Meet Shondhya Rani. Until recently, Shondhya had spent her entire life living in poverty, without education, and with barely the ability to read and write. Shondhya is married, has two children, and for most of her marriage, was abused by her husband. Five years ago, everything changed for Shondhya. She started working for Aarong where she learned how to weave textiles. Aarong is the manufacturing arm of the largest social enterprise of BRAC, an international development organization founded in 1972 in Bangladesh, whose mission is to alleviate poverty by empowering the poor to bring about change in their own lives.
Richa Agarwal, project leader for Aarong, tells the story of how, with the assistance of Aarong, Shondhya gained market access, working capital, fair market prices for her goods, and was able to take advantage of social services, such as healthcare and legal aid for herself and for her family. Shondhya is now a successful and respected member of her community and her story is the embodiment of a holistic approach to poverty alleviation. Through investment and the development of new production techniques, Aarong is helping women like Shondhya create market-driven crafts that are appealing to the modern consumer taste.
Shondhya’s story represents one of the many examples shared by panelists during the guest lecture on Creating Sustainable Futures: Empowering Women Through the International Fashion Industry, held February 23, 2012 at the Fashion Institute of Technology (FIT). The program launched the 16th season of Talking Trade @ FIT series whose mission is to serve as an outreach program for students of international trade and marketing and to promote the Department of International Trade and Marketing as the premier source of talent and academic leadership in the industry. The occasion brought together an impressive roster of industry leaders and C-suite executives to further the understanding of social impact models within the international fashion industry and their role in alleviating poverty.
The event was moderated by Chrissie Lamb, senior concept designer of American Eagle Outfitters and founder of The Supply Change and Fashion Designers Without Borders, organizations that foster closer relationships and collaborations between the design community and artisan social enterprises around the world. The panel is comprised of leaders from the for- profit and development sectors, including Agarwal, Mary Ellen Iskenderian, President and CEO of Women's World Banking; Craig A. Leavitt, CEO of Kate Spade New York; and Benjamin Stone, president and CEO of Indego Africa.
The panelists discussed the business opportunities and challenges associated with alleviating poverty for women in developing and emerging markets through the lens of the international fashion industry. Through a critical examination of social impact programs targeting women, the panelists highlighted ways in which the international fashion industry could take the lead in building sustainable, innovative business models that help to solve key social issues and achieve long-term business success.
Fashion Is Big Business
Fashion businesses typically require relatively little capital or infrastructure and are often the first step for industrializing economies, which means that there is great potential for the fashion industry to play a leadership role in the global fight to reduce poverty. In Bangladesh, a little developed country, 70% of the gross domestic product is derived from the fashion industry. Oxfam, the international development organization devoted to poverty eradication and justice, notes that, "If Africa, east Asia, south Asia, and Latin America were each to increase their share of world exports by one percent, the resulting gains in income could lift 128 million people out of poverty.”
The purchasing power of key markets around the world is yet another reason to take notice of the fashion industry is tremendous capacity to help alleviate poverty. According to Marketline’s February 2012 Industry Profile on Global Apparel Retail, the world’s consumers spent approximately $1.2 trillion on clothes. Approximately 35% of sales were in Western Europe, 36% in the Americas, and 25% in Asia.
Why Focus on Women
Led by Iskanderian of Women’s World Banking, Leavitt of Kate Spade New York, and Stone of Indego Africa, the panel championed the importance of focusing on women as an effective means of poverty alleviation as they constitute a majority of the worlds 1.3 billion poor. Women are also more likely to focus their earnings on improving health, education, and nutritional status of their household. Targeting women can improve a company's financial performance and can strengthen consumer loyalty and brand trust. Eskandarian said, “… by investing in women, companies are able to play a critical role in creating a long-term, multiplier effect on the lives and well-being of poor families and their communities.”
While the fashion industry has been a powerful force in helping to reduce poverty and to create sustainable livelihoods for some disadvantaged communities, more must be done to ensure that the impact is scalable and sustainable, and that employment opportunities bring about greater economic independence for women and take strides toward gender equality.
A majority of government workers in developing an emerging markets are young women with little to no work experience who have immigrated from rural areas and whose propensity for financial exclusion typically exceeds that of men's. Women's economic potential and their unequal access to capital to create and expand their businesses are two fundamental reasons Iskanderian argued for the need to increase women's access to finance. Greater access to financial services, including loans, savings accounts, and insurance services, complemented by products that address social needs, will allow women to develop and scale fashion businesses that are both sustainable and profitable and improve the well-being of their families and communities.
Trade, not Aid
Many fashion brands have taken the lead in creating cause marketing initiatives that are designed to solicit charitable giving from consumers in order to address a social issue. However, the panelist stressed the need for the fashion industry to be at the forefront of changing the status quo by creating innovative business models that are designed to solve systemic development issues, like poverty, using the whole of the business—from supply chains, to alternative sourcing strategies, to market penetration—in order to make a long-term, sustainable, and profitable impact.
It is trade, not aid, which is essential to building economies that economically empower disadvantaged populations and communities. Stone of Indego Africa warned that trade can inadvertently become a form of aid unless it is executed in a transparent and ethical manner, and artisans are taught the skills necessary to become independent suppliers. Ultimately, having a social impact is more about running a successful, profitable business than it is about charitable giving and cause marketing campaigns as asserted by Leavitt. Agarwal stated that profitability and the development of products responsive to the market are key to ensuring that the social impact program is sustainable, can fund itself, and can be used to improve the program overall while preserving the craft.
