"Companies go out of their way to both, reduce price and purposely release production control and management to their suppliers."
By Pamela Ravasio
In the 1990s, Nike was caught in a sweatshop scandal showing poor working conditions in its suppliers' Asian factories.
Not only did its stock prices fall as a consequence, but the company also suffered a loss of reputation that triggered a loss of several contracts with colleges, boycotts by celebrities, a drop in sales (from $9 billion in fiscal 1998 to $8.8 billion in fiscal 1999), and a fall in market share (from 35.5 percent in 1997 to 30 percent in 1998).
Greenpeace's 2011/12 Detox campaign, which attacked second and third level suppliers of global apparel brands such as GAP, H&M, Levi's, Nike, Puma and many others, brings to mind several similarities with the Nike scandal.
The accompanying publicity campaign raised so much concern among consumers – and first signs of serious sales losses and boycotts – that even reluctant manufacturers such as Inditex eventually signed up to the 'Roadmap to Zero' initiative to clean up their act.
Then, two important suppliers' factories in Pakistan burnt down in the last quarter of 2012. These factories were SA8000 audited and certified yet all exits were locked which caused twice as many deaths than the New York Triangle Shirtwaiste Factory fire in 1911.
The incident received widespread publicity across the international press.
Supply Chains: Lack of Controls or Apathy?
However, between the Nike scandal and the Bangladesh fires lie over 20 years of industry incidents, all of which have at their roots the Western fashion brands' lack of supply chain controls result of their outcontracting policies. In these 20 years, the story has repeated itself over and again, without brands seemingly learning from past mistakes.
But where previously it was traditional media such as newspaper, TV and radio that owned the news, today information spreads much more quickly and in a less controlled manner thanks to informal digital communications channels, owned and orchestrated by consumers themselves.
Worse, since the Nike scandal, consumers have become not only more cynical about the industry's true motivation to self-regulate and 'do business responsibly,' but also came to understand that they cannot trust any claims made by retailers and brands.
Creating a Cynical Customer
In numbers: Over 75 percent of consumers are suspicious of corporation's sustainability pledges, and don't trust businesses. An equal percentage (75 percent) is of the opinion that large companies do not care about the environment. Further, 82 percent of all consumers have noticed some type of 'environmental friendly' claims by companies, but 54 percent state that they do not trust any public 'eco', 'green' or 'sustainability' claims made by companies.
As a consequence consumers have come to request in-depth product and production information, in a format suitable to them: concise, to the point, accurate, and with enough evidence to prove any claim.
In recent research conducted during a consumer trade fair, we found that consumers are not as clueless as the industry assumes them to be. Attendees were well aware of the pros and cons of outsourcing apparel production to overseas destinations with many of them acknowledging that “companies go out of their way to both, reduce price but also purposely release production control and management to their suppliers. Companies want to purposely remain ignorant about what may, or not, be happening in those far away places”.
Consumers did not particularly appreciate that their clothes were made in Asia. They were certain that the ‘Made in China’ tag on their jeans or winter coat isn't good news, not for the environment and not for the workers who made those garments.
Yet, at the same time, they had little idea of alternatives available to them.
From their perspective, 'everything' is made in those far away places. Where can they find alternatives that are affordable? This is why consumers resort to buying locally in order to buy sustainably, because they perceive large brands and businesses to be non-transparent and therefore untrustworthy.
On the Hunt for Ethical & Sustainable Consumer Products
Suddenly the words ‘accessibility’ and ‘availability’ take on a somewhat different nuance.
What consumers in fact are facing is a typical Catch22 situation: plenty of producers and brands claim to be ‘listening' yet neglect to acknowledge the demands consumers put forward, and consumers who want to invest in better products but also feel that producers are inattentive to their needs as consumers.
After all, one of the most frequently received answer when asking CEOs of consumer goods companies – fashion and apparel in particular – why they are not producing more sustainable products is: “Show me there is demand, and we'll be happy to cater to it.”
It is important in this context that, in a recent report we found that consumers are neither purposely ethical nor unethical.
Instead, purchasing decisions are made as a response to particular needs and choices related to the range of products available. In the purchasing process, convenience remains an important factor. Given choice, sufficient information and a comparable price/quality ratio among products, a majority of consumers are willing to choose the most ethical product among those available to them, despite being valued at a slightly higher price.
There is, however, equally little doubt that consumers are reliant on, and generally trust product labels, certification and accreditation labels in order to compare the ethical credentials of products and make their purchasing decision. However, they maintain the view that sufficient information is still unavailable to them.
So is the market ready for transparency?
If brands, department stores and retailers were ready to give consumers easy access to their supply chain data and and consequently also, a larger range of more sustainable products, then yes, it is.
About the Author:
Pamela Ravasio is a co-founder and director of texSture and specializes in strategic risk management and sustainability for the textile, fashion and apparel industry. She is co-author of the freely available report The Better Consumer in Europe: The trends fashion companies should watch to make good decisions.