American Apparel Inc.

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American Apparel Inc.

747 Warehouse Street
Los Angeles, California 90021
USA
Telephone: (213) 488-0226
Fax: (213) 488-0334
Web site: www.americanapparel.net

AMERICAN APPAREL CAMPAIGN

OVERVIEW

American Apparel Inc., founded by Dov Charney in 1997, rose to profitability as a T-shirt maker with an unconventional business model. Countering the almost universal garment-industry practice of outsourcing labor to other countries, Charney located his company headquarters and manufacturing facility in the same building in downtown Los Angeles, paying his factory workers high wages and providing comprehensive benefits. Despite the higher costs of its manufacturing process, the company was able to grow by using a "vertically integrated" structure in which all facets of business were intermingled for maximum efficiency and speed of production. After seeing sales double each year after 2000, American Apparel expanded into retail, with a widened offering of basic knitwear, in 2003. Charney himself devised the accompanying print ad campaign.

The American Apparel ads premiered in concert with the retail-store openings in 2003 and expanded geographically as more stores opened, running in lifestyle publications and alternative newsweeklies in relevant urban markets. Charney himself sometimes took the photographs for the ads, which featured sexually provocative images of company employees as well as men and women whom Charney had sought out on the street and elsewhere. The campaign openly courted comparisons with soft-core pornography while at the same time publicizing American Apparel's commitment to social justice, a combination intended to appeal to the progressive values of young, hip urbanites.

While the campaign ran, American Apparel sustained its rapid growth. Sales continued to double each year, and the number of retail stores grew from 2 in 2003 to more than 50 in 2005. The ads generated considerable controversy and resulted in public scrutiny of Charney's overlapping personal and business lives, but his marketing savvy, as demonstrated by the print campaign and the company's distinct brand image, went virtually uncontested.

HISTORICAL CONTEXT

Dov Charney started selling T-shirts on the streets of his native Montreal during high school, and he dropped out of Tufts University to start the first incarnation of his T-shirt manufacturing business, American Apparel, in South Carolina. When this effort failed, Charney moved to Los Angeles, where he relaunched American Apparel in 1997.

Despite the prevailing conventional wisdom decreeing that profitability in the garment trade required the use of cheap foreign labor in the manufacturing process, American Apparel's business headquarters and factory operations were located in a single building in downtown Los Angeles. From the start American Apparel paid well over the minimum wage and offered comprehensive benefits and perks to its factory workers, while also making significant improvements in fabric quality and fit relative to other major American T-shirt brands. These two brand attributes—a politically attractive sweatshop-free business model and a superior product that was competitively priced—helped Charney carve out an ever-growing niche among T-shirt wholesalers. The company found particular success as a supplier of T-shirts to rock bands, who screen-printed their logos onto the shirts and sold them at concerts and online. American Apparel first became profitable in 2000, and the company nearly doubled its sales growth and employee force each year thereafter, eventually adding new products, such as tank tops and women's underwear. In explaining American Apparel's success, Charney pointed to his antiestablishment business model, arguing that it simply made more sense for his company to locate its factory operations in the United States. American Apparel's "vertically integrated" structure, the concentration and strategic intermingling of all company departments under one roof—Charney, for instance, served as head fashion designer and marketer as well as CEO—was a cost-saving, efficiency-enhancing way of doing business that allowed the company to accommodate higher manufacturing costs.

While continuing to focus on basic casual knitwear, American Apparel further enlarged its range of products and styles, and in November 2003 it began opening retail stores with an art-gallery look in fashionable urban neighborhoods. The products sold in the stores had no logos, and the company positioned itself as an alternative to the vigorously branded garments found in most other retail outlets. The American Apparel stores' selection of wall-mounted photographs (including the work of prominent photographers, Charney's own photographs, and images from 1970s and '80s pornographic magazines) and the hiring of retail employees were undertaken with an eye toward maximizing a brand image that was uniquely urban and gritty as well as overtly sexual. This image was intended to work with the company's socially conscious reputation to appeal to youthful urbanites, and the accompanying advertising campaign, chiefly developed by Charney himself, shared this mandate.

