TOMS Shoes: A Modern Day Tragedy

Image taken from toms.ca

A tragedy is defined as a story involving a hero, admired by all, brought down by unforeseen flaws that lead to the hero’s downfall. Often the flaw is nothing overly spectacular, it can be something as simple as overconfidence (Tragedy, 2020). With this definition, the story of TOMS Shoes is in every way a true modern tragedy. It begins with an inspired entrepreneur with a dream to make a change. Then the start of a movement, a movement that would inspire millions. Growing rapidly, TOMS was proving that not only could a social enterprise be profitable, but it could be a massive financial success while making the world a better place and inspiring all that heard its story. Nothing could go wrong. Until the discovery, a discovery that would shake not just TOMS Shoes, but the entire way the world views international aid. This is the tragedy of TOMS Shoes.

The story starts in 2006, Blake Mycoskie was a serial entrepreneur travelling in Argentina. During his travels, he noticed lots of the local children didn’t have any shoes. Upon doing further research, Blake discovered that that was because many of them couldn’t afford shoes. Additionally, this was a fairly serious health concern for the children, as walking around shoeless often led to injury and foot infections. Blake knew he needed to do something, and as an entrepreneur, Blake knew that somehow there was a business opportunity here as well. This is when the idea for TOMS Shoes “one-for-one” model was created. The concept is simple. Blake would create a shoe company, and for every pair of shoes he sold, he would give a pair of shoes to a child in a developing country. Inspired by the comfortable and fashionable shoe of the Argentina locals, the Alpargata, Blake created TOMS Shoes (TOMS Shoes stands for Tomorrow Shoes). Blake shared the story and vision he had with everyone he could, and to his surprise, it worked. Orders started to flood in for the comfortable and socially innovative TOMS Shoe. To Blakes’s genuine surprise, TOMS Shoes was soon an international hit. TOMS got celebrity support and international news coverage. Blake himself was featured in People Magazine, Time Magazine and Fortune Magazine’s “40 Under 40” list (Toms, 2020). Everything was going better than Blake could have ever possibly dreamed.

Most of the developed world and Blake celebrated the success of TOMS Shoes, me included. It was actually TOMS Shoes that introduced me to the concept of social enterprise. I remember being awestruck at the idea that a company could financially thrive and still do so much social good. TOMS Shoes was also one of the first companies that proved that the market would support a socially focused business. In fact, in 2014 TOMS was valued at over 600 million USD (Stock, 2014). But while most of the developed world was celebrating the success of TOMS Shoes, some people had some concerns.

The major concern was this, were the shoes that TOMS gave away actually helping the people that received them. This seems like a silly question, people who didn’t have shoes were now receiving shoes, how could that be a problem in the slightest? However, upon some digging, it was discovered that TOMS Shoes might be creating more harm than good. The true impact of these free shoes can only be understood if we look at how international clothing donations affect developing nations.

Ever since the end of World War 2, countless organizations have worked hard to try and increase the quality of time in developing nations. Some of these organizations have been individual governments and the United Nations, while others have been non-government organizations such as the Salvation Army and Goodwill. One way these kinds of organizations have attempted to assist the developing world is by getting used clothing from developed nations such as the United States and selling these used clothes at a discounted rate in developing nations. This seems like a great and moral idea. It allows consumers from these developing nations to buy more clothing for cheaper. Because of this, these organizations have continuously sent used clothing to developing nations and have had this clothing sold for deeply discounted rates.

