From sweatshop to hip-hop: once ignored by fashion, youth of color become the focus of its marketing. (Culture).

India Arie is smiling down at you from a Gap billboard. A half-mile later, it is progressive hip-hop crew Black Eyed Peas looking fresh in Levi's Silver Tab jeans. Rewind two years, and it was Mos Def and Talib Kweli, then De La Soul.

Rewind 10 years, and hip-hop was absent in the mainstream fashion industry. The billboards would have featured thin, slightly curved white female models who refused to smile.

Ten years ago, when Gap Inc. and Levi Strauss & Company gazed into the future of their clothing empires, youth of color were an irrelevant demographic. The fashion powerhouses believed that hip-hop was an annoyingly violent fad that would pass through like a bullet. They gambled against hip-hop. And so far, they have lost millions.

Today their futures look very different. Both companies have become lightning rods for bad news. Gap stock, once flying high and helping its Republican founder Don Fisher buy political clout in San Francisco, was degraded to junk status by Moody's in February after 21 months of non-stop losses. In the same month, CARMA, a media analysis firm, announced that among U.S. retailers, Gap had received the second-worst media coverage in the world, second only to bankrupt K-Mart.

Meanwhile, Levi Strauss & Company has been losing profits--and laying off workers--in what seems to be an irreversible downhill slide in U.S. sales. It has recycled executives like tin cans, dumped marketing agencies left and right, gone IPO and then reversed course back to private stockholdings--all in an effort to stop losing money.

When announcing their bad news to investors, both companies focus on business details like profitability per square footage of retail real estate, or they talk generally about the need for more competitive fashion designs, or, like everyone, they blame September 11.

Neither Gap nor Levi's confesses to the deeper irony of their situation. Both companies are suffering from a loss of cool--the fashion industry's equivalent of cardiac arrest. Where did cool go? It shifted to the very people who were dismissed by fashion insiders as "sociopaths" in the 1980s and early 1990s. They are the kids shooting hoops in concrete jungles, the break-dancers taking over high school hallways, the American-born children of exploited garment workers. The kind of people who rarely made it into fashion billboards. Today, coolness lives among youth of color and their beloved hip-hop. And now, if they are to survive the new millennium, Gap and Levi's must take that coolness back.

Garment Exploits

The difference between this reality and what the companies anticipated is enormous. Levi's predicted a cheaper, globalized workforce, and began closing U.S. factories and relocating those jobs to countries like Costa Rica and China. In the 1980s alone Levi's closed 58 plants, putting 10,400 people out of work and moving about half of its production overseas. Gap did the same thing, subcontracting with 3,600 factories in 50 countries by 2001.

As a result, Gap and Levi's, like others in the industry, are the focus of dozens of anti-sweatshop campaigns internationally, which have revealed terrible labor conditions in the garment factories sewing their clothing. Both companies have been sued by garment workers in Saipan, a U.S. territory in the Pacific. The suit alleges that the factories, sewing clothes for a who's-who of fashion companies, including Tommy Hilfiger, Calvin Klein, Target and the Limited, practiced indentured servitude. Witness, a human rights organization, says that in Saipan, "14 hour shifts, payless paydays and lock-downs are routine."

In 1990, Levi Strauss & Company closed a factory in San Antonio, laid off more than thousand workers, gave them horrible severance packages, and then moved the jobs to Costa Rica.

Jason Morteo understands all of this. He is a 17-year-old Chicano lyricist, bear junkie, and grafitti writer in San Antonio. On Wednesday nights, he can be found at Bruno's, a local restaurant, battling other mcees in the freestyle competition. ("I would have won first place, except the other dude starting beat-boxing on me.") He has a front row seat for what Levi's and other clothing companies are trying to do with hip-hop and garment workers.

"For me, I find it so ironic that Levi's, of all companies, is going to try to make a profit off of hip-hop culture, on top of that Latin hip-hop culture, when there's so many people here they exploit so much," he says. "And the companies do their best to keep that out of the media."

Defining Cool

To bury this negative publicity, both Gap and Levi's spend hundreds of millions of dollars on marketing, showering us with images of cool. For years, those images, alternately flashy and sexy and subdued, were, above all, white.

The formula seemed unbeatable: white models + brown workers = mega-profits. Gap became the largest clothing company in the world. Levi's held its own, struggling at times, but still flexing its iconic muscle. Youth of color continued to be invisible, except in so far as they worked at garment factories abroad. (Levi's code of conduct allows 15-year-old laborers to work 60 hours per week in its factories.) In its marketing, Gap focused on selling khakis to the predominately white professional class and their children, and Levi's left the power of its name on autopilot, selling denim to teenagers in department stores.

Then, after hip-hop awoke in the 1990s, reality slapped them right in the face.