TARGET MARKET

American Apparel targeted 20-something urban hipsters with a combination of social consciousness, a lack of visible branding, quality products, and reasonable pricing—but primarily with sexual images. Charney downplayed media attempts to cast him as a do-gooder, maintaining that an appeal to the conscience alone would never result in profitability. He openly acknowledged that the American Apparel image was rooted in hedonism more than social justice but asserted that both were organic parts of youth culture. "This is a new generation of young adults," he told the New York Times. "They want what their parents wanted at that age, what kids always want: to have a beer, to smoke a joint, to go to a good movie, to party … At the same time it doesn't feel good when their happiness is based on exploitation." In his company's print ads, therefore, Charney showcased provocative images of scantily clad women (and occasionally, men) that clearly verged on pornography. Meanwhile, American Apparel's socially conscious agenda was mentioned in accompanying small print. Charney contended that an appreciation for pornography did not conflict with a social consciousness and that those who thought otherwise were out of step with the rising generation that he was targeting.

COMPETITION

Several other clothing and footwear makers were at this time pitting themselves against supposedly exploitative megacorporations. Part of Charney's inspiration for the American Apparel business model and image was the anticonsumerist magazine Adbusters, which sought to change the power structure and exploitative norms of twenty-first-century life. In 2004 Adbusters unveiled its Blackspot shoes, an "anti-brand" that was intended as part of a campaign to "unswoosh" Nike (a reference to Nike's logo, the swoosh) and "give birth to a new kind of cool in the sneaker industry," according to a Blackspot mission statement. Purchasers of Blackspots automatically became voting members of the Blackspot Anticorporation, a status that allowed them to weigh in on new designs and uses for the profits generated by sales of the sneakers. Blackspots had, logically, a black spot instead of a logo, but some critics pointed out that the black spot itself functioned as a logo.

TeamX, a company located in the same downtown Los Angeles neighborhood as American Apparel's headquarters, launched a sweatshop-free clothing brand called SweatX in 2002. Funded by an investment from a hedge fund endowed by Ben & Jerry's Ice Cream cofounder Ben Cohen, TeamX employed only union workers and paid them at least $10 an hour. The company never became profitable, however, and it folded in 2004.

Waltham, Massachusetts-based No Sweat also sold sweatshop-free, union-made garments and shoes. Unlike American Apparel, No Sweat claimed that its social-justice mission was central to its existence, rather than a mere selling point. "We're creating an opportunity for progressive customers to participate in an experiment," the company's founder and CEO, Adam Neiman, told the Boston Phoenix. "Call it entrepreneurial activism—[an experiment] to see whether a niche market can be used to reform the larger industry." American Apparel's Charney scoffed at his competitor's sincerity: "No Sweat—boring! That guy from Massachusetts—c'mon, dude, how many panties has he sold?" Charney, whose workers were not unionized (to the dismay of many union activists), also questioned the righteousness of No Sweat's commitment to hiring only unionized workers. Regarding the unionized Indonesian workers who made No Sweat sneakers, Charney told the Phoenix, "[Neiman] says they're making more than the minimum wage in that country. But it's like 70 cents an hour; that's not sweatshop-free to me."

American Apparel's long-term goals included challenging the likes of clothing giants the Gap and Old Navy, but American Apparel's sales, though growing rapidly (from roughly $20 million in 2001 to a projected $250 million in 2005), were still only a fraction of those larger competitors, both of which were owned by Gap Inc., whose 3,000-plus stores generated more than $16 billion in 2004. American Apparel's explosive growth during the early 2000s did recall, however, the Gap's rapid expansion in the late 1970s.

MARKETING STRATEGY

The American Apparel ads ran in alternative urban weeklies, including New York's Village Voice and L.A. Weekly, as well as in lifestyle magazines such as Vice and Beautiful/Decay. The campaign began with the opening of the first retail locations in New York and Los Angeles, and it was expanded into new markets as more stores were opened.

What distinguished American Apparel's sexuality-based approach from those of other risqué marketers, such as Victoria's Secret and Abercrombie & Fitch, was the nature of the photographs and models in its advertising. Many of the photographs were taken by Charney himself, and the subjects that were shown wearing American Apparel clothes were not professional models. Charney recruited his models personally on urban streets, at trade shows, and in his stores, among other places. Many models either became American Apparel employees after their photo shoots or were already American Apparel employees before being chosen to appear in the company's advertising. The resulting ads showcased a range of female beauty and body types and were not doctored to eliminate imperfections. The images therefore had the appearance of intimate casual snapshots or art photographs, and they were meant to look more genuine than sexual images found in conventional advertising, which, in the opinion of many consumers, presented destructively unreal images of beauty.

