EDINBURGH, United Kingdom — In a recent Op-Ed that appeared in these pages ("The Problem with One-for-One Models"), Grant van Sant argued that the one-for-one model pioneered by Toms Shoes is fundamentally flawed — built on the allure of “offer[ing] relatively affluent consumers the opportunity to feel like they are helping others, while, in actuality, they are shopping for themselves” — and ultimately does little to address the root causes of poverty.
In past weeks, amidst media reports indicating that Toms was up for sale, cynics saw the growing possibility of a private-equity buyout as evidence that the one-for-one model was nothing more than a marketing hook. And yet, with Wednesday's news that Bain Capital has taken a 50-percent stake in the company, the future of Toms and its commitment to social entrepreneurship looks bright.
From its very infancy, the one-for-one model immediately re-kindled the long-standing debate on the impact of direct aid versus trade on developing countries; despite what seemed like good intentions, were shoe donations to impoverished countries really doing anything to help alleviate poverty?
In its 2013 Giving Report, Toms itself acknowledges that, “on their own, shoes have a limited ability to change a life.” However, the notion that the brand’s shoe donations do little to address the root causes of poverty overlooks the fact that the shoes themselves are only one piece of the puzzle. When used by Toms’ Giving Partners to support wider health and education programs, a simple pair of shoes can become the final piece of a uniform that allows a child to attend class or, combined with disease-fighting medication, reduce the health risk associated with a mile-long walk to school every morning, ultimately reducing absenteeism.
At the end of the day, as Toms has often communicated, “this is about more than just shoes.” It should have come as no surprise, then, when in 2011 Toms expanded its business into eyewear and undertook the first major evolution of its one-for-one model, shifting from a platform of physical donations to one providing funding for local clinics and hospitals to cover the cost of not only prescription glasses and vision-saving medical treatment, but also the local training needed to ensure ongoing access to professional eye care.
Despite this, the original Toms concept and its subsequent evolution into eyewear still failed to address a key shortcoming of the one-for-one model. “If you really are serious about poverty alleviation, our critics said, then you need to create jobs,” founder Blake Mycoskie admitted to The Huffington Post in an interview last year. With that, Toms announced its plans to support manufacturing in Haiti by building a local factory it hopes will help establish a sustainable shoe industry in the country and has since publicly expressed its goal of producing one-third of its Giving Shoes in the countries where they are donated to by the end of 2015. But even at this, it remains to be seen the scale at which the company can help create new jobs through shoe manufacturing alone. Ultimately, another fundamental shift in thinking was needed in order to address the brand’s critics.
This came earlier this year, when Toms signaled the second major evolution of the one-for-one model with the introduction of Toms Roasting Company, adding coffee to the growing list of products that the brand uses to support its social initiatives. Addressing the criticism of what has been until now an exclusively aid-based model, the company’s newest move supports the local coffee trade in many of the countries where Toms already operates, sourcing directly from farmers to ensure fair prices, and ultimately giving back to the surrounding communities by funding water-related infrastructure projects that provide access to clean water for cooking, drinking and sanitation needs. With its latest endeavour, the brand seems to have found an answer, albeit for now, to at least some of its most ardent critics. Perhaps most significantly from a business perspective, with a 12oz bag of Toms roasted beans available from $13 and its current number of international café-stores set to expand, the move into coffee has allowed Toms to increase its accessibility and reinforce its position as a true lifestyle brand, offering consumers the opportunity to support the Toms movement for as little as the cost of a single cup of coffee, through a purchase which is already a part of their daily routine.
This brings us to one of Mr van Sant’s key arguments in the case against Toms and the one-for-one model, namely that “[it] offers relatively affluent consumers the opportunity to feel like they are helping others, while, in actuality, they are shopping for themselves.” I would argue quite the opposite; if Toms has succeeded in growing to where it is today, it has been on the influence of a generation of social-minded millennial consumers, not on the affluence of those looking to assuage themselves of any form of guilt. Do helping others and shopping for oneself have to be mutually exclusive? Not according to a 2012 report from The Boston Consulting Group: “Instead of making one-off charitable donations in cash or in kind, [millennials are] more likely to integrate their causes into daily life by buying products that support sustainable farming or ‘fair trade’ principles, or by joining large movements that aim to solve social or environmental problems.” Toms has compelled a generation of young consumers to engage in their cause, not only through purchasing its products as a badge of self-expression, but also by rallying together for awareness-raising initiatives such as One Day Without Shoes, an annual event where supporters go barefoot to raise global awareness around children’s health and education issues.
This ability to capture the hearts, minds, and wallets of such a highly sought-after consumer group has not gone unnoticed. Along with pioneering the way for likeminded social entrepreneurs such as Warby Parker, Toms has also helped open the eyes of many Fortune 500 multinational executives, some perhaps truly realising for the first time that bringing social causes to the forefront of their businesses, rather than addressing them as an afterthought, presents a genuine opportunity to tap into the purchasing power of a highly lucrative, and highly informed, consumer demographic.
If nothing else, Toms has certainly captured the attention of Bain Capital, which has surely recognised that the key to the brand's ongoing success rests in continuing to nurture the relationships that it has built with likeminded consumers since its founding. In an interview last year, Mycoskie likened his vision of the company’s future to that of Richard Branson’s Virgin empire: “That’s the way we’re thinking about our future," the Toms founder told Business Insider. "I think you would see five different products, all under the Toms name, but probably with the infrastructure built out from people who are best in class in that field." With the expertise and financial support that a private equity owner will provide, Toms has an opportunity to once again bring both its social and business aspirations to the next level. Until then, the only true problem with the one-for-one model is not its limitations, but rather that we cannot accurately evaluate its effectiveness in addressing the root causes of poverty until we see how far its evolution will go.
Derek Ruediger is a global brand manager based in Edinburgh.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.
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