DEED Lab Artisan Case Study: Global Goods Partners

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data-driven approaches to artisan development + retail partnerships

MERCADO GLOBAL 1


From filling in quarterly dashboards to its in-depth, biennial survey of the artisan weavers it employs, Mercado Global uses data to track and drive social impact.


MERCADO GLOBAL New York, United States & Panajachel, Guatemala

In 2009, five years into its existence as a nonprofit supporting Guatemalan women weavers through employment in accessories’ production, Mercado Global began to build an in-house design team. The move was prompted by pressure from competitors. “In the wake of the recession, the market for the more–or what the market considers to be–traditional products (what artisans had been selling to tourists), was disappearing,” says Ruth DeGolia, Mercado’s Co-Founder and Executive Director. “There were changes in consumer trends and demand, and there was increased competition from factories in Southeast Asia and China making similar products.” Many other Latin American artisan organizations were feeling the squeeze. They could no longer hope to compete on price. Those that successfully adapted to the market changes increased “product quality and design,” explains DeGolia. The creation of an in-house design team “allowed us to access mainstream retailers ... in a way that, at the time, few artisan groups were able to successfully.” The shift didn’t happen overnight. A multiyear, strategic partnership with the Levi Strauss Foundation, and later the Levi’s brand, resulted in a design program and product catalog that would inform the inhouse design team’s work. “We were able to scale with [Levi’s], and in the process work through our supply chain.” The success of

the partnership–enabled by increasing the focus on “our quality control and being able to deliver orders on time”–provided Mercado with a pivotal proof point to take to other retailers. Their model now relies on not only building major retail partnerships, but on forging inventive strategic partnerships. “We work with factories in Guatemala City and Mexico that stock and subsidize leather for us, and provide [material training], says DeGolia. “But the only way a retail partnership is durable and scalable is if it’s financially successful for the retailer.” Sales have grown in the last few years, as much as 60% year-to-year. While Mercado has managed to partner with an impressive array of retailers, social impact measurement ensures that sales growth translates into increased opportunity and prosperity for women artisans, and steps toward the ultimate goal of “poverty alleviation.” “First, we run ourselves internally like a business,” says DeGolia. “We have our top three strategic goals across multiple years, annual top strategic goals, and goals by department.” Progress is tracked by a series of dashboards that display KPIs (key performance indicators). Some indicators are tracked monthly or quarterly, while others are tracked on an annual or biennial basis. All of the departmental dashboards “roll up” into a organization-wide dashboard. 3


DeGolia explains how data is also used to assess social impact. “When it comes to social impact, we look at: how are we growing income to artisans–what percentage have a bank account or are saving monthly.” Through a monitoring and evaluation system that’s integrated with their monthly artisan curriculum, Mercado makes production and programmatic “changes in real time.”

« We started with - we’re a poverty alleviating organization: what do we want to want to pay per day, per hour, and what can we sell that will allow us to pay that. » - RUTH DEGOLIA, CO-FOUNDER AND EXECUTIVE DIRECTOR

The most intensive data-tracking effort is biennial, when a group of graduate students, along with local interpreters and facilitators, administer a 150-question survey to each artisan Mercado employs. “It’s self reporting, so it’s not perfect,” admits DeGolia, “but it covers questions that are connected to indicators of poverty” and social emotional health. Mercado tracks individual artisan income on a monthly basis, and administers a knowledge retention survey after each month’s curriculum–whether the sessions are focused on reproductive health, financial literacy, or any other topic. “Each artisan group receives two community-based education classes per month,” says DeGolia, “in addition to technical training courses that are customized for each community.” In the future, Mercado hopes to build out a more robust Salesforce database to allow for even deeper, data-driven insights. 4


