Do Western shoppers care about how products are made

There's a huge amount of assertion going on right now about how important decent working conditions are to people buying clothes. But very little hard evidence. Indeed, I'd say there's none at all

For all the journalists’ tales of Western shoppers “enraged” at Bangladeshi disasters, there is very little sign of customers allowing their alleged rage to influence how they spend their money.

Bangladeshi apparel exports in May were 15.1% up on last year: indeed the annual rate of apparel export growth has stayed ahead of where it was before November every month since the Tazreen fire. US imports from Bangladesh grew faster in April than they had before Tazreen

There are a number of pieces of consumer research that shed some kind of light. About 70% of Americans have heard of the Rana Plaza collapse in Bangladesh, according to a survey by Harris Poll of more than 2,000 adults from May 14-16.  Among those who learned of the deaths, 39% (42% of women and 34% of men) said they would probably buy fewer products produced in Bangladesh.

Vancouver-based retail specialist DIG360 Consulting found in research that 26% of Canadian shoppers would “no longer purchase” Joe Fresh apparel from the Loblaws chain after labels for the brand were found in the Rana Plaza debris. This appears a far stronger reaction against the brand – generally praised by commentators for its proactive response to the disaster – than the vague and unquantified decline in US shoppers’ “impressions” of Walmart found on YouGov’s BrandIndex since early May and attributed by BrandIndex management to Walmart’s public refusal to sign the AFBSB. BrandIndex has released no data to substantiate its managers’ conclusions: Walmart has received negative publicity for lots of different reasons in the past two months, and there is no evidence Americans are more upset about what agreements it has signed than about lengthening checkout queues, bribery allegations or a spate of highly publicised strikes.

A 2012 study by Harvard University and Massachusetts Institute of Technology (MIT) researchers looked at "fair-trade certified" clothing, as part of a small-scale pilot set up by Fair Trade USA . It found that someone looking for the best bargain on a package of socks is much less inclined to buy the slightly more expensive "fair labour" option, but someone buying a pricier item might spend a little extra for fair-trade certified clothing. Fair Trade USA have made no further progress on “fair labour” certified clothing: the European Fairtrade movement has shown no interest in fair labour development, and its “Fairtrade” garments specify that it is merely the conditions under which the cotton was grown that is “fair”. Spinning, weaving and assembly of allegedly Faitrade garments are carried out under the same conditions as any other clothing.

Several studies claim to have investigated the effect of “fair labour” labelling. A 2004 study by a group under the leadership of a University of Michigan professor found that when the two types of socks labelled “Made under Good Working Conditions" were sold at the same price as unlabelled socks, only 43% of customers bought the labelled socks; when the labelled socks were sold at prices higher than the non-labelled socks, about 25% of consumers bought the labelled ones.

A study published in 2012 by an MIT  researcher and carried out in 38 US Banana Republic outlet stores seemed to show 14% uptake on more expensive garments with an ethically reassuring message. The research compared organic T shirts with a poster flagging a meaningless message (“The Island Wash organic T shirt”) shirts with a poster carrying a message that meant something (“The Island Wash T shirt means fair working conditions”).

Both carried the same premium price, but sales of the shirts with the meaningful message were 14% higher. At much lower price points, the meaningful message got no extra sales. From which the researchers conclude there is “a substantial segment of shoppers willing to support fair labor standards by voting with their shopping dollar”.

But we would suggest the research merely shows that an instore promotion with a meaningful message works better - and might work just as well with a message saying “made in a factory where no-one’s paid too much, so you know you’re getting the best value”.  No attempt was made to see what kind of a premium shoppers might pay for a shirt made by “fairly” paid workers

Though the Alta Gracia factory in the Dominican Republic keeps 130 people employed at wages three times higher than the national minimum, it appears to do so only because its ultimate owner – Knight’s Apparel – is prepared to operate the factory at a loss. No-one has attempted to drive its retail price up, or to persuade US college shops to accept lower returns per square foot.

There are lots of reasons why it can be good business for a retailer or brand to see that the people making garments with their name on are well treated, and we'll return to those reasons in a future Blog. But so far: no-one's shown those reasons include the effect of compliant social policies on retail sales