Global Policy Forum

By Michael B. Farrell

Two tiny TV sets sit side by side in the new American Apparel store on Boston's ritzy shopping strip Newbury Street. On their screens, the company's mustachioed young founder spews forth the ethos behind his brand of cotton T-shirts. The irreverent and enthusiastic Dov Charney, also the senior partner of the California company, excitedly explains to shoppers that his company does not exploit the workers who make his $15 cotton T-shirts - each affixed with tags bearing the company's trademark, "Sweatshop Free T-Shirts."

But they may do so soon. "There certainly is a growing consciousness" of the sweatshop issue, says Wendy Liebman, president of WSL Strategic Retail, a marketing research firm that analyzes how people shop. This growing consumer awareness has struck mainly shoppers who are young, hip, and well-heeled, creating a class of buyers who care about how and where their clothes are made. The proof is in the sales of several companies, including Charney's, that have made "sweatshop-free" a part of their pitch.

American Apparel recorded $150 million in sales in 2004 and expects to climb to $250 million this year. In Waltham, Mass., the company No Sweat Apparel claims a 750 percent sales increase since 2003 when sales totalled about $150,000. The "vegetarian" Blackspot sneaker - developed by Kalle Lasn of Adbusters fame - adorns the feet of the clothing-conscious looking for an alternative to Nike. More than 10,000 pairs have sold since 2004. Even U2's Bono has gotten into the "conscious commerce" apparel game, selling his Edun label at Saks Fifth Avenue.

"I see the sweatshop issue as being a very transcendent issue," says Adam Neiman, co-founder of No Sweat Apparel. "On the one hand we're trying to help unionize the global garment industry, and on the other hand we want consumers here to start asking questions about their own working conditions." While Charney is an unabashed capitalist who admits the "no sweatshop" tag on his knits is part of a marketing strategy, Mr. Neiman says he's a "lapsed activist" who wants to "change the world a bit - while earning a living."

A revenue stream with ethics

Far from the American Apparel showroom on Newbury Street that infuses an ambivalent hipster aesthetic with sex appeal, No Sweat Apparel occupies the basement of a nondescript building in a gritty, industrial section of Waltham, a western suburb of Boston. Its khakis, sweatshirts, and shoes are sold mainly over the Internet. One recent business day, Neiman walked through the stacks of boxes filled with shoes and sweatshirts that have been made by union factories in Indonesia, New York, and Chicago. No Sweat Apparel relies on factories with unionized workforces that either it has inspected or that anti-sweatshop groups have vetted. "We wanted to create a for-profit business that molds public opinion and creates a new revenue stream," Neiman says.

The issue of global sweatshops and worker conditions captured headlines in the 90s after high-profile allegations were made that products sold by Wal-Mart, Gap, and Nike were manufactured in sweatshops that, in some cases, used child labor. According to Sweatshop Watch, a California coalition of rights groups that monitors conditions of garment factories, the problem remains widespread because of the vast network of unaccountable subcontractors in China, Bangladesh, the US, and elsewhere who are locked in fierce competition to make clothes at the lowest possible price.

The group defines a sweatshop as any workplace that subjects laborers to long hours and extreme exploitation, maintains unsafe conditions, or uses verbal or physical abuse, or intimidates workers who speak out against conditions.

It's not a revolutionary idea for a company to build altruism into its business plan. Remember those two Vermont hippies Ben Cohen and Jerry Greenfield who pushed social and environmental consciousness along with pints of ice cream, or The Body Shop, the British cosmetics company that opened in the '70s and, claims to dedicate its business "to the pursuit of social and environmental change"? But the sweatshop issue is gaining traction partly because of the rapid rise of American Apparel and, more recently, because of the fanfare over Edun, the fashion line started by rock star Bono, his wife Ali Hewson, and designer Rogan Gregory. The line is said to blend "social activism and aesthetic innovation."

These socially conscious threads - clothes produced, in part, to create "sustainable employment in developing areas of the world such as South America and Africa" - come at a high price. Sweatshirts run $163; women's jeans $164; and T-shirts $55. By comparison, American Apparel's simple solid-colored, cotton T-Shirts are a bargain. But its $15 standard jersey knits and $34 collared shirts still cost far more than a $10 pack of three plain T-shirts at Kmart.

Why their customers pay extra

For longtime American Apparel customer Jane Leo, a Boston schoolteacher in her late 20s, it's worth paying a bit more for a product that's not only fashionable and a good fit, but is also free of sweatshop labor. "Because I like the clothing and because they are sweatshop-free, I feel like I'm willing to pay more to be more ethical," she says. Ms. Leo says that she's the type to buy ethically when given the chance. She opts for eggs from cage-free farms and uses recycled paper towels and toilet paper. "Now I think there are more companies out there, so people can buy ethically if they want to," she says.

Leo represents a sizable chunk of Charney's customers, who like the company's marriage of ethics and style. But for Charney, what's most important is the product - making the best classic American T-shirt possible. Charney isn't comfortable with American Apparel being seen exclusively as a socially conscious brand, even though that message is found throughout the company's marketing. In fact, he scorns political correctness and the union movement, and even says, "We don't care about sweatshops anymore."

When the company adopted the "sweatshop-free" trademark, he says, it was always about vertical integration - keeping everything from design to sewing and cutting in-house - and knowing your workers. "Sweatshop-free is one element," he says.

Selling ideas along with sneakers

It's also about differentiating itself from the likes of Gap or J. Crew and becoming known as "the antibrand," says James Twitchell, professor of English and advertising at the University of Florida. What American Apparel is attempting to do with its marketing, he says, is to create a narrative that differentiates it from other garmenteers. "There is no production-based difference, so the only difference you can create is narrative," Mr. Twitchell says. And the narrative created by American Apparel, as well as with the other companies using a socially conscious sales pitch, "is powerful especially among the young who want to 'do good.' There is sort of a mild narcotic in being able to consume and do good at the same time."

Kalle Lasn is using a similar antibig business narrative to sell his Blackspot sneaker - the vegetarian, recycled, antisweatshop sneaker that resembles the classic Converse (now owned by Nike). "Ultimately we might be putting sneakers on people's feet, but we are trying to take on an industrial giant like Nike." That means helping consumers to see that "a dynamic that eventually does serious harm" is not cool, says Mr. Lasn, self-described "culture jammer," CEO of the Blackspot Anticorporation, and founder of the anticommercial Adbusters magazine, which routinely pillories retail giants and materialistic society. "We are selling an idea. We are selling an idea of trying to create a new ideal of activism," he says. "If we can successfully launch our Blackspot sneaker on the back of Nike and if we cut into their market share, that would be a success."

But the heightened awareness among a relatively small percentage of shoppers - those who are willing to pay more for what they perceive as "socially conscious" garb - is not enough to make the big retailers change their practices or to retool their marketing, says retail analyst Ms. Liebman. "It's not at the point where this has affected the retail market.... Value is still guided by price, not where [clothing] comes from," she says.