© Matt Farman Photography

Most of the trainings Mercado offers artisan co-ops are through its community-based education (CBE) program. All 600 of its “partner artisans” receive two classes per month, led by full-time Mercado employees. The trainings “cover a range of topics, with a focus on entrepreneurship, health, leadership, and financial management.” All of the trainings, says DeGolia, “are taught in local indigenous languages–ensuring the women understand and retain [the] information.” The more technical trainings–focused on sewing, weaving, and other techniques–are taught by contracted trainers under the supervision of Mercado’s Technical Training Program Manager. In 2019, Mercado aimed to provide about 1,000 technical trainings, with some co-ops receiving “as many as 30 full days of intensive training.” Mercado’s overall approach has its roots in the organization’s founding. “We started with–we’re a poverty alleviating organization: what do we want to pay per day, per hour, and what can we sell that will allow us to pay that.” They ended up “paying much more per day” than some of its peers. The difference resulted from its production methods. While other organizations were selling products made from a backstrap loom process, Mercado utilized floor looms, which allow for up to three times the production volume. Despite this change, “the value proposition for the U.S. consumer is basically the same,” says DeGolia.

Additionally, said DeGolia, Mercado was “teaching artisans what fair trade means–that it means you have to earn a living wage.” When artisans working with Mercado’s peer organizations began voicing objections to their comparatively lower wages, DeGolia received complaints from the professional staff at those organizations. “That’s a business challenge,” said the executive director. “If you’re not able to pay a living wage, say you’re a preservation organization instead. But if you ask any artisan in Guatemala what’s more important, I’d be shocked if a single artisan didn’t say ‘a living wage.’” In part because of its data-driven approach to impact and production, Mercado has found success with data-driven retailers, like Stitch Fix. While the ecommerce site had traditionally focused on sell-through rates–meeting basic financial targets around product sales –they’ve identified Mercado’s products as inspiring increased consumer loyalty. Stitch Fix customers “love what we do,” says DeGolia. “They send in long comments about how they love that our products are being carried.” So Stitch Fix developed a “love factor”–a metric for customer feelings about products–that’s taken into account. But Mercado isn’t resting on this success, as markets and consumer taste are constantly shifting. DeGolia and her team are focused on increasing sales, which will give employment to more artisans, while continuing to make and track social impact. 5


MERCADO GLOBAL FAST FACTS Mercado Global is a 501(c)3 based in Brooklyn, NY. Founded in 2004.

production team and/or master weaver then calculate the cost of the piece.

How they frame their mission: “Mercado Global is a nonprofit with a mission to transform the lives of women. We create beautiful and thoughtfully designed accessories that not only have the ability to transform an outfit, they can empower an entire community of indigenous women. A single thread is stronger when woven with many others. Through our not-for-profit model, we strengthen communities of women, weaving savings and loan support (income and access to equipment through micro-loans), education (financial literacy, business development, self-esteem and even basic nutrition), and market access into a program focused on financial independence to overcome poverty.”

• Revenue In 2017, Mercado Global received $697,080 in contributions and grants, and brought in $424,302 in program service sales, for a total revenue of $1,121,382. That year, their primary expenditures were program services ($953,332), supporting services ($84,229), and fundraising services ($83,455).

Focuses on: • Community-Based Education “Artisans enhance their leadership and business skills through trainings conducted in local indigenous languages.” • Market Access “Indigenous artisans highly skilled in ancient Mayan weaving techniques face very limited sales opportunities. We connect women to international sales opportunities with major retailers and provide technical trainings for women to improve their weaving and sewing skills.” • Asset Development “Artisans receive microloans for sewing machines and looms that enable them to expand their income. They also receive incentives to save a portion of their earnings, allowing them to cover long-term costs like children’s education and emergency healthcare.” • Business Model Funding relies on donations and large-scale orders from major retailers. Their goal is for sales revenue to pay for the fixed cost and labor involved in sales and to use direct donations—both individual contributions and grants—to support operations, not related to market access. • Supply Chain Weavers are given supplies up-front, and they deliver finished goods to Mercado’s Guatemalan headquarters in Panajachel. Mercado then ships goods to the U.S. - either to boutiques, large retailers, or to their office in Brooklyn, for direct-to-consumer ecommerce sales. • Artisan Pay + Pricing Artisans are paid per piece, using Guatemala’s minimum wage. Mercado calculates how long each piece or task takes, and their

