Sustainability of second-hand garment business

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Sustainability of second-hand garment business

Transcript Of Sustainability of second-hand garment business

National Business and Management Conference 2015 | p. 72
Sustainability of second-hand garment business
James S. Apolinar, CPA, MBA Erikka June D. Forosuelo, DM-HRM Hermogenes C. Orion, JR, Ed., D., Ivy C. Moya
Abstract Sustainability denotes a powerful and defining idea. A sustainable business is one that creates profit for its shareholders while protecting the environment and improving the lives of those with whom it interacts. It operates so that its business interests and the interests of the environment and society intersect. The study aims to find the significant differences in each of the business practices of second-hand garment by the number of years in business and the indicators of sustainability of second-hand garment business when grouped according to the number of years in business, and the significant relationship between the sustainability of secondhand garment business and the business practices of secondhand garment. The number of years in business has an impact to sustainability in terms of environmental resource efficiency but not with corporate social responsibility and profitability. The store owners’ level of perception of business practices of second-hand garment in terms of environmental and economic areas are significantly related to sustainability of second-hand garment but not in social area of business practices. It was found out that economic area is the most significant predictor and has the greatest impact in the sustainability of the second-hand garment business. Keywords: Business Management (Discipline of the Study), Sustainability of Second-Hand Garment Business (Concept), Descriptive-Correlational and Comparative Research Design (Method), Philippines (Location)
Introduction A second-hand garment or ukay-ukay business is a recession proof. In good times, second-hand garment appeals to trendy youth, frugal parents and the eco-friendly. In hard times, second-hand shops appeal to everyone. Running a second-hand garment store can be a fun and rewarding job particularly if the entrepreneur loves clothing and accessories. (Chapman, 2014). While it is true that second-hand garment industry is a lucrative business because every piece of garment has many potential future lives, its clothing consumption desire confront emulation. The obvious disadvantage of most second-hand garment business is that anyone with sufficient capital can open a designer clothing shop or start a second-hand clothing business in the open market. Since no particular skills are required, there is usually no difference between one shop and another one down the road. (SmallstarterThinkTank,2013).
Business sustainability can be defined as adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future (Deloitte and Touche, 1992). According to Azapagic and Perdan (2000) and Welford (2000), sustainable business offers products and services that fulfill society’s needs while contributing to the wellbeing of all earth’s inhabitants. It is a new, radical paradigm that considers the ecological, social and economic impacts in a way that will not compromise the needs of future generations.
All global business is exceeding 2 billion per year while global trade of second-hand clothing

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exceeds more than 1 billion dollars. Supporters of the industry know this business as an important factor in creating job in target countries including transportation, washing, repair, reconstruction, package and etc. (Bazzi, 2012).
In the Philippines, the market for second-hand garments flourished from its considered capital, Baguio City, province of Benguet despite the law that prohibits the wholesale of second hand clothes. Although Republic Act number 4653 (ratified July 1966) has been enacted, there is no clear implementation of this law. According to Mt. Province Representative Maximo Dalog, a lot of businessmen in the Cordillera who engaged in the ukay-ukay trade have succeeded in their business. Many of them, he pointed out, started with a meager capital before they earned money from it. Dalog said ukay-ukay owners are pay business taxes, income taxes, and other expenses to Baguio City (Silverio, 2011).
Second-hand garment or ukay-ukay as it is called in the Philippines was said to derive its name from the Filipino word, halukay, meaning to dig or to look for something. Some call it “UK” for short. Ilocano speakers are used to call. As early as the Spanish occupation, these shops were called segunda mano (second hand) and until now, everyone can still relate to its meaning. The ukay-ukay (a Filipino version of the flea market) has successfully carved its own niche in the country’s local clothing industry. Inside these second-hand clothes stores, shoppers are forced to dig or sift through endless racks of clothes for a good find. The spread of ukay-ukay shops have made the practice a norm among Filipinos. The allure of inexpensive clothes continues to draw people inside these shops to look for branded clothes for less and eclectic but tasteful pieces. Ukay-ukay remains appealing because it’s the practical choice for clothes shoppers on a tight budget. To prove a point, Baguio’s ukay-ukay street market is still a hot target of gift-givers and clothes shoppers from Metro Manila (ffemagazine, 2013).
In Digos City, Davao del Sur, despite the law banning the commercial importation of used clothing and rags, the selling of imported used clothing and apparel or relief clothes at cheaper prices in the ukay-ukay market continues to proliferate. The government has since opted to control and vindicate the market activities of ukay-ukay, for instance, by imposing taxes (Dalugdog, 2012). As of the year 2013 and up to the present, a total of 329 SMEs are registered in the Department of Trade and Industry specifically within Zone 1 to 3 in Digos City. There are 295 registered SMEs in 2011, and in 2013, only 34 SMEs are registered (DTI, 2014). Data reveals that there is a decline of business establishment for the Small and Medium Enterprises from the year 2011 to 2013. With the second-hand garment’s issues and concern and its contribution to the local economy, the study wants to analyze the sustainability of the business. Results of the study will help businessmen evaluate their businesses in general and be able to integrate the concept of Triple Bottom Line as the key element to sustainable business practices and integrate into their policies strategies and decision making processes (Elkington, 1994).
Objectives of the Study
The study attempted to determine the sustainability of the secondhand garment business in Digos City.