They finally got the hint, and the shift is evident on television commercials and billboards across the country. Since 1997, Gap ads have featured L.L. Cool J, Missy Elliot, and RUN DMC. Last season, Gap's commercials featured deejaying, one of the least celebrated elements of hip-hop. DJs Shortkut and Rob Swift cut it up with Shannyn Sossamon, an up and coming L.A. deejay. More recently, Lisa "Left Eye" Lopes and Shaggy sang in the "Give A Little" television ads, along with India Arie and Mary Gray.

Levi's focused its attention on progressive artists. It sponsored a Lauryn Hill concert tour. It promoted Mos Def and Talib Kweli before Mos Def's career sky-rocketed. Most recently it has scooped up Black Eyed Peas.

But, like most of the fashion industry, Gap and Levi s were more than a decade late on hip-hop.

"Within a few years, well before 'Yo! MTV Raps', it was clear that this was a massive movement that would influence everything from fashion to automobiles to lifestyle," says Irma Zandl of Zandl Group, a New York-based marketing and trend consultant whose clients include Gap. "Hip-hop culture has gradually enveloped mainstream youth culture not only in the suburbs but also throughout the world."

Why the lag? It certainly was not for lack of opportunity. Hip-hop has long been one of the most fashion-conscious cultural phenomena in America. In the 1980s, its most popular artists defined themselves with signature products. RUN DMC wrote a hit song called "My Adidas" that transformed the shoe into a cult classic. To this day, people rock the Adidas that RUN DMC made famous. L.L. Cool J did the same thing with Kangol hats. The list of fashion breakthroughs stretched on through the years: biker shorts, Daisy Dukes, huge clock necklaces, African medallions, fat gold chains, sportswear.

The brand consciousness reflects one basic truth about hip-hop: it emerged from despair. Black and brown youth, trapped in fire-blown ghettos across the United States, used rap lyrics to imagine an antidote to their desperation. They watched as the so-called free market created two very different worlds. In one, their own, emptiness reigned: empty pockets, empty blocks, empty promises. In the other, every edifice, every healthy child, every manicured lawn was a testament to the euphoric, distracting power of capitalism.

Presented with this dual world, some rap musicians became activists. Others simply proclaimed that the clear antidote to poverty was wealth. These artists came to define popular rap culture. They wore thick gold chains, leather outfits, fur coats and eventually Tommy Hilfiger, Gucci, Donna Karan--symbols of their success. In the rap culture they created, wealth and fame could erase any stigma, even the oldest, most basic manifestation of American racism: the idea that blackness is ugly. Murdered rapper Notorious B.I.G., who grew up poor in Brooklyn, once rapped about himself:

Heart throb, never/

Black and ugly as ever/

However/

I stay COOGI down to the socks

COOGI, a luxury Australian knitwear label, sells clothes for more money than most poor people make in a week. The company, which never capitalized on its hip-hop potential, is now teetering on the financial edge.

Crashing the Party

Still, despite the clear evidence, it took the mostly white fashion world another decade to notice that hip-hop, perhaps more than any other cultural phenomenon in contemporary America, is a gold mine of mind-boggling proportions. Two things seemed to block its vision.

One was racism. Rap triggered virtually every racial stereotype possible in the white imagination. The race-fueled controversy surrounding hip-hop in its first decade was phenomenal. Unable to move beyond this visceral disgust, and still enamored of America's basic whiteness, the fashion industry stayed away.

Its second blindspot was mass marketing. Companies like Levi's and Gap marketed to enormous young audiences--from 10-year-olds to young professionals. To cover such territory, companies would shoot for the most common denominators in their marketing strategies. They chose themes and images that attracted the largest proportion of their audience--middle-income white Americans.

But economists and marketers noticed that the middle was shrinking. Economic policy during the 1970s and 1980s created more wealth and more poverty, while reducing the size of the middle class. Race demographics also shifted dramatically, especially in certain geographic regions, as people of color make up an increased percentage of the total population.

Suddenly, the old marketing strategy--aiming for the all-purpose middle--no longer worked. In 1997 a marker research firm called Roper Starch released a report suggesting ways to market to the "Two Americas." The new approach was known as two-tier marketing. Many companies, from banks to fashion labels, created multiple marketing strategies for the same products: one strategy targeted the wealthy, the other targeted the poor. For Gap, this meant adding the high-priced Banana Republic label and the discount Old Navy brand--three versions of essentially the same product.

Once companies learned to divide their enormous markets into smaller pieces, it became easier for them to recognize the value of hip-hop. Marketers learned to use hip-hop strategically, while using other approaches for other niches--often all in the same marketing campaign.

But beyond two-tier marketing strategies, trend-spotters like Zandl Group and Teenage Research Unlimited pointed to the real bottomline with hip-hop and marketing: white kids with "purchasing power" were listening to it. They warned that if apparel companies like Levi's and Gap underestimated the impact of hip-hop on young consumers--not just on youth of color, but all youth--they would "suffer dearly," as Irma Zandl put it. "Even today, as rock reasserts itself, hip hop beats and hip hop flava are dominant."