This sounds like a great thing, low-income people being able to buy clothing for cheap. It is amazing until we ask one fatal question. What happens to the local people in these countries who are trying to make and sell clothing for a living? This simple question reveals a deep and troubling aspect of international “aid”. A study done back in 1997 revealed the answer to this question. Studying small and medium garment producers in Nairobi, Africa, it was found that local garment producers were having customers stolen from them because of imported used clothing (McCormick, Kinyanjui, & Ongile, 1997). Because of this, these local businesses were unable to grow and employ other local people. These donations, meant to help, were causing major economic problems for the local businesses. The findings only get worse. A study in 2008 found that in Africa, roughly half of the decline in apparel employment could be traced back to used-clothing imports (Frazer, 2008). So, while consumers did have access to cheaper clothing, many people were losing jobs that could have allowed them to buy good high-quality local clothing, not to mention food for their families. This effect of used clothing imports can be see all over the world. A study in 2017 looking at Haiti found the same effects of used-clothing imports. Used clothing had led to increased unemployment and struggling businesses (Gasseling, 2017). The study focusing on Haiti also brought attention to the environmental implications. While advocates of used-clothing distribution claim it allows the clothing to have a longer useful life and so be more sustainable, the study countered that the clothing still quickly wears out. These used clothes are still thrown out, but now they are being disposed of in a country that does not have the infrastructure to dispose of them sustainably (Gasseling, 2017). All the used-clothing import does is shift the environmental burden onto a country that is less equipped to suitably dispose of the waste. Combining these two major factors, used clothing actually creates a huge problem for the nation that receives them.

So, while on the surface used clothing allows the local people to buy cheaper clothing, this positive is outdone by the negative economic and environmental impact that the used clothing creates. This is especially relevant as most areas that are receiving these used-clothing donations already have unemployment as a major issue. The small benefit of cheaper clothes does not out weigh the unemployment problem that these clothing donations bring with them. Factor in the additional burden of dealing with the environmental waste and used-clothing donations are usually unwanted by developing nations. It is for this reason that Haiti has banned used-clothing imports (Gasseling, 2017). However, used clothing still gets imported to Haiti as the country doesn’t have the infrastructure to keep these imports out.

So how does all of this relate to TOMS? The problem with the TOMS one-for-one model is that it has the same negative impact as used-clothes donations. While originally TOMS was only giving out shoes to those who desperately needed it. Once TOMS became an international sensation, it was selling millions of shoes, so it had to give millions of shoes away. This meant that developing economies were being flooded with free shoes. While this was temporarily good, soon local shoemakers and sellers were going out of business as there was no more demand for shoes. This impacts not just the shoe sellers but also those who supply the shoe sellers and makers. While TOMS shoes had good intentions, this good intention doesn’t change the fact that the company has caused serious economic harm to already vulnerable areas. As the saying goes, “the path to hell is paved with good intentions”.

But what can we learn from this tragedy? I think the biggest lesson that we can learn is that when it comes to aid, it is not enough to just have good intentions. We need to do our research beforehand. I do not doubt that Blake Mycoskie had nothing but pure intentions in his heart when he started TOMS Shoes, and he was able to do a lot of good. He started a movement that inspired thousands to expect more from the companies they buy from. It was TOMS Shoes that exposed me to social enterprise. Yet none of this will change the reality of countless people who lost their jobs and livelihoods because of TOMS Shoes. That is why the story of TOMS Shoes is such a tragedy.

There is some good news! TOMS did try and adapt there one-for-one model so that it could have a more sustainable impact. TOMS came out with several lines of glasses, and for every pair sold, TOMS paid for eye surgery for someone in need. This is a much better system as the model actually empowers those in developing nations and actually increases their likelihood of getting meaningful employment. While the glasses line was not as successful as the shoe line, it was encouraging to see TOMS try and learn from their previous mistakes. Overall, the story of TOMS Shoes is a modern tragedy, but it is one that we can learn from. If we can learn from it, we can ensure that it is a tragedy never repeated!

Sources:

Frazer, G. (2008). Used-Clothing Donations and Apparel Production in Africa. The Economic Journal, 118(532), 1764–1784.

Gasseling, K. (2017). The Threads of Justice: Economic Liberalization and the Secondhand Clothing Trade between the United States and Haiti. BCL Rev., 58, 1279.

McCormick, D., Kinyanjui, M., & Ongile, G. (1997). Growth and barriers to growth among Nairobi’s small and medium-sized garment producers. World Development, 1095–1110.

Stock, K. (2014, August 21). Bain Capital Buys Toms, Will Still Give Away Shoes. Bloomberg.

TOMS Shoes. (Retrieved 2020, March 6). Blake Mycoskie. TOMS.ca.

Tragedy. (Retrieved 2020, March 14). Literary Terms.