Originally Written for Cultural Economics at Emerson College, taught by Dr. Tylor Orme
For the most part, the fashion industry has been kept at a distance from the need to be politically opinionated. Despite its breadth and inherently personal aspect in a person’s life, it’s long been able to slide by without caring about ethics or politics. The environmental consequences of fashion was often unquestioned. Designers like Karl Lagerfeld, of Chanel, were able to spew hatred towards plus-sized models, work with fur, and be plain-ol’ racist and sexist, without much comment. Maybe the fashion of a specific individual was politicized—that of a first lady being too much or too little, dress codes for a school child, or the consequences to crossdressing—but until recently, brands haven’t had to make an effort. This has largely changed with the rise of social media and the trend of activist fashion.
One example of this trend follower (though I hate to call it that), is the brand Everlane. Founded in 2010, in San Francisco, Everlane has quickly climbed the ranks: it’s now known as a go-to quality brand amongst anyone within the fashion industry. Throughout its almost-decade of existence, it’s boasted unusual practices to differentiate it from other mid-price range clothing companies (like Madewell, J. Crew, Banana Republic, etc). Everlane practices, what they call, Radical Transparency and use this transparency to directly compare themselves to their competition, and, of course, show themselves as the better option. Within this title, they do things like explain what portion of the sales price pays for what (profit and fixed costs, as well as variable costs like materials, labor, transportation, etc) or how their profit margin compares to that of other brands (it’s lower), they donate portions of profit from specific lines to organizations like the ACLU, give customers options to pay more for products to raise that profit margin (supposedly to pay for new product development), provide direct information about the factories or materials they use to produce their clothing with, and how those places and materials are ethical. All of which would be considered unusual in the industry.
Some fashion brands may deploy different tactics to garner the same ethical brand image, but rare is it a brand does as many, or any of those Everlane uses. H&M will run promotions for being environmentally friendly, and you can get a discount if you donate clothing to their stores for charity, but they otherwise don’t do anything at the source to manage their environmental footprint. Brands across the board (Forever 21, IvyPark, Dior, etc) will commodify current activist-esque slogans (“This is What a Feminist Looks Like”, “Green is Good”, “Stay Woke”, etc), while contradicting the words by simply using the slogans to gain a profit without benefiting the cause, or even directly falsifying it by using sweatshops to create their clothing.
While few other brands “walk the walk” in terms of their ethical marketing (and don’t participate in transparent pricing) due to the fact it seems most profitable to not give away money, there are actually some strong economic benefits to running a fashion brand in this way.
Potentially the strongest benefit garnered from their “Radical Transparency” is the subsequent ability to manipulate the demand elasticity of their products, in a way most brands can’t achieve with just marketing and no follow through. While most products can be classified as having either elastic or inelastic demand, Everlane is able to pick and choose which would be more beneficial for each of their products even though many of the factors that influence elasticity remain the same. To start, the clothing doesn’t take up a large portion of a (target) customer’s income. They price and market towards middle-to-high class people who are looking to be more conscious of their decisions. This customer can easily afford their prices, which means the demand is inelastic. And, their brand has garnered a lot of brand loyalty. Their loyal consumers love the actually ethical approach to fashion, and thus will stick around for what’s to come. This also points to demand being inelastic. This inelastic demand means they should raise prices to make more money. Everlane also taps into elastic demand. Because of the quality and price point of the brand, it’s probably considered more of a luxury than a necessity. And, there are also a lot of substitutes for the products themselves—the brand is made up of simple designs with good quality materials. Elastic demand means they should lower prices to make money. The biggest way Everlane has been able to monetize this split-down-the-middle demand elasticity is with their “Choose What You Pay” line. In it, the customer is given three price options, each with descriptions of what the extra money would accomplish: cost to develop, produce, and fulfill a product; basic costs + extra towards office overhead; or basic costs and extra overhead + future product development.
By giving consumers the choice to control their price, they succeed in following both the “lower prices” and “raise prices” instructions to make more profit. When a customer pays the lower price, they are able to get customers who cared a lot about the price of the products—essentially gaining the benefits of price discrimination without making customers who paid more feel unfairly treated. This choice also builds brand loyalty since a customer appreciates that they can choose to pay less, and may change the future demand of that customer towards inelastic demand. On the flip side, the company doesn’t lose out on the money of the people who already had inelastic demand—like they might with traditional price discrimination. Those with already inelastic demand are likely to pay the higher price in the “Choose What You Pay” line, and are more likely to purchase the other, higher cost, products outside of the line as well. Across the board, the line encourages brand loyalty and also likely results in a spread of information about the brand, which is good no matter what type of demand a brand or product has. The more people who know about your brand, and create buzz about it, the more demand there is overall.
Thus, Everlane has also been able to benefit from a sort-of Bandwagon effect, in two ways. First, as the entire industry trends around activism and ethics, Everlane has been able to lead and stand out from the crowd in this discussion. As mentioned, by being one of the few fashion companies that actually follows through on their activism, people reference them as a capital-G Good brand, and they’re flocked to in applause. Secondly (and somehow both in conjunction and opposition), they’ve done very little traditional marketing—almost all of their press has been from editors of different magazines or other fashion industry influencers. In result, they’ve gained a sort-of cult following of people who feel “in” on the secret of how great they are. More people hear about them and more people tell those who they think will be like-minded. Everlane’s word-of-mouth “advertising” means they’re only being marketed towards people who would actually want to join the bandwagon and become a loyal customer—the information exchange is more valuable, efficient, and makes consumers feel like they’re part of a club that only those with similar values and inelastic demand can join (it’s basically a political party).
Truthfully, everything mentioned so far works to do one thing: incentivize consumers to buy their products. Even aside from all of the economic terms, everything works as incentive. The ethical factories, donations to the ACLU, and good quality/environmentally-sourced materials make consumers feel like they’re doing something to help the world just with the purchase of a shirt. The “Choose What You Pay” line, works because it makes people feel good about the money they’re spending. They pay more money because they’re incentivized to help a brand they care about come up with more new products. Or, they pay less money and are incentivized to become loyal to the brand, because what other brand lets you choose what you pay? The bandwagon effect encourages consumers to jump on the bandwagon—on this, actually good, bandwagon—and tell their friends that are good enough people for the brand. Even the wording on their website, phrases like “built to last” and descriptors like “go-to basics” incentivize customers into buying these products because, unlike from other brands, you won’t have to buy them over and over again when they eventually fall apart or out of trend. With the upturn of activist fashion, and the societal expectation that people should care, there’s even a built-in disincentive towards shopping elsewhere. Not participating in activist fashion (even fake examples, like the commodified slogans) means you don’t care about them or are actively against them, and society (social media, your friends, liberal politicians) will shame you under that assumption. Everything about the Everlane brand is incentivizing you to be Good, and they’ll admit to it. The first large block of text on their about page says, “We want the right choice to be as easy as putting on a great T-shirt.” And they’re making a profit out of it (a profit that consumers are okay with). Everlane hasn’t fallen privy to the idea of capitalistic greed many other brands have succumbed to. Instead, they’re okay with the idea of long-run equilibrium—of just breaking even and bettering the world with it.
Really, the difference between Everlane and other brands is that Everlane is okay with making less profit, because they seem to actually believe in the activism that’s currently trending, and they know the only real solution to making it widespread is to make it easy.