Business 2.0, Sustainability

Case Study: Haul

This post is part of a series outlining my learnings from interviews with a number of small and medium businesses exploring how they have benefited from a shared value approach. These case studies support a paper I wrote exploring strategic CSR (PDF 1.3MB).

The interview upon which this case study is based was undertaken with Haul’s founder, Scott Kilmartin, in April of last year—nearly 12 months ago (yes, it’s taken me that long!). A quick visit to the Haul website will show that Haul is no longer in operation, having closed their doors earlier this month. In his blog post announcing the closure, Scott cites a variety of personal and business reasons for winding down the business.

When I heard this news I was firstly saddened to see one of my favourite companies calling last drinks. But I also considered whether I should publish this case study, given that the business was no longer operating. Upon reflection I felt that there were many valuable lessons in what Scott shared with me in our interview that I felt the broader business community might benefit from. And I also think that Haul remains an exemplar of a shared value approach that is worthy of consideration and examination.

Perhaps, then, this post can be considered a homage to Haul and the inspiration Scott and the team provided me (and I’m sure many others) over the last 14 years. I’ve left the case study as it was originally written (in the present tense, as though Haul is a going concern).

Haul describes itself as an “independent design brand”. Based out of Fitzroy, an urban destination on the outskirts of Melbourne, Victoria, Haul produce bags, laptop cases and sleeves, photo albums, and other accessories from waste materials such as discarded advertising billboards, number plates, inner tubes and rubber printing mats. Haul diverts wastes that would otherwise end up in landfill and “up-cycles” them into high value products. In the words of company founder Scott Kilmartin:

we’re not melting it down and turning it into the padding that goes into speed bumps or children’s playgrounds. That’s recycling. We take a low value, no value item and turn it into something of significant value.

Haul was started in 1998, with Scott converting old number plates into wallets and photo albums, after seeing similar products during some time spent in the USA. Initially the products were sold at Salamanca markets in Tasmania (Scott’s father continued to sell the products there until early 2012) but the business quickly grew to include a combined retail outlet and production facility in Fitzroy.

Indicative of Haul’s success, five years ago Haul converted 36 tonnes of materials into products. In the financial year 2010–11 that number has grown to 85 tonnes—a 236% increase in that time—with that quantity projected to double in the financial year 2012–13. A majority of Haul’s business is from customers within Australia, with overseas internet sales, predominantly from New Zealand, the USA, UK and Japan, accounting for approximately 7.5% of sales.

Inherent in Haul’s business is a positive sustainability outcome. Scott estimating around 75% of the sourced material being utilised in Haul’s products, a further 10% being distributed to secondary markets such as theatre companies and local schools.

While an integral part of the brand, the sustainable attributes of Haul’s products have proven to be less important to the business’s success. Instead, the individual nature of each product has been a stronger selling point: due to Haul’s production process every piece is unique. Haul established itself as a retail brand, initially positioning itself in the “eco” or “green” category. However, a shift in strategy that saw the business framed as an “art-house” design brand, emphasising the uniqueness of the product, was rewarded, as Scott explains:

I got it wrong in the beginning, I thought we were a green business playing in the fashion space. We’re not. We’re a fashion business using green materials. And the difference in that is not just semantics, it’s we sell on a look and a feel and a story. …

And the biggest story that I can sell is “if you buy this Macbook case here, no-one else on the planet’s going to have it.” Walk down the street in Sydney, Stockholm, Shanghai, that’s the only one like that. And that’s a claim that very few products can make. Whether you’re a super premium brand like a Hermès or a Prada, there’s still 20,000 others exactly the same handbags that you made. … And that was the perception where the value in this wasn’t that it was a recycled material, it was the fact that it’s a one-off kind of art piece.

So we pulled out of a whole bunch of kind of green and eco stores and went to design and fashion stores. Instantly things changed overnight.

