Add CategoryOther outdoor brands are very much achievement-focused — you see people climbing mountains and suffering against the elements, but for us at Kathmandu, it’s about having fun, getting outside and enjoying yourself. That’s what we’ve always been about. We’re about being more inclusive and making the outdoors more accessible to everybody. We wanted to make sure that came through in how we come across to customers, how we talk about the business internally and how we go into other markets.
Those markets are hyper-competitive, with many established and up-and-coming brands, so to stand out, you have to show up differently. That’s where our ‘We’re out there’ platform comes from.
Rather than talking about what we do when we’re out there, it’s about how it makes us feel. The outside makes us happier inside. We’re happier inside when we’re outside. Those kinds of statements define how we’re thinking about what we do. It’s very much a homecoming for us. It reminds us of why we exist and what we’re all about.
IR: I love how the marketing campaigns are really bright and fun. It’s a real noticeable difference.
RC: That’s right. And I think in the current environment with lockdowns and various uncertainties around Covid outbreaks, testing and isolating, people need some fun and joy in their lives and certainly getting outside is a great way to do that, like with our recent zipline activation in Sydney, where people were having fun in a beautiful location. That’s an example of the kind of things that we’re trying to do; we’re reminding people that there’s fun to be had, rather than being cooped up and locked down.
IR: It’s also quite clear that you’re trying to target a millennial customer. Tell me about the strategy.
RC: The 25-34-year-olds are the biggest participants in the outdoor market and the biggest spenders. It’s been a deliberate choice to show up in a more fun, carefree way and make sure we’re on the right channels with the right tone of voice to attracts those customers. That doesn’t mean we don’t want our existing customer base because we have a long heritage with them. It’s interesting talking to store teams when I do visits. The young customer loves the fun and colourful aspect of our new product, but so does the older customer, so it speaks to both sets of them.
IR: Do you often make store visits?
RC: I do. Once we were out of lockdown in New Zealand, I went to all the stores. We have 48 here. It’s great to meet the team, get their direct feedback on what they’re hearing from customers, get a sense of what the stores are like, the competitive environment and the customers. It’s only a snapshot at a certain point in time, but I find it really rewarding.
IR: It’s really about present leadership, isn’t it?
RC: [The stores are] where it all happens, and I firmly believe it’s important to show up. I’ve spent time in the distribution centres as well, doing some packages and shipping some online orders, just to make sure I understand what the teams go through every day and I’m in their work environment.
IR: Now that the brand transformation has rolled out, what’s the next step for the business?
RC: Next on the agenda is summer, and we’ve got some exciting products, like collaborations and product innovation, that we haven’t introduced to the market. We’re very much a winter brand in the eyes of our consumers — our imagery has a lot of snow and mountains. People have traditionally bought from us when they’re going to a winter destination for a holiday, so we need to change that perception and make sure we’re as relevant in summer as well as winter.
Interestingly in New Zealand, we’re a very strong camping business. When you go to a campground, you see a lot of Kathmandu tents and furniture because it’s a traditional Kiwi escape over summer, Christmas and New Year’s. We have that business in New Zealand, but not so much in Australia, where it’s more about down jackets and winter-weighted products, which is ironic given the relatively different climates.
Twelve months from now, we’re thinking about expanding into international markets. Europe will be the first meaningful expansion that we’ll be attacking under this new brand positioning and using the Ripcurl infrastructure to do that. Ripcurl has warehouses and customer service teams operating through Europe at the moment, so we’ll be able to tap into that as our platform to sell. We have a sales team set up in Europe that will be talking to customers about the brand and its positioning and making sure we deliver the key go-to-market stories for winter next year, which we’ll start selling later this calendar year. We’ll be delivering into the market in August 2022. We’ll do online direct-to-consumer and have wholesale partners.
IR: Where do you see Kathmandu in the next five years?
RC: Our vision is to be the world’s most-loved outdoor brand, which speaks to how we want to create a connection with our consumers. I’d love to see us having a business in Europe, North America, and potentially Asia in five years. The most likely places will be Japan or South Korea; they’re both two large outdoor markets. That would be ideal.
IR: Kathmandu has just announced its partnership with mental health organisation Beyond Blue. Can you tell me what the thinking is behind the two of you working together?
