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Ethics tops the agenda for retailers

It seems ethical clothing is not just a passing fad, with retailers now investing more to give themselves a cleaner conscience.

Tesco’s decision last week to introduce a new supply chain monitoring system and stop sourcing cotton from Uzbekistan, highlights the increasing pressure retailers are under to ensure ethical standards run all the way through the supply chain.

The supermarket giant’s stance is likely to put pressure on others, even at the cheapest end of the market, to consider where and how their goods are made.

Sales of ethically-sourced clothing have rocketed in the past year as Marks & Spencer, Tesco and Sainsbury’s have jumped on the trend started by small brands such as People Tree and Gossypium. The Co-operative Group’s annual ethical consumer survey found sales of organic and fair trade clothing shot up 79% to £52 million in 2006 compared with the previous year, and the figure is thought to have increased again last year.

About three million people boycotted certain stores in 2006 because they were unhappy with their ethical stance, according to the Co-op’s report. Value retailers such as Asda, Primark and Tesco were also accused in a War on Want report of using factories in Bangladesh that apparently exploited their workers.

Campaigns for workers’ and farmers’ rights are likely to continue. A recent poll in The Times newspaper found that 80% of UK shoppers think retailers are still not doing enough on social and environmental issues. Almost half said retailers should make improving working conditions at suppliers a priority.

Debenhams chief operating officer Michael Sharp says there is growing interest among shoppers about where their goods are sourced. He points out that several retailers, including Debenhams, already have a ban on sourcing from Uzbekistan because of concerns about child labour.

“There is a lot of sense in being aware of where cotton is coming from,” he says. “It is part of a broader responsibility that we have as retailers. You need to be aware of ethical and environmental issues.”

Ethical certification organisation the Fairtrade Foundation reports a dramatic rise in sales of ethically-produced product. The group, which handles retailers’ relationships with farmers producing cotton to ethical standards, says there was an eight-fold increase in sales of Fairtrade-certified cotton last year. It predicts a rise of at least 50% this year as Tesco, Marks & Spencer and a raft of other retailers step up their commitments.

A fair trade future
Tesco, which launched its Fairtrade-certified range in-store in the past fortnight, is now the world’s second-biggest buyer of fair trade cotton after M&S, and will be selling between 15 million and 20 million garments.

Tesco clothing category manager Alan Wragg says customers are demanding the option of both cheap prices and fair trade. “Whether it is bread or clothing, we try to give customers a choice,” he says.

Next month, Fairtrade’s promotional fortnight will also see launches from Debenhams, which has put together a men’s range backed by Olympic rowing champ Sir Steve Redgrave, and Topshop, which is more than doubling its range of items bearing the ethical standard. Sainsbury’s is raising its use of Fairtrade-certifed cotton by 50% by switching all its Tu T-shirts to the ethical fibre.

Sharp says: “Debenhams is doing fair trade because customers are interested in buying that product.” However, he believes shoppers are confused about the meaning of fair trade and that there is little point in putting out basic T-shirts using the more expensive cotton without clear differentiation.

“Steve Redgrave gives us something that will attract customers’ attention. If you are going to use Fairtrade certification, you have to take a differentiated approach,” he says.

Dual-certified organic Fairtrade cotton is the fastest growing ethical product. Tamara Thomas, business development manager at the Fairtrade Foundation, says: “Most of the retailers we work with have an increasing section of their range which is Fairtrade-certified and are looking to make it organic too.”

At present just 5% of Fairtrade-certified cotton is organic, but that is expected to rise to 20% this year. Production will increase six-fold in 2008. Most garments made from organic Fairtrade-certified cotton are sold by small independent labels, such as Hug and People Tree, but Thomas says the major chains are keen to get in on the act.

She says: “All the major retailers I work with are interested in sourcing Fairtrade organic cotton. They are trying to confirm there is enough availability for them to produce an authoritative range.”

The Soil Association predicts that sales of organic cotton products in the UK will rise to £107m in 2008 from £45m in 2006.
Rebecca Calahan Klein, programme director at charity Organic Exchange, says: “There is definitely a long-term shift in the market. Most of the companies driving the market have multi-year plans for expanding their use of organic cotton.”

Thomas is confident there will be enough organic fair trade cotton to meet demand this year, but stresses that retailers need to make long-term commitments so farmers can feel secure in switching production to organic, a process that can take three to four years.

Questions of commitment
However, some retailers are wary of wading in to the ethical market too deeply, in case it is a short-lived trend among consumers. A number of retail bosses privately express doubts as to whether shoppers will be willing to pay more for a clean conscience if the economy continues its downturn.

Ethical supply can also be at odds with the demands of fast fashion. The Fairtrade stamp acts as a guarantee that farmers growing the cotton earn a living wage, but it also demands that the entire supply chain uses approved operators working to ethical standards. Achieving certification for a product can take up to six weeks, which is an obvious deterrent in the fast-fashion arena where speed to the market is crucial.

Meanwhile, hiring a social audit firm or buying a supply chain monitoring system such as String, the online programme that Tesco will launch next month and which is already used by M&S and Wal-Mart, can be prohibitively expensive for a small or medium-sized retail group.

The Ethical Trading Initiative (ETI) says that those without the major retailers’ resources should question their suppliers and try to establish if they are already used by a respected retailer and member of the ETI. “Ask if they’ve been audited by someone else, and if so ask if you can view the report,” says ETI spokeswoman Julia Hawkins.

With the likes of Tesco and M&S now making ethical standards a core part of their business strategy, the issue looks set to remain high on the retail agenda this year.

Verdict Research analyst Carol Ratcliffe says that after a decade of price deflation on clothing, consumers will be prepared to pay a few extra pounds for additional “emotional benefits” this year. “If the economy falters in 2008, we can expect shoppers to become more price sensitive and sales of ethically-sourced clothing would grow a bit more slowly,” she says. “But I don’t believe ethical fashion is just a flash in the pan.”

Essentials:
£52m:
Sales of ethical and fair trade clothing in 2006
50%: Predicted rise in sales next year of Fairtrade cotton
5%: Percentage of Fairtrade-certified cotton that is organic
£107m: Predicted sales of organic cotton products in 2008

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