Originally published in Entrepreneur Philippines (March 2008) and reposted on Entrepreneur.com.ph (October 2009)
Oct 20, 2009
By Nina Terol. Photos by Walter Villa
from Entrepreneur Philippines Magazine, March 2008
At the nation’s rag capital, a group of priests, young professionals, and a top fashion designer collaborate on a social enterprise with a fashion statement
If someone were to tell you that they had just come from Payatas with an upscale fashion find, you would likely think you had heard it all wrong. The word “Payatas,” after all, connotes images of destitute surroundings– a squalid area where impoverished families live atop mountains of garbage. It is hardly the environment you would expect for creativity and innovation, yet this is what Rags 2 Riches (R2R), a social development enterprise, found when it dug deeper into the Payatas situation.
Bro. Javy Alpasa, S.J., a Jesuit scholastic who ministers to the community around the Payatas dumpsite, relates that although he had seen clear evidence of pastoral growth among the Payatas folk, their economic circumstances had not been improving alongside with it. He then pondered the situation with a group of young professionals who wanted to do something to help.
Their assessment: Although Payatas had become well-known as the “rag capital of the Philippines,” the nanays [literally “mothers,” but here it means “women”] producing the rags were making only a measly P1 for each rag sold. In contrast, the retailers were making in huge profits of as much as P15 to P20 per rag.
They then suggested this solution: eliminate the middlemen and add value to the merchandise so the nanays can make more money from their efforts.
But most everybody agreed that the solution being offered was much easier said than done. Until one day when, during Bro. Javy’s theology class at the Ateneo de Manila University, a “heckler” whom he did not think much of as a student started the ball rolling by giving a surprise donation of P10,000. The student simply said that he had received the money as a graduation gift and he wanted to put it to really good use.
That donation was followed by another one of the same amount from another of Bro. Javy’s theology students. With
P20,000 now in his hands, he mustered enough confidence to meet again with the same group of concerned young professionals, this time to suggest a formal structure for putting their ideas into action. Thus was Rags 2 Riches born.
The original idea of the young professionals was to create “designer rags” that could be sold to the market at a premium. They came up with so many ideas and took so many steps to make this happen, but to no avail. Eventually, however, through a series of serendipitous events, they ended up at the doorsteps of Rajo Laurel, one of Asia’s top fashion designers.
As the group tells it, when they presented Laurel with a sample of the well made rags done by the Payatas women, he casually held it up with a twinkle in his eye, joined two ends, added three buttons, and said: “Now it’s a wine-holder.”
Angeline Benavidez, R2R’s vice president for sales and a long-time friend of the acclaimed designer, recalls that moment: “Rajo was so excited when he saw the product. After that, he asked us to leave the rags with him so he could make a prototype. The very next morning, he himself called us to say that the prototypes were ready.”
The end result of that meeting was an initial line of 11 well-designed accessory products made from rags–bags, totes, purses, and other personal items–under the “RIIR by Rajo” brand. They were to become an instant hit among the upscale, socially aware fashionista crowd.
Benavidez says that Laurel got himself “very involved” in the entire production process–from developing the prototypes to teaching the nanays how to carefully weave the products and assure quality control, and from determining the pricing and branding of bags to their retail distribution.
Laurel himself pushed the product “because he strongly believed in it,” Benavidez recalls. “In fact, during a fitting at the House of Laurel [his fashion shop], he personally brought in his clients so he could explain the project and show
the products to them. His clients started making orders on the spot.”
According to Mary Ann Lim, the president of R2R and concurrently its vice president for product development, one of their first big challenges was to get the nanays to accept the new standards and methods that had to be put into place to assure first-rate product quality. It was not easy at the start, but when the newly designed products were released to the market and the women saw for themselves how much the buyers appreciated their handiwork, they began to be truly quality-conscious and extra careful in making the products.
Laurel himself recounts how they were able to change the attitude of the nanays towards their enterprise: “My idea was really to change their views–to create a paradigm shift. I patiently explained to them that if they can give value to the work and give even more added value by designing it well and giving it an aesthetic touch, they can make the product command a good price.”
All these attitude-changing efforts paid off handsomely. The fashion designer rags the women made sold very well, drawing such high-profile customers and fans as Kris Aquino, Celine Lopez, Lucy Torres- Gomez, and many more celebrities. The R2R management has become so confident of the quality of the designer rags that they are hoping they would one day get to Hollywood and be sported by the likes of Angelina Jolie.
The R2R management believes that what makes their designer rag products click is not only the brand or the name behind it but, even more important, also the heartwarming success story behind the enterprise.
“We didn’t want to approach the merchandise as a ‘pity buy‘,” says Mark Ruiz, an Ateneo de Manila University management professor and R2R’s vice president for marketing. “Instead, we approached it as a product that people would really want to buy and use because it was worth their money. On top of that, of course, there’s the really powerful human story of the caring and passion that went into the product’s making.”
Aside from Rajo Laurel, several other first-rate professionals volunteered their services to make the R2R product launch possible. Among them were Jake Versoza for photography, Krista Ranillo for endorsements, Maylin Vergara of the beauty salon Propaganda for makeup and styling, popular events director Robbie Carmona, and the models from the Philippines’ Next Top Model search who graced the R2R launching event.
With such star-studded support, R2R was able to parley its initial capital P20,000 in the designer rag products into sales revenues reaching P200,000 during the first three months alone. The market demand for the products has been growing since then, so R2R has been steadily expanding production.
Bam Aquino, a media personality and well-known social entrepreneur who is one of R2R’s board members, is convinced that they did something right by establishing a social enterprise instead of a nonprofit organization.
Part of R2R’s long-range plans is to also venture into men’s accessories and home accessories for both the domestic and export markets.
Bro. Javy makes this observation about R2R’s social enterprise model: “It’s a win-win formula. The Payatas women earn more, and the investors hopefully would earn more over time, certainly more than what they could make from time deposits or from putting up other enterprises. The adage ‘A high tide raises all boats’ rings true here.”
Indeed, the experience of R2R has shown that in social development, encouraging productive social partnerships between and across sectors is much better than espousing one-way philanthropy and charitable dole outs to the poor. This is because such productive social partnerships teach people to experiment, to innovate, and to compete well with other businesses to survive and thrive.
R2R merchandise is currently available at:
HOUSE OF LAUREL
6013 J. Villena cor. Manalac Street, Poblacion, Makati City
Telephone: (02) 426-6101 locals 3440 and 3441