Tommy Hilfiger listened to the oracles. Tommy, one of the companies trying to settle with the Saipan workers, was among the first mainstream fashion icons to cash in on the hip-hop strategy. Its traditional marketing strategy relied on heavy doses of American patriotism, sharp-jawed white men, and New England atmosphere to compete with companies like Polo and Calvin Klein for the men's apparel market.

But then one day hip-hop headz discovered the brand, and Tommy was suddenly, almost effortlessly, the epitome of cool. Without fully abandoning its traditional marketing approach, the company cultivated its hip-hop audience on the down-low with strategies like giving rappers free shopping sprees--and even clothing a hip-hop Santa ornament for the White House Christmas tree. Snoop Doggy Dogg performed on "Saturday Night Live" in 1994 wearing all Tommy gear, and Tommy sales increased $90 million that year, according to industry estimates. On the strength of hip-hop listeners, the company's sales shot past a billion dollars a year, making it the blockbuster label of the 1990s. Tommy got so phat that it even tried to buy its competitor Calvin Klein--the gangster rapper challenging the preppy white model to a fight.

Rumor swirled around Tommy's rise to power, as some communities of color were suspicious of the company's real interest in them. For years, urban legend reported various versions of the same story: that Tommy Hilfiger, the man himself, told the press (or, as I heard the rumor years ago, told Oprah Winfrey) that he was disgusted by all these hip-hoppers wearing his clothes, because he was not designing clothes with such people in mind.

Regardless of whether the rumor was true, it spoke to the basic irony of hip-hop and fashion marketing. In a white-dominated industry obsessed by coolness, the underdog has become the undisputed champion of cool.

And Gap and Levi's are suffering for it.

Though no one believes they will collapse into bankruptcy like K-Mart, many think Gap and Levi's waited too long to join the hip-hop parade. Gap itself refuses to acknowledge that hip-hop has played any role in its current doldrums. Likewise, it denies any strategic reason for using hip hop artists in its marketing, and claims no direct interest in youth of color. Gap spokeswoman Rebeccah Weiss puts it this way:

"We chose DJs Shortkut and Rob Swift, as well as India Arie, because they are talented, we like their music, and most importantly, they express unique personal style. We cast them along with many other types of musicians in order to reach out to many different audiences."

Levi Strauss & Company, on the other hand, has been more blunt. "Many white teens identify with black culture, which they find powerful and attractive," Marian Salzman, founding director of TBWA Chiat/Day, Levi's former marketing agency, told a journalist in 1996. "A typical gangsta rap listener is a 14-year-old white boy from the suburbs. An in-your-face attitude is a marketing hook that screams authentic.

This was a startling shift for a company that was an icon of white American culture. The century-old denim pants were the blue jean of choice for the Industrial Age and the Wild West. By the 1970s, Levi's had been marketed by James Dean, Marilyn Monroe, Elvis Presley and Bob Dylan.

Basking in all of this white nostalgia, Levi Strauss & Company was looking the wrong way when black and brown youth turned the fashion world on its head. "It has suffered dearly," says Zandl. "Its popularity amongst teen boys has gone from 28 percent in '94 to 4 percent in 2001--a whopping 86 percent decline."

In 1996, Levi's began its hunt for black culture by launching a television advertising campaign featuring young black kids scaring the shit out of Wall Street professionals, asking in the tag line, "Do you fear me?" The controversial campaign flopped, but has been followed by many others, including the most recent Black Eyed Peas billboard.

This trend infuriates Esperanza Garza, an organizer with Fuerza Unida, which works with women and youth affected by Levi's plant closures in San Antonio. But she really hit the roof when she saw Levi's mega-popular Super Bowl commercial this year: a young Latino, wearing Levi's and a tank top, was break-dancing down the street in Mexico City, listening to Spanish-language hip-hop group Control Machete (of Amores Perros fame). The featured break-dancer was 21-year-old Johnny Cervin, a Mexican-American hip-hopper from Los Angeles.

"They are trying to sell to us now. We are the new market. They can't fool us. We know who they are," Garza says. While the company courts black and brown youth, she says, it continues to exploit their parents here and abroad. Levi Strauss is dosing its two remaining factories in San Antonio in April and "negotiating contracts that are worse than severance agreements in 1999."

Jason Morteo puts it this way.

"It's disappointing as a hip-hop artist, and as a Latin American, that I know something so wrong is done to my people, but people are starting to go out and buy these clothes," he says. "People are so deceived, they don't know the full truth about what this company has done."

Ryan Pintado-Vertner is co-director of DataCenter, a national research organization based in Oakland.