RC: Our purpose is to improve the wellbeing of the world through the outdoors because we know it’s good for us, it improves our creativity, empathy, internal happiness, physical and mental wellbeing. We’ve partnered with Beyond Blue to help improve people’s wellbeing particularly with our focus on our outdoor activities. We’ll also be donating proceeds from our shopping bags to Beyond Blue.
In New Zealand, we have a partnership with a similar organisation called the Graeme Dingle Foundation. They have a couple of programs where they work with underprivileged youth, take them into the outdoors and give them an experience like camping and hiking, which builds their confidence and gives them some time with other people.
IR: I think a lot of businesses, especially since Covid, have invested a lot more into the mental health of their customers and employees. But I sometimes think, with a lot of these social causes, they can be quite surface-level. What are the ways that you guys can authentically support these causes?
RC: Mental health is something we’ve been talking about internally at Kathmandu for a few years now, with the recognition that it’s often hidden away and it seems to be an ever-increasing problem in society, particularly with young people, where there seems to be a lot more prevalence of anxiety and other mental health issues.
Internally, we’ve talked about it to raise awareness. It’s not something anyone should be ashamed of; it can affect all of us. We’ve advised about strategies for dealing with it, especially in terms of our store managers and leadership. How do you deal with your teams? How do you look out for those signs among your team? It’s about trying to build that awareness and understanding and identifying when someone could be struggling and trying to make it okay to admit you’re struggling or need help.
We use Facebook for Workplace. They have a wellbeing group set up and run by one of our store managers in Sydney, and she’ll often post inspirational quotes, and people can share their experiences. We’ve had staff members say they’re struggling. Because we have such a wide store network, Facebook is a great tool for people to provide support. I know during Covid, store managers directly messaged me and said, “I just wanted to reach out and make sure you’re okay,” which is quite touching as a leader. It just shows that people are doing it organically and creating that supportive culture around mental wellbeing.
IR: I think people need to talk about mental health on an ongoing basis, too. It’s not just a one-time campaign that you launch.
RC: It needs to be normalised. It’s like how we talk about physical wellbeing and financial wellbeing, and planning. Mental wellbeing is no different. If you think about your holistic wellbeing, it’s just another part of it. We have a strong commitment to making sure that, where possible, people aren’t overworking, and we’re keeping a watch out for burnout and where we may be putting pressure on people to do excessive hours. That’s an easy trap to fall into.
IR: I also really like the workplace flexibility initiatives you guys launched around Fri-Yays. You’ve given people the tools and resources to take care of their mental health.
RC: People can work longer during the week and get Friday off, or they can work four days a week and have Fridays to do something fun outdoors. That came about as we evaluated how we approach the workforce after Covid and trying to build more flexibility into the business. It’s particularly important for people like mums returning to the workplace or people with young families. Children don’t get sick at the right time; they get sick all over the place.
Having that flexibility is important to foster that openness to people from different backgrounds and circumstances to work for us, not fit into a rigid mould of nine-to-five, Monday to Friday. That is completely at odds with our brand. Encouraging people to get out there has to start with our team. [When we launched], we had an Out There mini-festival with our teams with music and food. It was great.
IR: What are some of the unique struggles of being a purpose-led business?
RC: Being a B Corp business and an ASX-listed business is not necessarily a match made in heaven. As a listed company, we have a duty to shareholders, but having said that, a lot of our shareholders support the ESG (Environment, Social, Governance) focus that we have.
The way we think about B Corp is that as a company, we have touchpoints around the world. We have suppliers, teams, customers, our environmental footprint, and a B Corp mentality is about making sure that at each of those touchpoints, you’re trying to provide benefit to each of them, as opposed to just focusing on shareholder outcomes. But by doing that, you actually also provide shareholders benefits in terms of long-term sustainability instead of just the latest set of results.
There is sometimes a natural tension between some initiatives you might want to do but not having the funds, so you have to make decisions. We try to prioritise what will make the most difference rather than what will tick the most boxes. Otherwise, what’s the point? I’ve always told the team, “Will this make a difference or are we just ticking a box to get a better rating on the Baptist World Aid project or whatever it may be?”
