Business Leaders In Sustainability

The Victoria VBN selected Hemp & Company and three other Victoria businesses as case studies for a University of Victoria Economics Department project . The  students examined the practices of entrepreneurs who factor in Social and Environmental responsibility with the bottom line of money. The other businesses were Eco-Everything, The Good Planet (both Green Collective members) and the restaurant Red Fish/Blue Fish.

The VBN is hosting a public meeting to discuss these issues on March 24 at Victoria City Hall from 7-9 pm. There will be representatives from each of the businesses. More information can be found at the Values Based Business Network website.  Otherwise, read on to review the student report for H&C.

Hemp & Company BLIS Project Report

As Bill Finley, owner and manager of Hemp & Company (H&C), stood outside his flagship location on Victoria’s vibrant LoJo street, he considered the changes in the values of the people walking past him—and of those throughout the country. His alternative fabrics clothing store, driven by the mission to promote hemp as a sustainable and viable alternative for fuel, oils, fibres and foods, had experienced gradual growth partly due to the green movement of recent years. Things were changing, though. Thanks to their success, H&C was evaluating the best way to grow the company; they were facing more competitors who were positioning themselves as values based leaders; and, they were continuing to struggle with how it was best to successfully communicate to customers what made H&C different.

Company Overview

With three locations, LoJo, Vic West, and Nelson, B.C., H&C served the needs of customers who wanted their clothing to be derived in sustainable ways, while being practical, durable, and stylish. H&C sold clothing made of alternative fabrics, such as hemp, organic cotton, and bamboo. They also carried some natural body care products that claimed to have fewer harmful chemicals, these included products such as lip balms, soaps, and lotions.

Their product was more expensive than mainstream clothing stores, but not prohibitively so. Bill proposed that the extra money spent on buying a t-shirt made of hemp would be acceptable to a consumer when they realized that the t-shirt would far outlast a cotton one, and that it had been sustainably manufactured. This value proposition indicated that H&C was differentiating based on quality and sustainability, something they tried to communicate to their customers.

Because one person’s definition of sustainability tended to be different from another’s, it quickly became obvious that H&C must have a lucid definition of their own which would be easily communicable to their customers. Finley saw sustainability at his company through the lens of the Triple Bottom Line (TBL); not only must the company be economically profitable, but its actions must further the social needs of the community, as well as reduce, as best they can, the impact on the environment. These three facets of sustainability were considered in the long term goals, as well as daily decisions of the company.

History

Earlier in his life, Bill lived in a small town in the Kootnays region of B.C. in which a polarization of values was just under the surface. The families of loggers who derived their livelihoods from the harvesting of the forest were at ideological odds with those of the significant community of liberal-minded families who believed in the preservation of habitat and ecosystem. As a school teacher, Bill was particularly mindful to walk the line of diplomacy, and as a result, he was exposed to concerns brought by both sides. He noticed that both sides were concerned with—what it boiled down to—protecting “our place”. So as he became involved in the community and the mutual education of different points of view, he was involved in a local conference which focused on discussing proper logging and its effect on the local water source. From his experience understanding the conflict, he came to believe that facets of both systems were important to a balanced lifestyle. Over decades, as families and family values mixed, and new generations were born, he started to notice that the people of the town came to see things in a similar light.

So, it was in Nelson in 1999, with his business and management skills, Bill opened H&C with his son, Mike. They recognized that hemp could be brought into the mainstream in Canada, but that they needed to promote its use without being associated with marijuana. The hemp plant had been used by humans for over 10,000 years, and had numerous advantages over cotton. They found that hemp was a more sustainable and logical fabric choice because it took much less water to grow to full yield. Pests were not as attracted to it, and less fertilizers were needed. The plant could be used for many purposes, among which, very durable fabric could be manufactured. Despite all of this, hemp had fallen out of favour.

During the 1930s, hemp was confused with its cousin, marijuana, and banned. Farming it became illegal in many nations, excluding certain communist states, and so the modern use of it had been stunted. This came through as H&C quickly uncovered that there were no hemp textile manufacturing facilities in North America. The only places that they could source their fabrics were from suppliers in Eastern Asia and Eastern Europe, but primarily China. As of May 2009, H&C’s hemp clothing products were largely produced from fabrics manufactured in China.

