressive when you consider the fact that we were building a product line, creating a supply chain, designing our own distribution channels (including a new approach to retail) and launching a brand, all from scratch. There were a number of moving parts that required multiple competencies. Given the investment capital that was required, the net result was that we had a fairly aggressive growth plan. If the capital markets hadn't changed so drastically, perhaps Nau (version 1.0) would still be around. On the other hand, perhaps the key learning relates to the scope, scale and complexity of the plan, which we've attempted to address in Nau (version 2.0). As Gordon Seabury (our new partner and the CEO of Horny Toad) likes to say, we've adopted more of a "build it as they come" philosophy.
[NB: See a comprehensive interview with Horny Toad's Gordon Seabury on the Nau aquistition in this article from Apparel Magazine]
The other key learning is that we were on to something in Nau (version 1,0). I'm referring to our design philosophy and how that was brought to life through our product, coupled with the underlying ethos of Nau. Both seemed very ripe for the times. Evidence of that fact was expressed through the incredible outpouring of response from our customer community when we announced we were closing the business. There was disbelief and colorful commentary about what people had to come to love about Nau during the relatively short period of time our business was up and running. That's why our design philosophy, product and way of doing business will not change as we move forward.
TH: What is about the original company model that Nau staff now laments they are currently not in a position to continue with?
Ian: You know, that's a tough one. When we set out to see if we could re-launch the business, we knew there were fundamentals about our philosophy and overall ethos that couldn't change. If they did it wouldn't be Nau. We wanted Nau to continue. Our customers wanted Nau to continue. If the underlying principles changed it would no longer be Nau — it might be a business, but it wouldn't be Nau. Fortunately Gordon Seabury, The CEO of Horny Toad and our new partner, agreed wholeheartedly. On the other hand, we knew parts of the business would have to change. We couldn't just wake up and pretend that nothing had happened.
The most significant change to our business is the shift in our distribution strategy. We're not going to re-open our retails stores. Instead we'll continue to sell our product via nau.com and partner with select retailers across the U.S. (hopefully we'll think about broader international distribution soon) like Paragon in New York City, Uncle Dan's in Chicago and Lizard Lounge in Portland, Oregon. Do we lament that change? I don't think so. We think it's appropriate and necessary given our desire to serve our customers and build a sustainable foundation for our business.
By the way, the same thing could be said about the evolution of our Partners For Change program. We absolutely knew the program had to continue. It had become synonymous with Nau. But the shift in the donated amount, from 5% of sales to 2% of sales, and the shift from 33 to 6 non-profit partners seems totally appropriate and symmetrical with the current scope and scale of our business. I guess if we lamented one thing, it would be that we no longer work day to day with the broader community of incredibly inspiring non-profit organizations and their respective staff groups that were a part of the Partners For Change program historically. We miss them.
TH: Are you having to reposition the brand at all, given that you now have sales history indicating whether customer preferences for performance or lifestyle pieces, more muted or brighter colours, male or female styles and the like?
Ian: We are not repositioning the brand. But, we hope to refine our point of view. From a product perspective we've shrunk the line from 170 styles to 70, primarily because we no longer have to fill our own retail stores. That's one example of our overall shift in scope and scale.
That decision also enables us to focus on the best of the best and concentrate our creative energies and resources. Within the existing 70 styles we have our historical continuum of technical as well as more lifestyle-oriented products. However, our sweet spot can be found in the products that balance both characteristics, like the woman's Urbane Jacket and the men's Shroud Of Purrin Hoody. Both offer protection from the elements and are functional in the outdoors while being very suitable and stylish for use in sophisticated urban settings. Beyond that we were amazed to see our customers purchase across the breath of the line. Perhaps that was also reflected in the fact that our customers were pretty much split 50/50 male to female.
On color front, our overall color philosophy will not change. From the beginning our approach to color was informed by our commitment to sustainability. We wanted colors that would remain in style over time, as opposed to the forced, planned obsolescence that drives seasonal color palettes. We also wanted to choose colors that were relevant and could crossover from an urban setting into an outdoor setting. Multifunctionality, another dimension of creating product that is more sustainable, is one of the desired goals. Finally, our color palate was influenced by the intended constraints of our Restricted Substance List, which dictates that we won't use dyes containing heavy metals because of their toxic nature. Having said all of that, we continue to add additional breath to the color offering and in some cases we enjoy the benefit of technology breakthroughs that now give us more flexibility. For example, with our recycled polyester fabric we are now able to offer cross dyes and some interesting color mixes that we couldn't do in earlier seasons.
TH: With a smaller scale operation I assume you will have smaller production runs and this must have some flow on, not just for the stock mix, Â but also the degree of clout you have with fabric and component suppliers. Has this changed how you design products?
Ian: No, we haven't had to change how we design product or our relationship with our suppliers. Achieving certain volumes and price points has never been the primary driver for us. Instead we've focused on creating high quality product that raises the bar from a sustainability point of view while remaining price competitive with higher end, high quality outdoor and lifestyle apparel brands. Additionally, entering the wholesale market allows us to buy deeper into a fewer number of styles, so our production runs for any given style are similar in size to what we bought in earlier seasons. Â Â
TH: On that score I guess you could amortise the costs of materials development if Horny Toad were also running some of the same. Any cross fertilisation like that going on?
Ian: Building on the above, we don't face huge demands to create volume or scale in order to be competitive in the upper end of the outdoor and lifestyle apparel market that we compete in. Our orientation is not price point, volume based although we do aspire to create price competitive product that has tremendous value built into it.
Regarding Horny Toad, we think the most important synergies center around our sustainability efforts. That's probably the primary opportunity for collaboration, particularly given that each brand has its own distinctive performance and aesthetic criteria. As we move forward we'll investigate opportunities for collaboration and learning. But frankly, in the short term we've been focused on putting the pieces back together again so could re-launch Nau. Now that we've achieved that milestone our minds can begin to wander which leaves us feeling pretty excited about the longer-term possibilities.
Tomorrow we continue on with the interview, getting more amongst the products, fabrics and pricing.
(If you can't wait until then, we suggest you check this Interview we did when Nau closed back in May. At the end you'll find a heaps of links to much more info. There was also this interview recorded with Nau, when they first announced they were coming back.)