People Tree

For every beautiful garment People Tree makes, there's an equally beautiful change happening somewhere in the world.

Tuesday 19 June 2012, by samaira

5 inspired

A. How did you find this company? What are the main facts about its activities?

People tree is a company that I wanted to pursue my internship while I was studying in the UK.

People Tree is a Fair Trade pioneer and ecological fashion company making clothing and accessories for women, men, children and babies. It was founded by Safia Minney in 1991 first based in Japan and the company was launched in the UK in 2001 to establish fair trade fashion in Europe. Today, there are 130 shops selling People Tree products throughout the continent such as Topshop, ASOS and John Lewis, in addition to 400 shops in Japan. People Tree has successfully exhibited that even in the fast-moving, extremely volatile fashion and garment industry, fair trade can succeed; having a first mover advantage in fair trade fashion supply chain in the world.

People Tree has relations with more than 60 fashion and handicraft producers in India, Bangladesh, Nepal and 16 other countries across Africa and Latin America. It is supporting the lives of rural communities through fairtrade business. These producers provide jobs for about 2,000 people, while 10,000 benefit from People Tree programmes. Their collections are handmade rather than relying on polluting machineries, which in turn aims to protect the environment and reduce global warming.

They have formed partnerships with top designers such as Richard Nicholl, Bora Aksu and Thakoon showcase fair trade fashion at its best. For SS11, they signed actress, Emma Watson, who helped to produce a youth inspired collection.
Through its Market Exposure programme, representatives of producers are invited to meet customers in the UK and Japan to have learn and understand about the market, the importance of design, quality and raise the fair trade profile.

B. What are the Ethical challenges this company is addressing?

• To pay producers fair prices
• To provide advance payments when needed
• To promote traditional skills and rural development
• To operate with transparency
• To promote natural and organic cotton farming
• To avoid using damaging chemicals
• To use natural, recycled and biodegradable substances where possible
• To recycle where possible
• To protect water supplies and forests

C. What makes this company really inspiring to you and why would you trust it?

It is a company that shows that fair trade business actually works. People Tree encourages the use of traditional skills and techniques – hand-embroidered skills which are rapidly disappearing due to the mechanisation of the garment industry.
For instance in Bangladesh, traditional hand weavers are losing their jobs against machinery looms that work nine times faster. This is due to demand for faster fashion. People Tree pays a premium for hand-crafted/ hand embroidered items, giving people a living wage.
They also provide assistance to people to build up their businesses; People Tree offers training and financial help such as advance payment. As the company places regular orders, people can plan ahead, feed their family and send their children to school.
Further the founder, Sofia Minney works with passion and she is fulfilling her dream while helping many others. She has designed a new business model in the fashion world to fight against world poverty. She believes that ‘slow fashion’ can obtain sustainability and offer food on the table. On average a garment takes 13 minutes to make, using more machinery and leading to a de-skilled workforce. People Tree keeps the traditional crafts from diminishing and employs people for 1-4 days per garment meaning each garment offers far more benefit to the producer. They also offer 50% payment in advance to their producers and pay 50% more on average. So they can get materials and pay wages on time. Money isn’t their first priority and a big part of what they do is offering technical training, capacity building as well as education. The profits from the garments provide education to children. For instance, Kumbeshwar Technical School (KTS) provides training and employment opportunities to disadvantaged people in Nepal, at the same time as using the profits from Fair trade to run a school for 260 kids. People tree use organic cotton which not only benefits the earth but also the people. Farmers often spend 20 – 30% of their profits on pesticides when producing non-organic cotton, which can lead to ever increasing debt.

Further in terms of transparency the company provide every year a complete comparable social review which evaluates the company’s activities as seen by their producers. This initiative engages consumers or anyone to look behind the marketing, do their research and make up their own mind about a company’s ethical credentials.

What is interesting is that although People Tree looks like it is successful it still isn’t making profit In 2009 the UK branch of People Tree made a record loss of £375,000. This is after being in the UK for 10 years. People Tree Japan first broke even and made profit in 2001, which was its 10th year. So maybe year 10 was profitable for the UK division too. This is because People Tree ensures that a fair price is paid to the producers as well as committing to environmentally friendly production and the costs of working in small villages, not factories.

