Business
1:20 am
Wed May 1, 2013

Would You Pay A Higher Price For 'Ethical' Clothing?

Originally published on Wed May 1, 2013 8:51 am

Look at photographs from the Bangladesh garment factory collapse, and you can see clothing in the rubble destined for a store called Joe Fresh, one of the many retailers using supercheap fashions made overseas to keep shoppers buying often.

But in the aftermath of the tragedy, would customers pay more if they knew the clothes were made by workers treated fairly and safely?

At the Joe Fresh store on Manhattan's Fifth Avenue, customers are bombarded with pastel polo shirts, button-down shirts and chino pants. On one shelf, you might find clothes made in Peru, Vietnam and China. Toward the back, there are piles and piles of shorts, just $19 each, and each made in Bangladesh.

Outside the store, Reene Schiaffo emerged with a bag full of Joe Fresh merchandise. She says she knew about the Bangladesh factory collapse but gives the company the benefit of the doubt.

"It didn't affect my sale, because I know a lot of times these retailers don't exactly know where the stuff is being made," she says, "but they have to pay attention more because that's not acceptable."

Of course, Joe Fresh has many competitors. Nearby Herald Square has become a kind of mecca for what the industry calls fast fashion — clothes so cheap they are almost disposable. On a block with Zara, H&M, Gap and Uniqlo, I asked shoppers if they'd pay more if they knew the clothes came from safe factories that treated workers well.

Most, like Ingrid Lelorieux of France, said yes.

"If it's between 5 and 10 percent, I will," she says.

In town from Australia, Steve Beretta says he'd pay more, "maybe 20 percent."

That number was repeated by others, and it turns out there's research behind this.

Ian Robinson of the University of Michigan and his team ran an experiment at a suburban Detroit department store. They placed identical socks side by side on display. Some were labeled as coming from factories with good working conditions. Half of the customers noticed the choice and bought them. When the researchers started to raise the prices on the ethical socks, however, there were fewer takers.

"As soon as we introduced a small price difference, just 5 percent different, it dropped down to about 33 percent," Robinson says.

When prices were 20 percent or as much as 50 percent more than the regular socks, about a quarter of shoppers chose to pay more, "at least in part motivated by ethical concerns," he says.

Michael Silverstein of Boston Consulting Group says many retailers do actively monitor their suppliers, but consumers have to demand ethical products. The Bangladesh disaster could help change that.

"It's going to haunt the major manufacturers and major retailers, and they're going to have to get on it," Silverstein says. "I'd say about 75 percent of them are."

For its part, the Canadian parent company of Joe Fresh says it will compensate Bangladeshi victims and is committed to finding a way to improve working conditions. The real test will be if that means the end of $19 shorts.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

Now, yesterday, Wal-Mart, Gap and other Western retailers met with labor groups and NGOs in Germany to discuss a plan to prevent future disasters like the one in Bangladesh. Yet one retailer in particular is in hot water after detailed photos of last week's factory collapse emerged. Labels for the clothing store Joe Fresh can be seen amid the rubble. Joe Fresh is one of the many retailers selling super-cheap fashions made overseas, which made us wonder if people are willing to pay more to be sure their clothing was made in an ethical way. Here's NPR's Dan Bobkoff.

DAN BOBKOFF, BYLINE: At the Joe Fresh store on Manhattan's Fifth Avenue, you're bombarded with pastel polo shirts, button-downs and pants. On one shelf, you might find clothes made in Peru, Vietnam and China. Toward the back, piles and piles of shorts, just 19 bucks each, and each made in Bangladesh. Outside the store, Reene Schiaffo emerged with a bag full of Joe Fresh merchandise.

REENE SCHIAFFO: We bought all kinds of pants, dresses, tops. They have a lot of great prints.

BOBKOFF: She shops here around once a month. She knew about the Bangladesh factory collapse, but she gives the company the benefit of the doubt.

SCHIAFFO: It didn't affect my sale today, because I know a lot of times, these retailers don't exactly know where the stuff is being made. But they need to pay attention more, because that is not acceptable.

BOBKOFF: Of course, Joe Fresh has many competitors. I headed down to Herald Square, which has become a kind of mecca for what the industry calls fast fashion, clothes so cheap, they're almost disposable. On a block with Zara, H&M, Gap and Uniglo, I asked shoppers if they'd pay more if they knew the clothes came from safe factories that treated workers well. Most, like Ingrid Lelorieux of France, said yes.

INGRID LELORIEUX: If it's between 5 and 10 percent, I will do this effort.

BOBKOFF: Steve Beretta was in town from Australia. He says he's not a big shopper, but he would pay more.

STEVE BERETTA: Maybe 20 percent.

BOBKOFF: It's a number I heard often.

EVELYN RUIZ: About 20 percent more.

BOBKOFF: That's Evelyn Ruiz. And it turns out, there's research behind this. Ian Robinson of the University of Michigan and his team ran an experiment at a suburban Detroit department store. They placed identical socks side by side on display. Some were labeled as coming from factories with good working conditions. Half the customers noticed the choice and bought them. But when the researchers started to raise the prices on the ethical socks, there were fewer takers.

IAN ROBINSON: As soon as we introduced a small price difference, just a 5 percent difference, it dropped down to about 33 percent.

BOBKOFF: When prices were 20, or as much as 50 percent more than the regular socks, about a quarter of shoppers chose to pay more.

ROBINSON: At least in part motivated by ethical concerns.

BOBKOFF: Michael Silverstein of Boston Consulting Group says many retailers do actively monitor their suppliers, but consumers have to demand ethical products. The Bangladesh disaster could help change that.

MICHAEL SILVERSTEIN: It's going to haunt the major manufacturers and the major retailers, and they're going to have to get on it. And I'd say about 75 percent of them are.

BOBKOFF: For its part, the Canadian parent company of Joe Fresh says it will compensating Bangladeshi victims, and is committed to finding a way to improve working conditions. The real test will be if that means the end of $19 shorts. Dan Bobkoff, NPR News, New York. Transcript provided by NPR, Copyright NPR.

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