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Artisan Aspirations: “What I hope to do is generate my own resources and further on, build my own home so others can see what I did with all my hard work and effort.” - Rebeca Samines Ajtzij “Weaving is a beautiful skill, I really enjoy it. I’ve been doing this for a long time, and as I get older, my hope is that these skills won’t be forgotten. For this reason, my daughters are here working together with Mercado Global so that they can carry on that knowledge. I hope they can take. advantage of this opportunity to develop these skills and pass them on to their children too.” - Elena Mendoza Pérez Retail Partners: Include: Anthropologie, Levi Strauss, Nordstrom, The Ritz Carlton, Stitch Fix, Yoox, and Zimmermann. Scaling Campaign: Mercado is in the midst of “a four-year scaling campaign to reach 800 women artisans.” This campaign aims to (1) build Mercado’s market access program to reach $1.5 million in annual sales, (2) triple the income they provide to both current and new artisans through this sales growth, and (3) reach a total of 800 artisans over a three year period. Measures of Success: - 99% of artisans’ children are enrolled in school, compared to only 35% of children in Guatemala’s rural areas. - 64% of artisans have a personal bank account in a country where only 27% of the indigenous population has one. - 73% of artisans have access to the food and nutrition they need, while 69% of Guatemala’s indigenous population and 55% of its rural population faces chronic under-nutrition. - 72% of artisans have reported saving or saving more since starting with Mercado, compared to 60% in 2013. - Since its inception in 2004, Mercado has achieved: Over $3.8 million in total sales. 879,271 hours of work to indigenous women in Guatemala. 178,468 accessories such as clothes, bags, and pillows, to international consumers. Approximately 1,500 community-based education classes per year across 65 co-ops.


« [Having our in-house design team] allowed us to access mainstream retailers ... in a way that, at the time, few artisan groups were able to do successfully. »

- RUTH DEGOLIA, CO-FOUNDER AND EXECUTIVE DIRECTOR


REFLECTION QUESTIONS “We do not learn from experience; we learn from reflecting on experience.” - John Dewey, educational theorist and New School co-founder The DEED Lab’s case study series is meant to provoke dialogue among members, supporters, funders, and consumers of the global artisan sector—and to inform the next generation of designer-entrepreneurs. First, we hope that readers of any case study we publish will consider the overall state of the global artisan sector. Given that it is a $500B+ industry, why, then, are the majority of indigenous artisans living in poverty and socially isolated? And now that you’ve read about Mercado Global, we invite you to further reflect using the short set of questions below. While some of these questions specifically reference the case study, all of the questions are meant to generate broader dialogue about the sector. •

Organizations across the case study series use a combination of the terms “living wage” and “fair wage.” Is there a meaningful difference between the two terms?

DeGolia, Mercado Global’s Executive Director, mentions many of the ways they track and measure their impact on artisans–including monthly income, curriculum retention, and self-reporting on questions that are indicators of poverty. What is your assessment of Mercado Global’s approach to impact measurement and reporting?

DeGolia says that, when it comes to cultural preservation versus living wages: “if you ask any artisan in Guatemala what’s more important, I’d be shocked if a single artisan didn’t say ‘a living wage.’” What are your reactions to this quote?

This case study was written in 2020 by Robert Burack, DEED Lab Fellow, with editing, compilation, and interviewing support from Elizabeth Bailey, Luciana Jabur, Alik Mikaelian, and DEED Lab Director Cynthia Lawson Jaramillo. It was designed by Silvia Garuti. Our gratitude to the Mercado Global team, including Co-Founder and Executive Director Ruth DeGolia, for their participation. The information presented in our case study series is drawn from a combination of desktop research and qualitative interviews. The content and views in this document do not necessarily represent Parsons School of Design or The New School. This information is shared for educational purposes and should not be read as a seal of approval for the organization and its work.

DEED is a research lab based at Parsons School of Design that focuses on the future of indigenous artisans and their children. Through fieldwork programs, strategic partnerships, and research, our focus is on models that equally support poverty alleviation, artisan empowerment, and cultural preservation. This case study is one of several available at deed.parsons.edu