HARASSMENT?

American Apparel founder and CEO Dov Charney was widely known for his libertarian attitudes toward sex. Not only were these attitudes embodied in the company's advertising, which he largely crafted, but Charney also publicly defended his right to have consensual relations with his employees and was said to foster an overtly sexual work environment. These personal attributes proved troublesome, as many industry observers had predicted they would, in May 2005, when three female former employees filed suit against Charney, claiming sexual harassment. Among the offensive actions the women cited were Charney's frequent off-color comments, his suggestive actions and gifts, and his policy of hiring women (sometimes strangers on the street) based on physical appearance. Charney dismissed the complaints and maintained that he had never pressured anyone into a sexual relationship. He told BusinessWeek, "I should tone down? So I don't get in trouble? It's fascism. You're asking me to succumb to tyranny." BusinessWeek interviewed seven former American Apparel workers, however, who were not involved in the controversy but claimed that they had found the sexual environment of American Apparel offensive. One said, "It was a company built on lechery." Another said, "I thought it was a male contemporary perspective on feminism, but it turns out to be just a gimmick." A third former employee stated that she intentionally stayed away from the retail store where she was employed when Charney was in town. "It's not one person," she said, "he's aiming for all women."

The early American Apparel ads established the prototype that would remain in place, with variations, throughout the campaign's run. In an ad publicizing the first American Apparel store in Los Angeles, for instance, a young woman in a bra was shown from the waist up, looking casually away from the camera. Accompanying copy read, "Come see what we're doing at our new Community Store and Gallery." The store's address appeared below, as did—in smaller print at the bottom of the page—an explanation of American Apparel's identity and commitment to social justice. Other ads showcased underwear by using cropped, close-up images of the garments on models. Some of the ads included narrative copy providing details about the model pictured, as in the following example: "Mananita Lira (aka Spring) was born in La Paz, Mexico. When she was 12 years old she and her family moved to the United States. 'My sisters and I bought some sunglasses and new clothes and tried to pass ourselves off as American girls at the Mexican/American border.' Thirteen years later Spring, age 25, is involved as a retail strategist at American Apparel."

The ads became more sexually explicit in 2004 and 2005, and many made reference to the porn aesthetic governing the campaign. Charney himself posed for an ad in which he was photographed from behind wearing an American Apparel T-shirt and no pants. Another ad showed a young man in underwear with copy reading, "Meet Glen. He's a 25-year-old New Jersey native living in New York. Glen's a bright guy and works as a tutor, but he has shown off some other features in Sweetaction Magazine, a porn mag created by ladies for ladies. Who better to test out the new Men's Brief, coming soon to our stores." One ad depicted "Melissa," the winner of "an unofficial wet T-shirt contest held at the American Apparel apartment in Montreal," and another showed a company employee, Kelley, reenacting "her favorite poses from vintage porn mags." In 2005 an actual pornographic-movie star, Lauren Phoenix, was featured in an ad wearing only American Apparel tube socks; accompanying copy instructed consumers to "look her up on Google."

OUTCOME

As the campaign ran, American Apparel's explosive growth continued. After opening its two initial retail locations in 2003, by the end of 2005 the company had 29 U.S. stores and 28 international stores, with 35 more stores slated to open. The American Apparel factory in Los Angeles became the country's largest garment-manufacturing facility, with a workforce of more than 3,000 and the capacity to produce one million T-shirts per week. Continued exponential growth was predicted.

The sexual emphasis of the American Apparel ads incited substantial negative media attention, especially as it became known that the ads' imagery was in keeping with the work environment Charney fostered at his company: he unapologetically revealed in multiple sources that he regularly engaged in sexual relations with his employees, including some of the ad models. Though many observers questioned Charney's judgment on such matters, few disputed the marketing instincts behind the print campaign and the American Apparel brand image. Advertising Age's Simon Dumenco said, "[Charney's] ads are not only hot (they show his sexy employees modeling the merch) and briskly reinforce the brand message (which is all about well-constructed, no-frills, eminently wearable, sweatshop-free clothing), but are refreshingly not celebrity-obsessed." Dumenco further compared the trendsetting power of American Apparel's ads to that of what was perhaps the most lauded print campaign in history, "Absolut Vodka," and praised the innovative attention to the personal stories of the models pictured.