The idea behind giving away shoes to children and adults is that it will improve their health. TOMS is likely the best known shoe brand that enables the giving of a pair of shoes for each one purchased. The one for one model, as it is called, has led to the explosive growth of TOMS and the donation of more than 10 million pairs of shoes in 60 countries, since 2006. The brand has expanded into eyewear and coffee, and its founder Blake Mycoskie says more is coming soon.
August saw TOMS sell a 50% stake to Bain Capital (known best for its famous alumni, Mitt Romney) at a price that values the company at $675 million. That was followed by the announcement last week that TOMS was teaming up with Target for the holiday season by producing a limited-edition collection for the national retailer. Things are on the up and up for TOMS as a company.
However, the impact of donating shoes has dogged TOMS for years. Critics (including myself) have questioned whether giving away shoes helps improve the health of children as much as TOMS claims. Stronger concerns have been aired regarding how free shoes can harm local businesses. The thinking is that other aid programs, like food aid, can undercut the local producers in the countries that are on the receiving end. People will be fed, but opportunities for business growth, which supports jobs in a given community, is lost.
While some research exists on second hand clothing sales and food aid, there were not evaluations on TOMS shoes or something similar. That is until now. Researchers from the University of San Francisco, led by Bruce Wydick, ran an experiment with a distribution of TOMS shoes in El Salvador. The paper, Do In-Kind Transfers Damage Local Markets? The Case of TOMS Shoe Donations in El Salvador, was recently published in the Journal of Development Effectiveness.
The good news is that there is finally some data on TOMS. The bad news is that the findings will likely not put to an end the debate over whether TOMS shoes are harmful to local markets. In an experiment involving 979 households (5,607 individual people), the research team gave roughly half of the people shoes at the beginning of the study and the other half the shoes when it was over. Everyone, regardless of whether or not they got the shoes initially, also received a voucher to purchase shoes of their choosing in the local market.
They found that there was in fact a reduction in shoe purchases for families that got the TOMS shoes. However, and this is the important part, the difference was not statistically significant when comparing the two groups.
“While all of our regression estimates lie in the direction of slightly negative impacts on household shoe purchases, they fail to reach statistical significance, and thus we cannot present conclusive evidence pointing to a negative impact on domestic markets from in-kind donations,” conclude Wydick and his co-authors.
There are some caveats to consider. The survey only looked at a period of as long as four months. Some 88% of children in the region owned two ore more pairs of shoes or sandals. Most children had shoes and even the poorest families could likely afford at least one pair for each child. People who traveled around barefoot did so out of their own choice, not because of a lack of shoes.
It was also found that the majority of the children wore the shoes with an average of 4.54 days worn per week. Overall attitudes about the shoes were favorable, but there were concerns about their lack of durability. Parents say they would have prefered ” a sturdier, hiking-style shoe” for their children.
What remains after reading the study are more questions. What are the long term effects of TOMS shoes on local markets? How long do the shoes hold up? Does a short lifespan mean that families still have to buy shoes regularly for their children? How does the cost to produce and distribute a pair of TOMS compare to the vouchers?
The debate over TOMS shoes will continue, but at least both sides can admit that they might not be completely right.