Are Hipsters Enough?

Today’s post is in response to one of my classmates, Mike Rogers, post about American Apparel called “Hipsters Support Sustainable Development” which can be read here.  I, too, own a few of the AA brand items including those ubiquitous V-neck t-shirts (but they’re so comfy!) and the white-zippered hoodies so it was interesting to read about the company in Mike’s post.

In last week’s group lecture I learned more about how American Apparel employed “cost-based pricing” meaning that the price of the products have sought  to internalize the social and ecological costs associated with consumption.  This inspired me to learn more about the company and see some of the other things it was involved in.  However, a quick “Google News” search of American Apparel brought up some grim news.  Their quarterly financial document filed earlier today revealed that their revenues have dropped quite significantly since the last quarter, and their share price has plummeted 63% since the beginning of the year.  This makes them dangerously close to not being able to repay major debt (in the tune of around 80 million) coming due soon.  A somber quote from the filing: “These factors, among others, raise substantial doubt that we will be able to continue as a going concern”.

Although I do commend American Apparel for its effort to incorporate social and ecological costs into the pricing of its products, it is clear that consumers aren’t quite ready yet to pay this “total cost” for AA’s products especially during times when people are money-conscious. I’m not quite sure what to suggest to American Apparel because I’m sure that compromising on its value is the last thing it wants to do.   But what I do know is that AA will probably need more than the aforementioned “hipster’s” support to keep itself afloat.