American Apparel has been in the news quite a bit over the past week or two due to the Board of Directors attempting to remove Dov Charney as President and CEO of the company. And now even more in the news as Mr.Charney tries to increase his ownership stake to 50% so he can keep the company. I admit that I saw this as an eventual outcome with Mr.Charney’s repeated lawsuits about sexual harassment from employees. There haven’t been many prominent Americans (Dov is actually Canadian btw) who have been able to recover after photos or videos of their penis has been released to the masses. Although he did manage to parry these issues for a few years, the more pressing issue is American Apparel’s dismal stock performance.
American Apparel stock did reasonably well after their IPO and then peaked in 2008. Sadly it was pretty much downhill from there. I am sure raising the stock price is the main focus and goal of the different hedge funds that are fighting out a proxy battle with the board, but the best parts of American Apparel actually come from Mr.Charney.
It isn’t easy to appease and attract investors when you strive to be ethical and progressive in a way that Mr.Charney does. He is committed to his plan of manufacturing his clothes in the USA, which is already considerably more costly than most major clothing manufacturers/retailers who do all their production in third-world countries, then add in the fact that he believes in paying American workers a living wage and you’ve got a pretty expensive operation.
In fact, lots of what American Apparel does is in stark contrast to their competition.
10 great things about American Apparel
- American Apparel is committed to making sweat-shop free clothes
- All their clothes are manufactured in Los Angele’s garment district
- They strive to pay their employees a ‘living wage’ that is beyond the minimum wage set by the state
- In the past they have very quickly responded to natural disaster by donating their clothes
- Their ads feature actual American Apparel employees rather than celebrities or models
- They believe in equality and support LGBT right
- Their products are sourced from organic cotton because they care about the environment as well as the livelihood of cotton farmers
- They recycle as much as possible and even have a solar installation on their roof that generates clean and renewable energy
- They support progressive immigration reform
- Their clothes are actually great quality without a prominent
Now the bad in this instance is pretty obvious. They have received lots of criticism over the years about their advertising being too sexualized and sometimes downright creepy. This seems like a bit of a moot point in the world of fashion where all the major brands use sex to sell their products. At least their sexy ads still have woman actually wearing the clothes they are supposed to be advertising. We’re all aware of the other companies who create ads that feature a naked model to sell clothes we can’t see, but those companies aren’t facing the same issues as American Apparel.
Obviously the biggest problem with sexy advertising that features half-naked young employees is the fact that it is an uncomfortable reminder of Mr.Charney’s sexual harassment lawsuits that allegedly involve the very same employees. In fact, their hiring practices are suspect since their ads feature employees, clearly they hire women based on appearance. As far as I know you need to submit photos of yourself when applying for a job at their retail outlets.
Even if American Apparel’s unique posters and ads worked at first, they probably should have made a change in direction after these lawsuits emerged. Their inherent link to sex and provocation isn’t just limited to ads, they also carry products like “The Lolita Mini Skirt” which isn’t doing them any favours. Being provocative is one thing, but with the noise of sexual harassment lawsuits in the back of our minds, these ads are doing them a disservce.
Ethical consumerism is quickly becoming a real movement. The Bangladeshi garment factory that collapsed last year resulted in hundreds of death and was a catalyst for this movement as it pertains to purchasing clothes. Unfortunately these type of ethical consumer movements are having a difficult time gaining real traction with the average consumer. This is partially due to the sluggish economy and dismal job prospects for millenials. When (or if) this economy turns around and millennials have real purchasing power studies indicate that ethical business practices will play a major role in the decision making process for where they spend their money.
When this whole battle for power subsides in the upcoming months (hopefully not years) the company would be well advised to scrap their previous branding and advertising. They have a great story to tell about a progressive clothing company that is aligned perfectly with the consumers of tomorrow. Scrap the sexy ads and let other company’s play it out. They already have cool, simple and fashion-forward clothes that appeal to millenials, now all they need to do is put all their messaging behind it. If consumers can find something that they feel good in and feel good about, it’s a win/win for the company.
Admittedly I am not proposing something completely new. Their website features lots of information about their vertical intregration, corporate social responsibility, political activism and sustainable business practices. They also leverage social media to communicate these messages in a pretty impressive effort. However, I feel that these messages don’t stick in the minds of consumers because they are overshadowed by their sexy ads, which their brand is so synonymous with. They need to put all of their efforts into telling the great and often overlooked story behind the company.
American Apparel’s current vision and values will align perfectly with the consumers of tomorrow. If they focus their communications, branding, advertising and public relations on the right areas they could really reap the benefits of everything Mr.Charney has worked hard to create. Whether Mr.Charney is with the company by the end of the year or not, he deserves some credit for creating a fantastic brand that is currently under appreciated and undervalued.