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'Fair Trade' Label Reaches Retail Market...

Chicago Tribune, October 8 2006

Entrepreneurs see potential in socially conscious apparel, hoping it will follow the course of fair-trade certified coffee, which is growing at a rate of 75 percent a year.

Teresa Connors is a socially conscious consumer. She is a vegetarian who seeks out organic produce. She buys fair-trade certified coffee and chocolate, feeling good that the workers who picked the beans and processed them were paid a living wage.

If she could find a fair-trade certified clothing brand, Connors would eagerly check it out. "I would like having the access to an alternative. I kind of feel like it is not there," said Connors, who works as a project manager for a real estate firm in Highland Park.

A group of corporate alumni from Lands' End is trying to give Connors and other consumers like her what they want. The retail executives have traveled the world searching for garment factories that treat workers well and pay them more than the legally required minimum wage, which is often pennies an hour in many underdeveloped countries.

Late last month, they launched Fair Indigo, a catalog and Internet site offering "fair-trade" fashion aimed at mainstream, middle-market consumers. The first Fair Indigo store will open Nov. 1 in Madison, Wis., near the company's headquarters in Middleton, Wis. FairIndigo.com is already up and running.

"The whole evolution of the clothing and manufacturing industry has been to drive prices and wages down, shut factories and move the work to countries with lower wages," said Bill Bass, chief executive of Fair Indigo and a former executive at Lands' End and Sears, Roebuck and Co.

"We said, `We're going to reverse this and push wages up.' We've spent the last 18 months finding worker co-ops and small family-owned factories that were willing to pay their workers more than the going rate."

Bass hopes fair-trade apparel will follow the course of fair-trade coffee, which is growing at a rate of 75 percent a year and now constitutes 4 percent of the $11 billion specialty coffee market in the U.S. Even a few percentage points of the annual $150 billion Americans spend on clothing would mean big bucks.

But extending the fair-trade designation to sweaters and jackets won't be easy. No one really agrees what the ground rules are for fair-trade apparel, and what constitutes a living wage in various countries also is a subject of debate.

On top of that, some retail experts doubt that Middle America will pay a premium for apparel based on where it came from.

"For the mainstream, it's an added benefit. But the primary objective is to find clothes they like. The stuff has to be something they want to buy anyway," said Christie Nordhielm, associate professor of marketing at the University of Michigan's Ross School of Business.

"There are people who are very price-insensitive and are willing to search for these things. Everybody else is looking out for themselves first, and if they can help somebody along the way, they are happy to do so."

There's no question, however, that a growing number of entrepreneurs and companies see a potentially lucrative niche in educating consumers about where their garments come from and how they are made.

American Apparel Inc., the teen apparel-maker known for its risque advertising, runs its own factory in Los Angeles, and plays up the fact that its T-shirts are made by domestic workers who receive good benefits and earn a $9-an-hour base rate plus bonuses.

Dov Charney, 37, American Apparel's founder, says treating his workers well is a key component to his company's success. The company, which has grown to about 125 stores since being founded in 1998, racked up more than $220 million in revenue last year.

At a more rarefied price level, Irish rocker Bono and his wife, Ali Hewson, have launched Edun, a clothing line made from organic materials. The pitch to consumers is more than merely eco-friendly. The $300 hemp blazers and $175 jeans are made by workers in family-run factories in Africa, South Africa and India--plants that have been vetted by Edun for their ethical practices.

Also in the game is denim giant Levi Strauss, which is introducing Eco jeans, its first 100 percent organic denim line, hoping to attract upscale shoppers who can afford to pay $250 for a pair of naturally dyed "green" jeans. The line, which is being made in the U.S., will be launched in select Levi's stores this fall. Less expensive versions in the $65 to $80 price range will be rolled out to department stores next year.

