Retailers tap into shoppers' do-gooder spirit

By Matthew Perrone

updated 3:36 p.m. ET Dec. 2, 2006

Walk into any Gap clothing store this holiday season and expect to see red T-shirts, red hats and red bracelets.

Of course decorating with red is nothing unusual this time of year, but the merchandise is meant to remind customers of something not often associated with the holidays: the global AIDS epidemic.

Gap is one of a number of companies this year who are tapping into consumers' growing desire to do good deeds with their purchasing dollars.

Other retailers selling products to benefit humanitarian causes include Bath and Body Works, a division of Limited Brands Inc., which recently launched a line of candles and fragrances that benefit the Elton John AIDS Foundation, as well as Macy's, which is selling baskets made by Rwandan widows to help support that nation's developing economy.

"I think the demand for these types of products has always been there, but companies just weren't filling it until now," said Dan Henkle, Gap's vice president for social responsibility.

For the Gap, filling that demand means donating half the profits from all items marked with a Product Red label to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Items launched in October range from a $20 candle to a $350 leather jacket modeled by director Steven Spielberg in the company's star-studded marketing campaign.

Product Red is the brainchild of U2 rock star and activist Bono and philanthropist Robert Shriver, who convinced companies like Gap Inc., Apple Computer Inc., and American Express Co. to design customized red products.

The portion of profits donated to the Global Fund varies for each company, with Apple donating $10 from each $199 red iPod sold and American Express pledging one percent of each purchase made with its red credit card. All of the companies have contracted to promote the products for at least four years.

But don't confuse this new spirit of giving with a charity, say Product Red developers.

"Our focus is really on creating a sustainable business model, and the only way to do that is to make it beneficial for the companies as well," said Julie Cordua, vice president of marketing for Product Red. "Because if it's something that makes good business sense for them they're going to want to keep doing it."

Some critical of campaign
But it's the lingering "business sense" hanging over the red campaign that has attracted heavy criticism from some corners.

More than a few bloggers have pointed to the crassness of companies using a deadly disease as a marketing vehicle to sell more clothes and electronics. Radio talk show host Michael Medved has charged on his blog that companies have used the campaign as an excuse to hike prices and make more money for themselves.

"A Gap long-sleeved T-shirt that last week cost $14.50, now goes for $45... meaning the company still gets an extra $8 of your money on an absurdly overpriced piece of cloth," Medved writes.

Other online critics point out that since most of the money from red products will go toward buying medicine for AIDS victims in Africa, the campaign will help bankroll pharmaceutical companies who are unwilling to distribute their drugs for free.

So what's the payoff for participating in an effort that attracts such tough scrutiny?

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