TOMS started with a need. Using business to improve people’s lives. That’s how it all started for TOMS. The brand was initiated to start helping out one community. Today, TOMS has grown out to be a great example for other consumer brands. One-for-One is their well-known business model. With every pair of shoes they sell, they’re able to help a person in need. At TOMS, social impact, meaningful branding and building a successful business all come together, but not without challenges and obstacles.
While visiting Argentina in 2006, TOMS founder, Blake Mycoskie, noticed that a lot of children in rural villages were in need of shoes, as well as the hardships that can come a long with that. He was inspired to find a way to solve this problem. What started with an action to help one community, turned into a bigger idea: a business plan to enable consumers to help people in need, through an everyday purchase. For every pair of shoes purchased, TOMS (Tomorrow Shoes) would give a pair to a child in need. One for One.
For TOMS, giving is at the heart of everything they do. The whole business started as a social mission and the business model was built around that, not the other way around. After seeing how powerful this model could be, TOMS realized they could use the same concept to fill other needs. That’s how the brand launched other concepts after five years of giving shoes. TOMS Eyewear and TOMS Roasting Co. are meant to provide safe water and support safe births for mothers around the world.
TOMS created a unique business model, by integrating the whole aspect of giving at every level of the business. The strong relationships they have internally and externally enable them to realize this model. A dedicated team and working with many partners is key. TOMS is working with some of the leading nonprofit and humanitarian organizations, which offer deep experience in international development and poverty alleviation. By working close with them, TOMS can determine how their giving can add most value to the community.
This way, the Giving Shoes project is integrated in their partners’ larger health, education and community development programs. The commercial success of their business is allowing them to grow the giving part incrementally alongside it. Now, TOMS is offering multiple types of Giving Shoes for varying needs. Think of winter boots for children in Nepal and school shoes that fit the criteria for school uniforms in India!
Not everyone seems to understand that social enterprises can operate a viable business model at first. At TOMS, they noticed that a lot of other companies and entrepreneurs have started to adopt similar models. As a real initiator, the brand sees this as an accomplishment too. Innovation is key to stay relevant while continuing what the brand is doing. However, for TOMS it’s important that their basis is solid: starting with a need.
The special thing about TOMS is that they empower every customer to actively and directly impact someone else’s life in a simple way. The customers who buy the shoes share the same ideology and become part of the brand’s community and movement. Besides consumers, they want to empower other entrepreneurs too. Sharing what they’ve learned and growing the social entrepreneurship community is important for the brand.
The privilege to partner with some great designers, celebrities, brands and organizations has brought them a lot and enables them to support specific causes. With this, the impact they aim to make gets maximized. Now, what started as a simple idea to impact one community, has turned into a social enterprise that has touched millions of people around the world. But the real impact for TOMS is in the personal stories that happen every day in the field, as well as the long term waves of change.
But here’s the bad news. The brand proved as vulnerable to the retail apocalypse as any legacy mall-based brand, agreeing to an out-of-court restructuring recently.
CEO Jim Alling addressed a letter to employees informing them of the transfer from current owners Bain Capital and founder Blake Mycoskie to Jefferies Financial Group, Nexus Capital Management and Brookfield Asset Management.
The move is intended to “identify the best path forward for our company,” read the letter. It entails a new investment of US$35 million and an enhanced capital structure including debt relief. The firm would have collapsed entirely this year facing crippling debt of $300 million if the restructure and rescue plan had not proceeded. Let’s hope they make it out of this one.
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