Competition

H&C faced two types of competitors: other alternative fabric clothing stores—such as Fiber Options and Not Just Pretty—and sustainability leaders, which were successful stores such as Mountain Equipment Co-op and Lululemon, all of which consistently communicated conscientiousness for social and environmental aspects of sourcing, selling, and lifestyle conduct.

The way that Bill decided to deal with competition was to not see them so much as competitors but more as allies. He was in regular contact with the operator of Fiber Options (which was just up the street from the H&C LoJo location), and said that they sent customers to each others’ stores if they did not have what the customers were precisely looking for. Bill called this “Co-opetition”, and rationalized this unconventional practice by saying that “it is one of our missions to clothe people in hemp; why not get them clothed by competitors?” He also said that on the whole, “Co-opetition” has helped the two companies.

Another aspect of “Co-opetition” that Bill brought forward was the forming of The Green Collective, a group of 12 like-minded businesses in Victoria that helped each other by offering referrals and producing positive publicity and promotions. Among them were other environmentally conscious clothing stores, an eco-soap exchange, an organic hair dresser, and a fibre art store. By grouping together similar businesses and promoting themselves through brochures and contests, Bill sought to establish a reputation for being a destination for sustainable living—much like some malls become destinations for clothing or shoe shopping—that would garner more attention than if each store had promoted itself alone.

Employees

Because of the importance to H&C of spreading the awareness and education of hemp and healthy living, a major activity of employees was to communicate H&C’s values to customers. Marielle Duranteau, the floor manager, said that when evaluating candidates for a position at H&C, she looked for people who were “a lifestyle fit”. She needed people in line with H&C’s values who lived their own lives in sustainable ways, so she asked them about their actions in the community outside of work.

Another requirement of employees, in addition to being people who “embody the brand”, as noted by Bill, was that they were willing to share their knowledge of the message with those that were unfamiliar; they were expected to “start a conversation and see where it goes”. Bill recognized that it was valuable to start dialogues with customers, even if they may not have planned to buy anything, as well as that it was important not to force one’s beliefs if the customer did not want to hear about them.

As of May 2009, H&C employed four full time employees, who had worked an average of three years with the company, and four part time employees. Bill reported a feeling of responsibility to support the workers, so after H&C found that minimum wage was just over half of the amount necessary to live a healthy lifestyle in Victoria, B.C., they instigated a pre-emptive raise. They increased pay, commissions, and benefits. They felt that the new compensation package helped to attract and retain employees that better suited the organization. As Lorna Knowles, their chief community liaison, noted in regards to enabling employees to live sustainably “you can’t tell someone who makes eight dollars an hour to pay more…”.

Community Involvement

As part of the social element of H&C’s profitability goals, stronger community was to be developed. This was largely taken on by their staff member Lorna Knowles, who worked full time to engage the community. She used the store as a vehicle to spread awareness about the issues relevant to H&C. When an outside party would approach them, whether it was to sell tickets, donate gift baskets, offer clothing to fashion shows, post posters, or collect donations, H&C was willing to consider helping as long as this party was promoting an event or cause that was in line with H&C’s values.

One of the organizations that H&C helped collect donations for, The Land Conservancy (TLC), opened the door for further involvement. At first, H&C agreed to collect donations for a local organic farm to be preserved as such on behalf of TLC, but agreeing with the idea of preserving the local natural food source, H&C became more involved in the campaign. This was an example Lorna gave of the capacity for networking created by getting involved that may not have happened if H&C simply threw money at the issue.

In addition to networking between organizations, Lorna noticed the emerging “electronic capacity for change” from internet communication. H&C hired a web designer to manage their online presence, and they started distributing their newsletter electronically. The newsletter was another way to promote their message by listing community events and giving updates on green movements.

Bill accepted invitations to speak at schools and community events in order to share his knowledge.

Although Knowles admitted that she found value in community involvement through improved reputation and occasional free publicity, she also felt that “sometimes it’s valuable to do things because they’re right, and not because you see a direct benefit to your company”.

