This post is part of a blogging series by marketing students at the Presidio Graduate School’s MBA program. You can follow along here.
By Ariel Raymon
Once again, 41 year old Dov Charney, CEO of the LA based t-shirt selling empire, American Apparel, a company whose brand is built on providing fashionable clothing manufactured in a “sweatshop free” environment, is being sued for sexual harassment. With five women making sexual harassment complaints last month against the CEO, the company image is slowly becoming an ironic representation of exploitation.
In the eyes of some entrepreneurs, Dov Charney is a hero for building a successful apparel company in the US without compromising his commitment to providing fair labor practices. Operating in a market where most clothing is outsourced to China, not only does Mr.Charney pay employees almost double the state regulated minimum wage, he provides them with health insurance, subsidized lunch, free parking, well lit and ventilated working conditions, and paid time off to take English classes provided on site. When the company went public in 2008, employees received an average of 500 shares each, worth about $4,500. In a saturated market where 97% of apparel products sold in the US are outsourced for production, Dov is committed to making all American Apparel products in his factory in downtown Los Angeles. With “the highest-paid apparel workers in the world,” he has received praise from anti-sweatshop activists for being a leader in providing fair treatment to garment workers in the US.
On the other hand, Mr.Charney’s unorthodox business practices and provocative advertising techniques have been the subject of controversy among his young, urban, twenty-something target audience. After getting sucked into the catalogue for a minute, I noticed the ads are more like soft-core porn than an advertisement for a product. Dov claims to use many of his sales associates as models in his advertising and explains that he does much of the photography himself. Additionally, the CEO is open about having sexual relationships with some of his employees, and often holds work meetings in his bedroom. To me, his behavior is blatant admittance of crossing into a PR nightmare.
Dov’s actions communicate mixed messages to consumers. As the public face of the company, he suggests that he cares about workers rights, but continues to be charged with sexual assault and harassment charges. This contradictory approach regarding treatment of American Apparel employees is a double standard. From a business perspective, his actions pose a serious risk to the integrity of the company, and the board should oust him. Furthermore, this is the perfect opportunity for American Apparel to re-brand. As an informed consumer, I associate the sexually provocative ads with sexual assault. Moving from trashy, exploitative advertising, into a classier aesthetic may help disconnect Dov’s actions from the brand, helping the public to realize that American Apparel’s core mission is to provide fashionable, garments in an environment that fosters fair labor practices.
But in the meantime what do socially responsible, concerned consumers do?