 Fair Deal
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. By Margaret Littman
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.”
MARGARET LITTMAN is the author of The Dog Lover’s Companion to Chicago and VegOut Vegetarian Guide to Chicago.
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