Since its UK launch in 2001, People Tree has pioneered the eco-fashion movement, building strong links with fair-trade groups across the World and promoting the use of organic materials. Fair Trade is an alternative approach to conventional international trade. It is a partnership between producers and traders, which aims at sustainable development for excluded and disadvantaged people in developing countries. On a global level Fair Trade has the potential to alleviate poverty by changing the unfair structures of world trade and campaigning for sustainability.The close relationship between People Tree and ethical trade organisations such as IFAT (International Fair Trade Organisation), the Fairtrade Foundation, and the Soil Association has resulted in the exclusive use of organic cotton and natural dyes and products being sourced locally. By employing local skills People Tree delivers employment in some of the World’s poorest regions at every step of the production process. For instance, growing cotton, weaving, and embroidery are all outsourced to local communities – helping to alleviate poverty and creating exceptional, handmade garments.
All People Tree’s designers are based in Japan and the UK and the company sells its products via its thriving Mail Order Catalogue and through 600 Fair Trade shops throughout Japan, Britain and Italy. People Tree has two flagship stores in Tokyo and plans for a London store are in the pipeline. Following on from a small organic collection in Selfridges, People Tree launched fair trade fashion on the high street after agreeing to retail their collections in Topshop in the Summer of 2006. Today the company is endorsed by the likes of Sienna Miller and Minnie Driver.
Market Analysis
The eco-fashion market is growing rapidly. According to the co-op ethical consumerism report, ethical fashion sales increased 30.3% to £43 million last year. The report also showed an increased level of consumer awareness across all sectors, with sales of organic food and energy-efficient household appliances also rising. Growth has been strong for People Tree with UK sales growing 40% in 2003, 2004, 2005 and then 30% in 2006.
I asked Antony Waller, press officer for People Tree about the company’s performance and target markets. “We have a wide appeal than regular fashion outlets, with the majority of our consumers being women aged between the ages of 25-40. Research has shown our buyers to be well-educated with an interest in global affairs, and earning a middle market income. Asos.com is our biggest wholesale client in the UK.”
Because of their commitment to fair trade principles, People Tree cannot afford to advertise.
They rely heavily on their PR department to increase mailing lists and have been fortunate enough to receive free coverage in the mainstream media. Presently, People Tree send their catalogue to 77,000 consumers. They have to main mailings in Spring and Winter and encourage customers to get involved as reps or ‘People Tree Fair Traders’. The company also has a highly successful website, both in the UK and in Japan. Waller said, “The internet is important for us, we are able to segment with email campaigns and target offers to particular groups.”
Segmentation and Marketing objectives
There are a number of challenges involved in producing 100% fair trade fashion, which is one reason why People Tree are the only company in the World doing so. Compared to conventional fashion, the costs and timescales involved with ethical fashion are considerably larger. For example, a Fair Trade shirt costs People Tree up to three times the price of a conventional one, and we often pay 50% in advance to our producers. The company also uses jersey cotton - made with Fair Trade organic fibre. This is 30% more expensive than conventional cotton.
Because of these reasons People Tree is not making a profit in Europe as yet, and hasn’t even broken even in five years of trading. The company made the decision to put smaller markups onto the product prices than that of High Street brands, so not to price themselves out of the marketplace until sufficient volumes could be met to reduce the costs. Because People Tree operates in villages rather than large cities or towns, transport costs are higher and communications are more difficult. Coupled with the costs of regular training and design work, it’s an extremely expensive process.
Also, People Tree has to pay advance payments of 50% on placing the order, so that small-scale producers can buy the materials to start production. This money must be paid up to 8 months before customers pay for the product. Conversely, the mainstream industry pays for product 30 or 90 days after delivery. Antony Waller said, “We have not broken even in Europe yet but this is projected within the next year. Look at Adilli's published losses for comparison with our own and you will see we are doing well in context. Despite production difficulties People Tree garments are considerably cheaper than some other mail order catalogues with similar quality clothing and the successful launch of a concession in Topshop proves that our prices fit with those of the high street.”
Strategies: People and Process
People Tree continues to promote fair and ethical trading by running a number of seminars at major events and regularly attends schools and universities to deliver presentations. There is a monthly workshop at People Tree’s Tokyo store and organized fashion shows and design competition with an impetus placed upon raising awareness. As well as participating in events and festivals such as Earth day, The Big Chill and the Green Man Festival, People Tree regularly provides fair trade related news and articles on their website.
People Tree believes in payment of a fair price to their workers, voicing their opposition to child labour and exploitation. The average daily wage of producers working on People Tree orders is US$3.30. This is 199% better than local wages in Africa, 197% better than local wages in Asia and 169% than Latin American regions. In Bangladesh wages are a staggering 568% above the average local wage.
People Tree believes in payment of a fair price to their workers, voicing their opposition to child labour and exploitation. The average daily wage of producers working on People Tree orders is US$3.30. This is 199% better than local wages in Africa, 197% better than local wages in Asia and 169% than Latin American regions. In Bangladesh wages are a staggering 568% above the average local wage.
Another facet of People Tree’s performance and strategy is environmental awareness. A company social review in 2006 revealed that 65% of People Tree producers had changed the way they make their products after referring to the company’s Eco Policy. People Tree has pioneered the first organic cotton supply, becoming the first chain to achieve the soil association mark for fashion. Today, 40% of all sold products are 100% organic cotton. People Tree has opted to use sea freight rather than air freight to reduce CO2 and exclusively use natural dyes and non-artificial bleaching agents.
Conclusion
People Tree has enabled many developing regions and small firms an opportunity to grow. In fact, for 14 producers, People Tree orders account for one fifth of their total turnover. People Tree creator and brainchild Safia Minney’s commitment to long-term sustainability resulted in her selection as one of the World’s most outstanding social entrepreneurs by the Schwab foundation. She was recognized for her efforts that have empowered People Tree’s workers around the world to earn a better standard of living, and raised awareness of the importance of trade and environmental policy on the British High Street.
In the long term People Tree will continue to grow and is expected to break even in Europe within the next year. While People Tree is prominent on the Japanese fashion scene, it has still yet to truly break the UK mainstream market, although collections in Topshop and Selfridges are steps in the right direction. In my opinion, People Tree should invest in advertising as this will have positive long term effects even if it impacts on short term finances. Social networking sites, television and radio campaigns may be effective ways to do this. By teaming up with designers and celebrities and promoting the ethical and aesthetic qualities of their garments, People Tree can continue to flourish in a cut-throat industry.
