World's Fair (Trade)

In 2002, the North American market for fair trade goods was $180 million, up 44 percent from 2001, according to a report sponsored by the Fair Trade Federation (FTF), of Washington, DC, and the United Kingdom-based International Federation for Alternative Trade (IFAT). More than two thirds of fair trade products are sold by mainstream catering and retailing operations, and while fair trade does appeal to not-for-profit organizations, 70 percent of North American fair trade merchants are for-profit companies.

The product that made most American consumers aware of fair trade concepts was coffee. However, the first fair trade shop, which opened in the U.S. in 1958, sold handcrafted gifts. Today, the fair trade market for gifts is about $50 million (36 percent of the total), and there's a growing trend among specialty retailers to seek out these products in order to differentiate themselves from the competition and offer something mass merchants can't.

The principles of fair trade are to pay primarily overseas artisans a living wage; guarantee that working conditions, hours, and facilities are safe and humane; and offer producers services such as health clinics, child care, education opportunities, and literacy training. Fair traders also educate the end consumer about the producer or artisans' history, culture, and living conditions, and encourage environmentally friendly practices. One of the most common benefits of fair trade is prepayment: while most companies pay when product is shipped, the majority of fair trade companies prepay producers to cover materials and basic needs during production.

Fair trade companies also provide financial and technical assistance, market information, and product feedback. Typical programs range from a cantina and food garden provided by stationery vendor World Paper of Hawthorne, New Jersey; subsidized housing in South Africa made possible by Purple Rhino of Tempe, Arizona; and educational and social programs in Colombia organized by giftware company Terra Luna of Alpharetta, Georgia.

But what does fair trade offer retailers? Foremost, it's about the product, which has low tech, high design appeal, as well as small production runs that make for unique selections. "Most of our customers are mainstream American specialty boutiques that want smaller production runs because customers won't see our bags everywhere," says Kimberly Person of Gecko Traders, a fair trade handbag vendor in Arlington, Virginia. "We work with cottage industries that the big guys can't and won't deal with."

But just because a product is handmade in a developing country doesn't mean it has to look rustic. Many are stylish and sophisticated, thanks in part to product development assistance from fair trade companies. "We're trying to make things that look different, not hokey," explains World Paper owner Alexandra Soteriou. "We're trying to see it from a more contemporary angle."

Specialty stores are the perfect setting for such unique merchandise. "What's wonderful about gift shops and boutiques is the personal, intimate environment," says Mac McCoy, president of dZi, giftware provider of Tibetan-inspired products, based in Washington, DC. "Specialty customers are interested in knowing more about the product than just price and function. They want to know where it comes from, and what meaning it will bring the recipient."

Even though fair trade vendors pay higher wages and return a far higher percentage of profits to producers (anywhere from 25 to 40 percent), the costs to retailers and consumers are not necessarily any higher, because fair trade companies eliminate middlemen. Mike Hauser of Purple Rhino explains, "I pay artisans four to ten times more than the industry average. You can pay more and still be affordable if you cut out the middleman."

In fact, wages are a comparatively small part of the cost of bringing a product to market. "Materials, shipping, duty, broker fees, and overhead are way beyond artisan cost," says McCoy. "Fair trade companies control those costs and spend what they save on increased wages."

One of the key appeals of fair trade products is that customers can feel good about buying a product that they know isn't made in a sweatshop using child labor. In fact, shopping becomes a way to support a whole local economy. "It's making a positive choice as a conscious consumer," says McCoy. "And every purchase has an impact, because there are many hands that go into making a handmade product."

"It's guilt-free shopping," adds Kimberly Person. "You know the money's going back where it's supposed to."

On the environmental front, many fair trade companies make an effort to handle the Earth with care. World Paper, for instance, makes "tree free" paper using locally available fibers. In India those fibers are white cotton cuttings from a sock manufacturer; in Thailand it's the paper mulberry, a renewable shrub. Gecko Traders offers rice bags recycled into messenger bags.

What also makes fair trade goods attractive to consumers is their compelling story. Storytelling imbues merchandise with romance, making it more than just a commodity. Vendors work hard to tell those stories through hangtags, packaging, and point of purchase materials.

"It's a marketing advantage," says McCoy "We provide an information pack with each item so people can learn about the product as well as the culture that inspired it. Fair trade products emphasize information — and there's value in that. That's why the hangtag is key, you can learn something that is special."

In 1997, the Fairtrade Labeling Organization International (FLO-I) was created to set standards, certify production, and audit product labeling. The FLO recently introduced a universal international labeling mark, but the focus has been on food products. Person's hope is that fair trade companies will eventually have a stamp of approval, "like the Good Housekeeping seal."

Until then, your customer's most trusted resource is you, the retailer. It may take a little extra time to ask what a vendor means by fair trade, but it's worth it to be the expert your shoppers can count on. You'll also probably be the only retailer in your community carrying a unique line of products.