Expanding the Supply Chain
The nature of the industry makes it possible for fashion companies to work with community organizations that directly benefit the poor, while at the same time influence the community benefits of larger scale and factory production. For fashion businesses that are social enterprises, sourcing from Fair Trade or smaller scale cooperatives to design and sell handicraft collections can help to overcome some of the operational complexities that many larger brands face with sourcing from less developed markets. Minimum order requirements that can limit production opportunities for small to large scale fashion brands are not an issue for these types of organizations. Such is the case for Indego Africa, a social enterprise that provides women with access to markets, fair trade prices for their products, and skills and capacity building to ensure the growth and expansion of their businesses.
Stone stated that his company partners with some 400 women artisans in Rwanda on a fair trade basis and exports, markets, and sells its partners contemporary accessories and home decor products at major high-end retailers across the U.S., such as J. Crew, Nicole Miller, Anthropologie, Stevan Alan, shopbop.com, and Madewell; on its online store, shop.indegoafrica.org, and in 70 boutiques and museum shops in the U.S. and Europe.
Indego Africa then pools 100% of its profits with donations to fund long-term skills training programs for its artisan partners in areas such as financial management, entrepreneurship, and financial education. By fair trade, Stone means that Indego Africa complies with strict criteria set by the Fair Trade Association to create a more equitable and sustainable trade system for producers.
Indego Africa’s long-term goal is to transition out of the role of intermediary to that of advisor, allowing for artisan cooperatives to directly engage with the global market. It is an ambitious goal, but one that has come to fruition more quickly than the team imagined. In October 2011, designer Nicole Miller visited Rwanda and executed a purchase order with one of Indego Africa's artisan partners, marking the first purchase order ever made between a Rwandan cooperative and a major U.S. brand. Indego Africa helps to further its artisan partners independence through a commitment to “extreme transparency” as noted by Stone. This means measuring the impact of its work on the lives of its artisan partners, publishing the study and each financial document on its website, and ensuring that its artisan partners are kept abreast of everything impacting a product’s journey through the supply chain—from the cooperative to the customer.
Because of its products and unique business model, Indego Africa was the subject of a Harvard Business School case study and has garnered a great deal of media attention in industry and news publications like Vogue, The New York Times, WWD, InStyle, and Elle magazine.
In the case of Aarong, the company’s marketing savvy and its large number of retail outlets has made indigenous products fashionable and spawned a massive cottage industry in Bangladesh, helping to position the handicraft sector on the world stage. What began in 1978 as a fair trade organization to provide livelihood development opportunities for rural artisans has now become the largest retail chain in Bangladesh, generating roughly $10 million in profits last year, with 12 outlets throughout the country employing approximately 65,000 rural Bangladeshi artisans, most of whom are women.
A Socially Conscious “High-end” Label
Kate Spade of New York (“kate spade”) has partnered with Women for Women International (WFWI) since 2005 to create the Hand in Hand accessories collection, a high-end label comprised of unique handcrafted products sold exclusively in kate spade stores an on the companies e-commerce site throughout the year to provide jobs for women worldwide and raise awareness of WFWI. The partnership spans projects in post-conflict, war-torn countries like Bosnia and Herzegovina, Rwanda, and Afghanistan where women are usually hit the hardest. Through the personal involvement of Leavitt and Lloyd, who themselves have sponsored WFWI sisters, these communities are being transformed into thriving economies.
Rather than write a check for a charitable donation, kate spade is actively engaged in integrating its social innovation strategy into its core business strategy, which helps to improve the lives of poor women by providing them with steady employment and a consistent income. For example, in Bosnia, Kate Spade has employed 350 women who complete a year-long job skills and rights awareness training course from WFWI. Once the training is complete, under the creative direction of Lloyd's team in New York, the women in Bosnia create cold-weather goods, such as crocheted hats, scarves, and mittens: artisans in Rwanda make jewelry, hand-woven baskets and bags, and in Afghanistan, hand-knitted cashmere pieces.
Well the team from kate spade noted that it still continued to source from more developed textile manufacturers like China, it recognized the positive social and economic impact that producing uniquely handcrafted accessories in less developed markets can have on the lives of poor women. Lloyd said, "Work can save lives.”
As a result of their investment, more jobs have been created in Kosovo and Rwanda and the partnership has expanded to Afghanistan, where kate spade is investing capital to produce 5,000 units of accessories a year (with a goal of 15,000 by 2013) to provide sustainable employment to women who are vital to the country’s stability and growth.
Entering New Markets, Strengthening Customer Loyalty, and Eradicating Poverty: A Win-Win Strategy
Fashion is a business whose focus is on the bottom line. Yet, despite the fact that profitability is king, the fashion industry has an extraordinary ability to engage consumers with shared values on the issue of poverty while at the same time achieving core business goals.
Such were the sentiments of the presenters summed up by Leavitt, who called for the industry to take the lead in developing profitable social impact models integrated into a company's core business; investing in women as a means to revive economies and build stronger markets; and building fair profit distribution models to ensure workers at the end of the supply chain are able to share in the success of the products sold.
Think Globally, Act Locally
There are many ways for the public to play an active role in the fight against poverty. In addition to donating funds or arranging for corporate matching, one can participate by volunteering, interning, sponsoring a sister, becoming a member of these organizations, attending events, or by simply signing up for newsletters.
Women's World Banking, a global network of micro-finance institutions and banks, has a Young Professionals Network and offers immersion trips so the participants can see the work of the WWB network. At Indego Africa, one can join a regional board to promote the organization’s mission and model and help plan events.
These initiatives show that there are boundless ways to interlace fashion with transforming the lives of communities by providing steady employment to the neediest of mankind and by recognizing that the women, who benefit from these humanitarian undertakings, also have the creative skills to enrich the fashion industry. It is up to us to take advantage of this remarkable opportunity.