Even during the bad times, Minney’s company philosophy and beliefs have kept them running where similar ethical fashion brands were unstable and unsuccessful. Though the company profits for the past years have been below standard as a fashion brand, but they refuse to withdraw front this challenge.

D.What are the possible challenges facing the company in the future and how do you think this company may improve?

One of the challenges the company would be facing is financial help. It is currently looking for finance to scale up its activities, including the launch of a London flagship store. There is a challenges of growing while simultaneously able to finance orders to producers in advance (50% advance). They have to be careful about external investors interested to become shareholders and accept only like-minded shareholders. In order to have continuous cash-flow they issued bonds both in Uk and Japan: “we have received about 700.000 pounds from individuals that want to help People Tree making beautiful garment and beautiful change happening somewhere in the world” (Minney, 2012). Further, founder Safia Minney is convincing conventional companies to sell fair trade products and revaluate their sourcing strategies.

In many mass market brands, have introduced organic 
or Fairtrade labelled products or ranges as an option. There is a danger that they are now considered to be simply ‘chasing the ethical pound’ that could put a fashion company at a competitive disadvantage. This brings the idea of brand positioning as an important strategic competitive advantage. The most valuable types of competitive advantages are the sustainable ones and the ones that are most difficult to copy, and so a truly ethical supply chain could be one of the most effective sources of competitive advantage for People tree. The partnership with retailers like Topshop could have difficulties because of supply chain issues such as longer lead times due
 to hand crafting techniques. For
the time being, the fashion industry and the consumer market needs to realize that some market positions requires patience and time to achieve, such as low priced, high quality, truly ethical, high- street fashion.

To sum up, People Tree will not give up from growing and they have worked tirelessly through natural disasters like floods and financial crises to keep their brand going and become a household brand. They keep up with their values of promoting natural and organic farming, avoiding polluting chemicals, protecting water supplies, using environmental friendly substances where possible and to recycle where possible.

Bibliography

http://www.theecologist.org/green_green_living/green_business/839079/green_business_people_tree.html

http://www.ea-tokyo.com/downloads/ABINewsletter-PeopleTree3.pdf

http://www.theecologist.org/green_green_living/green_business/839079/green_business_people_tree.html

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1 Discussion / 1 Message

  • People Tree 5 October 2012 at 09:20 , by Francesca Piana

    Very inspiring!
    I think the consumerist field par excellence, fashion, is starting to take this path. The quickness with which high fashion brands and especially fast fashion brands are producing and selling their collections is increasing and increasing. Speed is required in order to satisfy people’s consumerist habits and their need for a rapidly changing style, look and fashion. At the expense of quality and fit. I believe the fashion market is preparing to go back to custom-cut, high quality finish and fit, more valuable fabrics and materials style of clothing. In one word: slow fashion back to life.

    If all this is combined with a sustainable supply chain, biological cotton plantations, well-paid hand-made tailors and workers from poor areas of the planet, financial help to them, sustainable materials... Then, the better!

    The problem is one: the unit cost per garment, and consequently its unit price. Can people afford this nowadays? The company’s suffering financial losses and People Tree UK still does not break even after 10 years. I read People Tree is not about making money, but how can a business survive in the long-term without making profits?
    Increasing the capacity and the supply chain network would be easily possible, I guess. But this would also mean expanding the number of the brand’s points of sale, with a subsequent decrease in the brand’s exclusivity and appeal. How is it gonna manage the trade-off between a unique image and a satisfying performance?

Location: London E1 5LN (United Kingdon)

Sector: Wholesale and retail trade, Education

Official website: http://www.peopletree.co.uk/

Key figures:

Annual Budget: million
established" Japan (1991); The UK (2001)
Employees: 53 ( 41 in Japan; 12 in the UK)
Geographic Area of Impact: Africa, Asia, Latin America Recognition:
2008 - Cosmopolitan Best Ethical E-tailer Award
2009 - The Observer Ethical Awards for Fashion

Nbr. visits: 969

Nbr. inspires: 5