IS IT POSSIBLE TO CHANGE THE WORLD ONE PAIR OF CHINOS AT A
TIME? A NEW CROP OF BUSINESSES THINK FAIR-TRADE APPAREL WILL BE AS
GOOD FOR COMPANIES AS IT IS FOR THE CONSCIENCE.
BILL BASS was looking for a new challenge. He had
already helped usher in the ubiquity of online shopping - first as
senior vice president of e-commerce for Lands' End and then as vice
president and general manager of Sears Customer Direct (after
Sears, Roebuck & Co. purchased Lands' End in 2002). He left
Sears in March 2005, and when he and several of his former
coworkers got together and were shooting the breeze, Robert Behnke
mentioned the fair-trade coffees he had tried. And being a guy who
had worked in the apparel industry, Behnke said he wanted
fair-trade clothes too.
"So, that's what we decided to do," says Bass.
Not that it was that easy. It took 18 months, but then Bass was
cofounder and CEO of Fair Indigo, a company in Middleton,
Wisconsin, with 30 employees, 25 of whom are former Lands' End
coworkers. (Behnke is a cofounder and the vice president of
merchandising.) Their team spent more than a year looking for
factories that not only could provide the kind of volume the
company would need but also could adhere to fair-trade principles.
Bass says that one factory they approached did not respond because
they thought it, this idea of paying workers more, must be part of
an Internet scam. In September 2006, Fair Indigo's print catalog
and online businesses opened. In November, it opened its first
retail store in Madison,
Wisconsin. Fair Indigo's clothes are
designed to appeal to men and women of ages 30 to 55. The linen
jackets and cashmere sweaters, if you didn't know better, could be
mistaken for those available at Ann Taylor or Lands' End. There are
none of the
Ugly Betty ponchos that come to mind when one
hears the term
fair trade.
Fair Indigo now works with 25 factories across the globe; some
specialize in skirts, others in sweaters. Bass says Fair Indigo's
business model of selling directly to customers, through catalogs,
the Internet, and its own boutiques, as opposed to selling through
national retailers, keeps overhead low enough that it can afford to
pay workers at its factories more. Because Fair Indigo is a private
firm, Bass will not release sales figures, but he says the company
is on track to turn a profit within four years, a time frame
analysts say is in line for new apparel companies, fair trade or
not.
Defining
fair trade has been one of the challenges for
companies like Fair Indigo that want to go mainstream with a
concept many still see as existing only in the margins. At its most
basic, the term indicates that the people who create the product
are paid a living wage and have decent working conditions. Some
expand that definition to include having the right to unionize and
access to health care. Others, including the Fair Trade Federation
in Washington, D.C., limit it to apply only to workers in
developing nations. Often those who support fair trade also support
the use of organics and other green initiatives, concerns that are
tangential to fair trade, which is all about the labor
practices.
"There's this perception of fair-trade clothing being made out of
hemp, but that's not the case," says Patti Freeman Evans, a senior
retail-industry analyst for New York-based JupiterResearch. "Bill
certainly makes the business case for stylish, reasonably priced,
competitive fair-trade apparel."
Concerning coffee - the unequivocal fair-trade success story - the
process is simpler because coffee (like cocoa) is a commodity.
Growers can be paid a fair market price for their goods, one that
can be applied universally. The Specialty Coffee Association of
America estimates that in 2006, 3.3 percent of coffee sales in the
United States were fair trade (TransFair USA calculates this at a
retail value of $730 million), thanks to support from megaplayers
such as McDonald's. Two years before that, those figures were 1.7
percent and $369 million.
Clothing is more complicated because it is not a commodity.
Everyone, from the cotton growers to the factory workers who hem
the pant legs, needs to be paid a living wage, and the cost of the
end product differs, based on a number of subjective criteria such
as designer labels. So far, there hasn't been a McDonald's
equivalent in fair-trade apparel. If a company like the Gap decided
to convert all its factories to fair trade, the category of
fair-trade apparel would certainly get a boost. But Evans says that
at present, there are not enough fair-trade factories to handle
that kind of volume.
It's impossible to pinpoint the exact value of all fair-trade
products, partly because there is no U.S. certification of
fair-trade apparel. But estimates of the domestic nonagricultural
fair-trade market range from $200 million to $225 million.
"I feel the U.S. is slow to start but will move at a faster pace to
bring fair trade to scale," says Stacey Edgar, president of Global
Girlfriend, a
Colorado firm that sells fair-trade goods made by
disadvantaged women. Edgar became aware of fair-trade issues after
her mother-in-law, the former first lady of
Illinois, told her
about the working conditions she'd seen when traveling to
developing countries.
Bass estimates that in the next decade, 10 to 15 percent of apparel
sales in the
United States will be from fair-trade clothing. And
Fair Indigo has competitors who are helping to move sales in that
direction.
U2 rock-star-turned-activist Bono launched Edun in 2005,
with an emphasis on high-fashion fair-trade clothing made
primarily in
Africa. Edun hawks more fashion-forward (and
expensive) togs than Fair Indigo, with $200 jeans sold at the likes
of
Fred Segal and Nordstrom. And Los Angeles-based American
Apparel, while not technically considered a fair-trade purveyor
because its T-shirts are made in the United States, has a
no-sweatshop stance that helped it reach revenues of $250 million
in 2005, just two years after opening its first store. Publicly
traded Gaiam sells fair-trade clothing as part of its overall
eco-lifestyle catalog. (Gaiam's 2006 revenues were $219 million,
but clothing sales were not broken down separately.)
David Jacoby, a partner with Schiff Hardin LLP, a law firm in New York, says that because there are no uniform standards of what fair trade is and isn’t, and because the United States lacks a certifying body when it comes to apparel, there are likely to be some issues relating to independent monitoring of category conditions. (Certifying institutions for commodities in the United States and abroad look at conditions country by country. A living wage in
Guatemala is different from a living wage in
China. Fair Indigo has been working with the
University of Wisconsin to develop a living-wage calculator that would help businesses determine what workers abroad should be paid.) Jacoby believes that eventually the apparel category will be “significant.”
Significant appeal is possible, because interest in fair trade is widespread. Bass says that in Fair Indigo’s first 30 days of business, it had sales to all 50 states, and not just to the urban areas. In
Alaska, orders came from 20 different cities. In
Alabama, they came from 30 different cities.
“This is not just a passing phase. When you look at the food industry and you see how far they’ve come, you can see it will happen with textile and apparel, just slowly,” says Connie Ulasewicz, coauthor of
Sustainable Fashion: Why Now, which will be published next year.
Adds Bass: “If people can get clothes with a comparable style, quality, and price, made by people who are treated fairly, that is a concept that resonates broadly.”