The last thing I read about Nau (http://www.fastcompany.com/magazine/116/features-leap-of-faith.html), it was changing the face of apparel retailing. The firm’s mission was to integrate a broad sustainability perspective with a specific social mission into every aspect of its business model (Chapter 4: Implementation: The Integration of CSR Into Strategy and Culture, p63):
“Its stylishly minimal clothes in muted colors, made of sustainable materials such as organic cotton and recycled polyester, went on sale in 2007 and appealed to outdoorsy types and city dwellers, tapping into the growing green fashion trend. … And as part of the company's social enterprise initiative, 5% of all sales—from a $38 tank top to a pair of $138 "lean jeans"—were handed over to nonprofit organizations, chosen by the buyer.”
Then I read the article in the url below from BusinessWeek, which reports a decision taken at the firm’s Board meeting on May 1 to close the firm, “just two weeks after its L.A. store had opened.”
The problem for Nau seems to have been a danger that faces all firms seeking to rely on the CSR market niche—the best of intentions cannot replace a solid business model:
“Nau's business model, with its multiple retail channels and sophisticated product line—as well as a heavy commitment to the ideals of sustainability, including tracing the origins of the wool it used back to the sheep in New Zealand—was not only ambitious but capital intensive.”
Nau ran out of money and, when the business climate turned, was unable to raise additional capital to underpin its planned expansion. Sales were fine, but costs were prohibitively high. The limits of appealing to consumer’s best instincts should not be underestimated:
“… in its first and only year of operation, Nau attracted a cult following; Even today its Web site is jammed as the company sells off remaining stock at half-price. But at a board meeting in Portland on May 1, the directors decided to shut it down. … Perhaps Nau was too fashion-forward, with its higher production costs … and unusual products … . While Nau's prices were comparable to like-minded retailers Patagonia and North Face, they couldn't match megaretailers such as Steve & Barry's, whose $8.99 dresses sold in massive, unadorned stores are wildly popular in tough economic times.”
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther
Business Week Online
Insider Newsletter
May 22, 2008
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Nau Is Then
The hip green clothing label with an unconventional approach to style, materials, and retailing calls it quits. What went wrong?
by Ernest Beck
http://www.businessweek.com/innovate/content/may2008/id20080516_881121.htm