The strength of the retail brand resulted in Haul receiving inquiries from corporates wanting to create unique and memorable merchandise. Companies like Shell, RMIT, Seek and McGrath Real Estate are engaging Haul to transform the wastes from their own advertising activities into merchandise for their organisations. For example: shopping bags made from sales signage; iPad cases for sales reps; merchandise for students or conferences. Products made from a company’s own marketing materials result in personalised products that reflect the company’s brand (e.g. colours and logos). Other businesses are also looking to Haul to whitelabel Haul’s retail products.

In contrast to Haul’s early experience with the retail market, corporate customers have a greater emphasis on sustainability criteria:

With the corporate business it’s completely the reverse, the first questions you [get asked] is how it’s made, what are the recycle credentials, … what have we been audited on? … So they absolutely love the design and the uniqueness, but ultimately the first part is what can we say, what are the eco-credentials of this thing? And so … [while] we’re effectively making the same product, they’re purchased for quite different reasons.

The strength of Haul’s product, its uniqueness, also proved to be a significant challenge in meeting the demands of corporate clients. The larger quantities required to supporting such customers presented significant challenges in scaling up operations. Firstly, there are limited economies of scale in Haul’s production process—the cost to manufacture one item is virtually the same as when manufacturing one thousand. Scott sees cutting as Haul’s “core business”, noting that “what ends up on the front of each product has a big impact on whether it sells or not.” Each billboard or other raw material needs to be evaluated individually and cut to ensure that the most interesting elements are featured—ultimately a design decision that requires experience and skill.

Additionally, scuff marks, crinkles and fold marks, and other imperfections in the raw materials need to also be taken into consideration. This means that multiple panels, even of the same billboard design, can’t be cut to the same template, ruling out automation of processes that would more commonly enable reduction of costs at scale. This has resulted in Haul establishing close and trusting ties with overseas manufacturers to deliver at a competitive price point, with specialised training programs to support staff in these companies.

Strong supplier relationships closer to home have also been critical to Haul’s success, with the cluster of businesses supporting the textiles, clothing and footwear sector has been beneficial. Haul ensure favourable terms for local sewers and suppliers, in some cases providing specialised equipment such as heavy duty machines typically used by saddleries or sail makers, to outworkers. This commitment has resulted in suppliers going ‘above and beyond’ to find new methods of manufacture and supporting new product development.

The development of strong customer relationships, especially through the creative use of social media tools such as Twitter, have also been critical to Haul’s success to date. Scott credits early engagement with Twitter in particular as playing a significant role. Social media is a natural fit for Haul’s story-based approach to marketing:

…we’re a business that’s a story telling business and we’ve got a story behind us. It’s not just “this jacket comes in three sizes and three colours” … For us it’s “this used to be a billboard, you may have thought billboards were paper, they’re actually vinyl and this is what happens when they come down. This is how we made it, we individually cut it. It’s made by this guy here. You know, we’ve got this dog [@GusTheBoxer on Twitter] in the store.”

Scott acknowledges that “we wouldn’t exist if the community that we both work with and, for want of a better term sell to, didn’t help us along.” Haul have also successfully engaged customers in helping develop new products and customers have also provided important word-of-mouth referrals.

Haul’s story illustrates a number of benefits to taking a shared value approach. Firstly, reconceiving products and services using a sustainability lense created a product with unique selling potential that clearly differentiates Haul in the crowded accessories market. The story behind the products has enabled opportunities for authentic dialogue in social media channels. This engagement with customers has also helped to both differentiate the brand and generate significant referrals and word of mouth marketing. The sustainability benefits also opened up new market opportunities in the corporate sector, where sustainability criteria have a greater influence in purchasing decisions. Secondly, Haul’s connection and support of their supply chain partners, strengthening the local cluster of textiles producers, has reaped dividends in creating new products and high quality of service and products. These deeply embedded practices have set the stage for strong continued growth as Haul’s corporate offering expands.

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