But Fair Indigo's founders say fair-trade clothing shouldn't be something that only the wealthy can afford. That's why prices for most of their items are under $100, such as an $89 silk tunic made in Shenzhen, China, a $39 rayon scoop-neck top manufactured in Macau, and a $59 pair of slim-fit jeans made in Costa Rica.

The goal is to compete with midtier clothing retailers such as Ann Taylor, J. Jill and Garnet Hill, Bass said. One might add Lands' End and L.L. Bean to the list in terms of price and quality, but Fair Indigo is shooting for a more feminine, less outdoorsy look, he said.

By reaching out to consumers through catalogs and the Internet, and dealing directly with factories, Fair Indigo believes it can save money on marketing and middlemen. Those savings will be used to fund the above-market wages paid to workers without having to pass that cost on to consumers through higher prices, Bass said.

Already, though, Bass' version of fair-trade apparel is being criticized by some anti-sweatshop activists.

Although the Fair Indigo catalog displays photos of workers who make its garments and lists the city and country where its manufacturers are located, the company so far has declined to make public the names and addresses of its factories.

Bass says that decision is a competitive one: "We spent the last 18 months trying to search out these factories. If the demand for this takes off like we think it will, there will be a number of big companies that will want to do this. I don't want to make it too easy for them."

That argument doesn't persuade Charles Kernaghan of the National Labor Committee, one of the nation's veteran crusaders against sweatshop labor.

"You can't really claim to be a fair-trade company without a minimum of releasing the names and addresses of the factories. If they say they won't do that because other companies will find the factories, that's exactly what Wal-Mart says," Kernaghan grumbles.

"Nike said to me years ago that if I only understood how business worked, I would understand they would sooner go out of business than release the names of the factories. It couldn't be done. We always knew that was baloney. The labels are all made next to each other. The companies already know where everyone else is producing."

After protests by college students around the country in the 1990s, Nike decided that it could, in fact, release the addresses of its factories without harming its business. The 13-page list is now available on Nike's Web site.

Bass says mentioning Fair Indigo in the same sentence with Wal-Mart is a low blow. "That's completely depressing," he said. "We are dealing at the completely opposite end of the spectrum from Wal-Mart."

The company also has received some calls criticizing it for using some non-union factories and for producing in China, a country infamous for Draconian working conditions.

Fair Indigo addresses those issues in a question-and-answer section of its Web site. While the company supports the rights of workers to form unions, "We do not consider them a make-or-break factor in workers earning fair wages and living comfortable lives," the site says.

As for the China issue, Fair Indigo acknowledges there are "many bad factories in China," but goes on to say that it discovered "some outstanding factories, too, where workers are truly being lifted up out of their former poverty. We do not believe it is moral to penalize these workers nor their generous factory owners simply because they happen to live in one country."

Complicating the issues surrounding fair-trade apparel is the lack of an independent third party to verify that a piece of clothing is made under humane conditions by workers who are earning a sufficient wage. It's something that a non-profit organization called TransFair has looked at but believes will take at least two years to figure out.

TransFair USA, a recognized independent, certifying agency for fair-trade products in the U.S., already gives its seal of approval to coffee, tea, cocoa, some types of fruit, rice and sugar. If a manufacturer passes its stringent tests, it can use the organization's "Fair-Trade Certified" label.

But certifying apparel is more complicated than agricultural products because everything from the fiber and the buttons to the cutting and sewing operation would have to be audited, says Nicole Chettero, TransFair spokeswoman.

"We believe our label can only be on something that is 100 percent fair-trade certified from the farm to the finished product," she said. "Apparel is definitely at the top of our list. In order to do it justice, we want to do it right."

TransFair has received requests to certify everything from cut flowers to soccer balls to diamonds, but the Oakland, Calif.-based group only takes on one new area a year. Currently, it is looking into a fair-trade certification for wine.

Bass says he wasn't willing to wait, and he thinks consumers are ready, too. "We have a bias toward action as a group of people. You can't let the perfect be the enemy of the good."


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