American Apparel's New Image

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Provocateur: CEO Dov Charney, makes no apologies for American Apparel's racy image. | photograph by Jeff Minton

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Dov Charney was naked from the waist down.

He was in his office with three of his employees -- a man and two women -- and me. The door was closed. I'd known Charney long enough to be unsurprised. I first met him in 2004, when his company, American Apparel, had only a handful of stores. By the end of 2007, it had more than 180 stores from New York to Seoul, Korea; revenue in the $380 million range; and more than 4,000 employees at its Los Angeles headquarters, the largest garment-manufacturing operation in the United States. Once obscure, the brand had become famous.

Or maybe infamous, since much of the attention Charney and his company got along the way tilted toward the sensational. His idiosyncratic lifestyle received much scrutiny following a magazine article in which the writer vividly mulled Charney's sex life. And let's face it, when a successful entrepreneur stands with no pants on in front of a journalist, the journalist is likely to mention it.

I wanted to interview Charney again, to talk not about his lifestyle but about his business. Before our first meeting, American Apparel seemed to me to be a marquee example of a business that had positioned itself to respond to a rising tide of ethical, antibrand consumers. At a moment when practically every clothes maker was offshoring to cut costs, American Apparel made its wares at a U.S. factory in which the average industrial worker (usually a Latino immigrant) was paid between $12 and $13 an hour and got medical benefits. The company had taken out ads in little arty magazines, noting that it was "sweatshop free."

But the company had been criticized in The Nation magazine for resisting unionization, and when I asked Charney about it, he unleashed a vigorous response that drew on everything from free-market economics to the Magna Carta. There were 7,000 cut-and-sew factories in the Los Angeles area, he fumed; none were unionized, and American Apparel paid the best wages of any of them. The nonprofit Garment Worker Center did not back the effort to unionize American Apparel, and the San Francisco Chronicle reported that the center heard "few complaints from American Apparel workers, and those that come up are typically minor and resolved easily."

Charney's most forceful argument concerned the irony of the occasion for The Nation's piece: Another self-consciously ethical clothing brand, the union-friendly SweatX, had just gone out of business. The lesson of SweatX, Charney said, was that building a brand solely around a company's ethical practices was not a good strategy for reaching masses of consumers. The ethical sell was too limiting. It was a niche strategy, at best. Which was why American Apparel was moving away from the ethical sell to something very different.

Charney pulled out a copy of a book called The 48 Laws of Power and read me No. 13, which suggested that to get what you want, you must appeal to people's self-interest, not to their mercy. "That's the problem with the anti-sweatshop movement. You're not going to get customers walking into stores by asking for mercy and gratitude." If you want to sell something, ethical or otherwise, he said, snapping the book closed, "appeal to people's self-interest."

Consumer Ethics

There is plenty of evidence to suggest that Charney has a point. A whopping majority of American shoppers may consider themselves environmentalists, but, according to the Journal of Industrial Ecology, only 10% to 12% "actually go out of their way to purchase environmentally sound products." Similarly, Brandweek reported on a survey that found that even among consumers who called themselves "environmentally conscious," more than half could not name a single green brand.

Why the disconnect? Well, ask most people whether they care about the environment, and it's not particularly surprising that many would say yes. Ask whether they would back that up by "buying green" if they had the chance, and again, it's likely that very few would admit to being hypocrites by saying no. What we do in the marketplace is another matter.

There is a real-world overload of factors that confront consumers in the marketplace -- price, quality, convenience, pleasure, plus the countless number of symbols that provide us with rationales to buy. The Yale Center for Customer Insights designed an experiment to test this phenomenon. It divided 108 subjects into two groups. Members of one group were presented with a straightforward consumer choice. Would they prefer to buy a vacuum cleaner (a utilitarian object) or a pair of jeans (a bit of a luxury), each of which was assigned the same price, $50? About 72% chose the vacuum cleaner. Members of the other group were told to imagine they had volunteered to spend three hours a week either teaching children in a homeless shelter or "improving the environment." They were asked to explain their choice, a process meant to prod them into engaging with the idea. Then they faced the vacuum-cleaner-or-jeans choice. In this group, a majority (57%) opted for the jeans.