Wednesday, July 18, 2007

How To Be Ethical Multimillionaire.

Indigenous Designs Corp. prides itself as a truly green supplier. Its women's clothing is made from all-natural, sustainable materials, such as organic cotton, silk and alpaca. It adheres to strict fair-trade manufacturing practices overseas, runs its U.S. corporate office on solar power and encourages employees to bike to work.

But all that feel-good stuff isn't what the Santa Rosa, Calif., company pushed when it met with executives from the Dillard's Inc. department-store chain at a trade show earlier this year. Instead, the apparel maker talked up fashion, design, and price -- mentioning the organic and fair-trade chit only as an extra bonus.

"It's all about the product, but P.S., there is this story behind it," says Scott Leonard, Indigenous Designs' chief executive and co-founder.

Subtle Message

This marketing strategy -- having a do-good message but not beating people over the head with it -- has helped Indigenous Designs to survive and segue into mainstream retail, while many of its green peers have languished in ecofriendly niches or gone out of business altogether.

These tactics and endurance highlight a sometimes overlooked truth in the fast-growing, much-ballyhooed green market: As much as consumers say they crave ecofriendly products, if those products don't look good, don't fit right, aren't durable or aren't priced competitively, then customers probably aren't going to buy them in droves.

"Companies that lead with green and ecofriendliness are in very dangerous territory because they are often not competitive on fashion or function and ask the consumer to make a compromise," says George Rosenbaum, chairman of Leo J. Shapiro & Associates, a Chicago consumer-research firm. "Retailers want green, but they won't let green stay in the store for long if it's not as good."

That's particularly true in fashion, Mr. Rosenbaum says, where appearance is everything. So to keep style at the forefront, Indigenous Designs employs five people on its design team and creates all clothing ideas in house. Advertising and marketing signage feature models and apparel prominently, with the organic/fair trade logo plugged more subtly. Fair trade allows for workers to receive a fair, living wages.

Founded in 1994, Indigenous Designs does business with more than 300 retailers nationwide, including Dillard's, Whole Foods Market Inc. and Eileen Fisher Inc. Revenue will jump to more than $4 million this year from $2 million last year, according to Mr. Leonard.

Mark Killingsworth, one of Dillard's general-merchandise managers, saw Indigenous Designs wares at a trade show in January and decided to carry the line based primarily on the design, fabrics and price -- which is precisely the order of criteria he thinks women use when shopping for clothes.

"It's a neat handle that something has the green thing attached to it, but I don't think we've embraced it as a strategy," he says. "It's still gotta be the right product at the right price." The organic hook, he adds, simply suggests that buying the garment is "also the right thing to do."

Indigenous Designs' wares will start hitting Dillard's shelves in September, initially rolling out to 60 of the company's 328 stores.

Putting the mission message second hasn't always been easy. Beyond the fields and farms of Peru, Guatemala, Ecuador and India where the clothing maker produces its wares, the company has steeped itself in green practices back home. About 20% of employees own and drive hybrid or biodiesel cars. Mr. Leonard also created a program called Green Steps to highlight other companies using green business tactics.

Net proceeds from the program will go toward purchasing wind credits, which offset 100% of the energy of the trade show. The purchase is designed to reduce the consumption of fossil fuels, clean the air and help keep greenhouse gasses out of the atmosphere. Funds also go toward purchasing recycled materials for shows' aisle carpets and booths.

At times, straddling the two worlds has been a balancing act. At an early trade show, a sizable retailer called the Nature Company ordered some 6,000 units of clothes from Indigenous Designs, in large part because it was impressed by the company's social- responsibility efforts. But buyers from large boutiques in Chicago and New York also descended on the booth. Mr. Leonard says when he started to explain his company's mission, they cut him off, saying, "Yeah, yeah, yeah -- whatever. I'll take 10 of that, 20 of that."

Mr. Leonard says he often errs on the side of being shy about his green props. And that's something most retailers appreciate. "You cannot sell clothing through guilt," says Courtney Fuchs, owner of It's Only Natural, a Kansas City, Mo., boutique that sells Indigenous Design clothes among others. "You don't want people to come in and feel beat up with facts and figures." Ms. Fuchs says she also has had a keep-it-to-herself attitude about her own green qualifications. "I didn't bring it up unless the customer asked."

Now that the green movement is booming even among mainstream consumers, companies like Indigenous Designs are faced with a new challenge: how to stay visible amid an onslaught of new competitors barking their ecofriendly credentials.

Among the rivals are companies that sell only a few products with ecofriendly attributes to enhance their green image with consumers -- a practice dubbed "greenwashing" among ecopurists.

To promote its own green stripes enough to stand out without abandoning it's product-first marketing strategy, Indigenous Designs is crafting new subtle clothing hang tags that will quantify exactly what percentage of the price a consumer is paying goes to the artisan in Peru, how much goes to certifying cotton is organic, etc. It's also creating ecoshop clothing displays for certain stores where "green" consumers are most likely to shop, like Whole Foods, while putting less obvious signage in more mainstream stores like Dillard's.

Mr. Leonard believes the shifting tide of popular opinion toward green products has given his company new longevity. The number of individual stores where Indigenous Designs clothing sells has jumped 75% in the past 18 months.

"If customers love [a product], and then they find out it is fair trade and organic," he says, "they will be a customer for life."

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