Former executives of Lands’ End launched apparel company Fair Indigo on Monday, scoring a virtual hat trick in multichannel retailing while aspiring to something loftier: fair worker wages.
The online and catalogue businesses sell men’s and women’s apparel, footwear and accessories made in 23 factories where pay exceeds local minimum wage and workers enjoy perks like on-site health care and free trips home for Chinese New Year. Opening on Nov. 1 is the third channel, a store at Hilldale Mall, Madison, Wis., the future home of Robert Redford’s first Sundance Cinema Center.
“This is a new market we are going to be creating,” Fair Indigo chief executive officer Bill Bass told WWD. He said there is pent-up demand for quality, ethically made apparel and it doesn’t have to be pricy.
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Silk chiffon skirts made in Shenzhen, China, go for $79. Jeans priced at $59 are made in Costa Rica, where workers get four hours extra pay each week plus free jeans for life. The Cashmere With a Conscience collection ranges in price from $129 to $169.
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The Middleton, Wis., company wants to take “fair trade” practices to mainstream apparel. Although there are fair trade wages established for coffee, loose tea and chocolate, no such standards exist for apparel.
“Traditionally, fair trade is [confined to] mom-and-pop shops selling indigenous designs, or people selling hemp clothes,” Bass said. “What we wanted to say is, we can have really nice fabric and still have it be fair trade — so you’re talking cashmere, silk, nice things that you wear to work.”
While Los Angeles’ “sweatshop-free” American Apparel targets teens, Fair Indigo is focused on 30- to 50-year-olds.
Wage rates are the top priority for sourcing decisions, he said, citing a factory in Dongguan, China, that makes Fair Indigo’s cashmere. Workers there are paid 40 percent above minimum wage. Fair Indigo subsidizes that pay with a bonus for all employees, even if they are not working on its sweaters.
Moderate price points are possible despite the higher cost of goods because Fair Indigo limits outlays for advertising and electronic commerce.
The Web site, fairindigo.com, was developed internally with the help of Berbee Information Networks, Madison, Wis., at a cost of $70,000, well below the $1.5 million estimate one analyst proffered upon viewing the site. Bass estimates 75 percent of revenue will come from the Web; 15 percent from phone catalogue business, and 10 percent from stores. He would not disclose projected annual sales, but said up to four stores per year may open beginning in 2008.
Launching all three channels together affords the start-up an edge that eludes many retailers. Fair Indigo’s single, integrated order management system will provide a holistic, reliable view of all channels. Retailers that add a channel often pieces together technologies, resulting in an inconsistent shopper experience across channels.
“These guys are launching all three pretty much at once. It’s a great thing because they are building synergies — from a technological standpoint and from an operational perspective — into the foundation of their company,” said Patti Freeman Evans, senior analyst at Jupiter Research.
Fair Indigo’s principals are financing the business and there are no outside investors, said Bass. Other co-founders include Don Hughes, chief operating officer; Rob Behnke, vice president of merchandising, and Elizabeth Ragone, style director. All four hail from Lands’ End, where Hughes was chief financial officer; Bass was senior vice president of e-commerce for Lands’ End and vice president and general manager of Sears’ customer direct; Ragone was manager of Internet merchandising, and Behnke was international merchant at Lands’ End Japan.
Fair Indigo is working with the University of Wisconsin to determine fair wages in different parts of the world based on the cost of housing, health care and other living expenses. Although Fair Indigo pressed TransFair USA to work toward standards, the certifying agency deemed the task too complex and said it would take years. “For us to put our seal on something, we want to make sure every level of production — from cultivation to processing and fabrication — has been certified,” a spokesman said.
Bass said Fair Indigo didn’t want to wait for that “perfect world” and will define fair wages for cutting and sewing first, and move deeper into the supply chain later on.