Operational Processes

In day to day operations, H&C made changes to mitigate their effects on the environment. Marielle reported that the store was “100% waste free”. All of the plastic packaging in which their purchases came wrapped was put aside and delivered to a community recycling program whom they paid—as it could not be recycled through the blue box system. As incandescent bulbs in the store burned out, they were replaced with high efficiency bulbs. They also made notepads out of waste paper.

Supply Chain Accountability

Some customers who had come into the store made comments about how H&C were being hypocrites because the clothing they carried had textiles that were originally manufactured in China and that China had unfair treatment of workers in their factories and questionable environmental practices. Bill said this was common criticism as he recounted an experience at a conference where one presenter issued the blanket statement: “don’t buy anything from China” to a seemingly approving majority.

H&C faced an ethical dilemma, Bill said, and they needed to weigh their options. Political differences they had with some of China’s human rights and environmental policies faced off against the specific benefits of hemp textiles that could not be feasibly sourced elsewhere.

In the end, they chose to source the textiles from China, because, as he put it, “without China, we wouldn’t be able to spread the message”. They also calculated the costs and benefits of both options in terms of their framing of profitability (financial, social, environmental), and decided that it was indeed profitable in terms of the three factors for them to proceed with sourcing from China.

With the suppliers, H&C remained in contact, and communicated their needs. They went to China to meet with them and requested photos of the worksite to get a better idea of the conditions of the factories.

Because the materials travelled such long distances throughout the supply chain, it was one of H&C’s long term goals to enable a local hemp manufacturing facility, whether that be somewhere in North America or closer, so that the chain would become more efficient. Three of the qualities of purchasing they sought were for products to be local, organic, and with less packaging.

Customer Education

Much of their target market segment placed high value on goods being 100% Canadian made, so it was a challenge for H&C to communicate their situation in a consistent way—especially when sourcing from China carried images of sweatshops and unsustainable practices in the minds of consumers. Although Bill was confident in the actions of the company and he advised, “don’t be bullied into being perfect because you’re trying”, it was also important to be able to explain what made H&C different from regular clothing stores.

Employees engaged customers to answer any questions they may have had and offered additional information. This was part of what Marielle included in employee training, as she noted that there was a growing “mom and pop” service trend, where stores made customers feels more at home. Bill recounted the power of starting conversations when he talked about a repeat customer from Brisbane, Australia who came back into the store after some time away to report that thanks to the inspiration from H&C’s friendly staff and the idea of a “Green Collective”, he had started a similar group in Australia.

On the tags of their merchandise, H&C placed information for customers to read that informed them further about the qualities of hemp, the difference between hemp and marijuana, or other topics.

Even with this commitment to customer education, H&C continued to be criticized for sourcing textiles from China. It seemed that as a company that made strides to make a positive impact through their operations, H&C garnered more scrutiny than a company that did not. Bill was familiar with this phenomenon, and requested that critics “let [him] off the hook” because he did what he could. Lorna’s take on it was similar. She felt that “doing well for customers and employees means success will come”.

Growth

What did the future hold for H&C? Having already opened three locations and firmly established them with proven success and increasing returns, H&C was contemplating taking the business to the next level.

Franchising the brand was a method by which Finley considered to spread H&C’s message further. But it was not so simple as preparing a franchise package, pamphlet, and operational guidelines. The values that had driven H&C’s success were difficult to define and identify within a franchisee that wanted to open a new location. Much like the process of hiring employees, the franchisee had to embody the brand, or it could be damaged, and the progress made by the company could be slowed.

The company itself could have expanded its reach, but should it have focused on taking control of upstream in the supply chain by pushing for more local hemp growers and manufacturers, or should it have assumed a more aggressive growth strategy for its retail locations? As Bill noted, their “goal is not world domination, but healthy living”, so how active was H&C willing to become in the interest of spreading its message?

Future Considerations

Delivering valuable education, building healthy living, correcting misconceptions, unifying and empowering the community, satisfying a demanding customer base, and marketing sustainable products, all while running multiple retail operations was quite a challenge, so was the business really ready for growth? How would H&C select a suitable growth strategy? How would the company stay abreast of the growing demands of its customers? Were the tradeoffs conceded in the past the correct direction to take the company? Would the mainstream continue to develop its commitment to sustainability? Bill considered these as the shopping crowds began to thin and the sun set beyond the distinctive blue Johnson street bridge.