IR: I know that in terms of being a B Corp, it’s not a case of being certified, and then you can set and forget.
RC: You can take the test and see where you sit, but you have to prove all your answers to get certified. It’s like being audited financially. In many ways, it’s a commitment to doing what you say and saying what you do and being prepared to stand up and say, “We’re an open book, come and check that we have done what we said we’d do.”
We have to do that as a listed company with our financials and results, so it’s no different for us in that respect for B Corp. We’re also part of the Fair Labour Association, so we get audited for that as well. It’s a not-for-profit organisation out of the US, with a lot of major outdoor and sportswear brands as members. The FLA provides you with a certification that says that you’re looking after the workers in your supply chain, they audit your ordering process, they review how embedded it is in the organisation and ensure that your policies are correct — that work really helped us to get to B Corp certification.
IR: Throughout Covid, we’ve seen that it’s the most disadvantaged who have suffered the most, and in the retail industry, that’s people in the supply chain. Last year was also the first time Kathmandu released its human slavery report. What are some of the ways you have actively worked to support your supply chain workers?
RC: We have a Code of Conduct, and we make sure it’s displayed at our factories where our product is made. It’s in the local language, and when we audit those factories, we expect it to be there. The problem with auditing is it can be manipulated, and there is a lot of corruption in the auditing process because it can be a name-and-shame game, so we try to work with our suppliers to rectify things rather than threaten and coerce them.
We have a WeChat app where people can anonymously report problems. A lot of them are living paycheck to paycheck. They depend on their job to survive, so raising a grievance with their employer is quite daunting. We partner with Elevate, and they have an app where staff can raise a grievance without raising it directly with a supervisor or manager.
We regularly audit our Tier 1 suppliers and audit the factory rather than the supplier because many suppliers run different factories with different standards. When we audit a facility, we make sure chemicals aren’t stored in dangerous places, emergency exits are clear, check labour records and comply with the local labour laws, so there’s no forced or child labour.
Especially during Covid, the challenge is you can’t be on the ground, and there’s always a temptation for suppliers to provide a false set of books, so the records might not be right. That’s why we work with the Fair Labor Association, as it provides us with some robustness in what we do. We recognise it’s a real challenge for the whole industry.
The way we think about business and how we compete with each other to get the lowest cost — that’s what drives suppliers to compete with each other, which then drives pressure on suppliers to use less than optimal labour practices to get a better cost to win the business. So the whole competition [mentality] is pretty unhelpful in terms of addressing modern slavery. It’s a big challenge for businesses all around the world.
IR: There are other businesses trying to turn around old business models to become more purpose-led and sustainable. What advice would you give them in terms of how to approach that?
RC: We believe that collaboration is really important, and we’re very fortunate to be part of an industry where [it’s a priority]. In outdoor and sports, we collaborate on the best way to do things and address these issues. We’re part of the Outdoor Industry Association, a collaborative group where we discuss these issues. In New Zealand, we’re part of a collaboration between consulting firms, industry participants and the government to look at how we can introduce modern slavery legislation into NZ.
We work together not to just share our successes but also our failures, which is important because if you can learn from each other, that’s how you can improve the overall practice in this area. You really need the openness to work together and support each other. We all face the same challenges, and no-one can do it by themselves. The UN is trying to make announcements, and the US is introducing legislation [about modern slavery], but even that hasn’t solved the problem, so to think you can do it on your own as a business is pretty foolhardy. We all need to support each other.
We’re fortunate that we’re more open to sharing in the outdoor category, but there’s still an element of competition, of course. You want to beat your competition; that’s how it works. But the model of working hard and getting growth almost ignores all the other impacts your business has on your ecosystem. The most vulnerable people your business touches are in the supply chain, so it’s important to consider that aspect.
IR: What are some of the big changes you’d like to see in the retail industry?
RC: This is where B Corp and business don’t match up necessarily, but if we want to be a more sustainable business, people need to buy less. This consumerism is quite rampant. I’d like to see overall lower consumption levels. It doesn’t mean people have to spend less, but they need to put more value on what they buy and focus on more quality, less volume. That really does put pressure on pricing, supply chains and resource consumption. We live in a world that has finite resources, not infinite resources.