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More specifically, this study sought to answer the following queries: 1. What is the business profile of the secondhand garment store owners in terms of: 1.1 Source of Capital; 1.2 Starting Capital; 1.3 Type of Business Ownership; 1.4 Type of Business Establishment; and 1.5 Number of Years in Business? 2. What is the level of business perception of second-hand garment store owners in terms of: 2.1 Environmental Area; 2.2 Social Area; and 2.3 Economic Area? 3. What is the level of sustainability of secondhand garment business practices with regard to 3.1 Environmental Resource Efficiency; 3.2 Corporate Social Responsibility; and 3.3 Profitability? 4. Is there a significant difference in the business perception of secondhand garment store owners by the number of years in business? 5. Is there a significant difference in the sustainability of secondhand garment business practices when grouped according to the number of years in business? 6. Are the following areas of business perception of secondhand garment significantly related to the sustainability of secondhand garment business practices either singly or in combination: 6.1 Environmental Area; 6.2 Social Area; and 6.3 Economic Area?
Theoretical and Conceptual Framework
The study is anchored on the concept of the applied sustainable business practices based on the Triple Bottom Line (Environmental, Social, and Economic areas) advocated by Desimone and Popoff, (1998) which states that the TBL is the key element of sustainable business practices. Firms that carry out sustainable business should not only understand it but also integrate it into their policies or strategies and decision making processes.
The Environment Area consists of environmental impacts related to the diverse activities, products and services of the business. These environmental indicators should be identified in all stages of the businesses full life cycle because they are used to track environmental progress, support environmental policy evaluation and inform the public. Examples are energy and water consumption, air pollution, and solid and hazardous waste produced.
The Social Area is related to wider responsibilities that business has to communities within which it operates and to society in general, including both present and future generations. Since the importance of social and ethical responsibilities of a company is gradually increasing, its social responsibility has become a constituted element within what society expects from

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business. It is not easy to define and quantify social indicators in terms of physical indicators like economic and environmental indicators. Nevertheless, many firms have set up a realistic goal to continuously measure these indicators in a comparable manner across organizations by using qualitative social indicators. These sets of qualitative social indicators are used to evaluate sustainable business embedded in the concept of sustainable development. Examples are human development and welfare (e.g., education and training and health and safety); equity (e.g., wages, equal opportunity, non-discrimination); and ethical considerations (e.g., human rights and child labor abolition) Azapagic, (2003).
The Economic Area includes the business economic values and performance that are explained by economic indicators. Examples are annual profits and sales, research and development investment, fines, capital investment, and share values or annual returns.
The independent variable includes the Business Perception of Secondhand Garment in terms of Environment Area, Social Area and Economic Area and the dependent variable contains the Sustainability of Secondhand Garment Business Practices in terms of Environmental Resource Efficiency, Corporate Social Responsibility and Profitability. The independent variable stands as the basis of quantifying the dependent variable to measure the effect and to know the perception of the respondents in the areas of sustainability of secondhand garment business practices. While the business profile of the second-hand garment business in terms of source of capital, starting capital, type of business ownership, type of establishment and the number of years in business serve as the moderating variable as it provides information to strengthen both the independent and dependent variables.
Figure 1 shows the conceptual framework of the study.

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Moderating Variable Methodology
Research Design The study employed a descriptive-correlational and comparative research design. It would determine the extent to which different variables are related to each other in the population of interest. These critical distinguishing characteristics are the effort to estimate the differences or relationships among variables (Sevilla, et.al, 1992 as cited by Villa, 2011). From the design, the study aimed to find the significant differences in each of the area of business perception of secondhand garment store owners by the number of years in business, and the indicators of sustainability of secondhand garment business practices when grouped according to the number of years in business, and the significant relationship between the sustainability of secondhand garment business practices and the business perception of secondhand garment store owners.
Respondents The respondents of the study were the business owners/proprietors of the second-hand garments establishments in Digos City. It made use of the non-probability sampling technique specifically the purposive sampling. The researchers chose 31 business owners/proprietors who positively responded to answer the survey questionnaire.
Measures In measuring the variables, a researcher-made questionnaire was utilized. The instrument consists of the following: Part I, Business Perception of Secondhand garment in terms of environment, economic and social areas and Part II, Questions related with the Sustainability of the Secondhand Garment Business Practices using the 5-point Likert Scale. The questionnaire was validated and pilot-tested, and test results were item-analyzed which resulted to 0.8160 reliability coefficient of the test instrument. The content of the survey questionnaire was validated by three (3) College Professors using a standardized content validation sheet. Comments and corrections were noted and incorporated for improvement. Using the Cronbach’s Alpha, it showed that the research instrument was very reliable. Respondents were asked to encircle the items most correspond to how they thought the statement describes them using the 5-point scale with the following interpretations in Table 1.

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Table 1. Using the 5-point scale with the corresponding interval range, descriptive rating and interpretations for the business perception of secondhand garment in terms of environment, economic and social areas

Weight

Descriptive Equivalent

5

(SA) Strongly

Agree

4

(A) Agree

3

(NDA) Neither

Disagree or Agree

2

(D) Disagree

1

(SD) Strongly

Disagree

Interval Range/Scale
4.51-5.0
3.51-4.50 2.51-3.50
1.51-2.50 1.0-1.50

Descriptive Rating
Very high
High Average
Low Very Low

Interpretation
Very highly manifested Highly manifested Moderately manifested Poorly manifested Very poorly manifested

Table 2. Using the 5-point scale with the corresponding interval range, descriptive rating and interpretations for the indicators of sustainability for second-hand garment business practices in terms of environmental resource efficiency and corporate social responsibility

Weight 5 4 3 2 1

Descriptive Equivalent
Always (10 times/wk) or
Often (7-9 times/wk) or
Occasional (4-6 times/wk) or
Seldom (1-3 times/wk) or
Never (0)

Interval Range 4.51-5.00 3.51-4.50 2.51-3.50 1.51-2.50 1.00-1.50

Descriptive Rating
Very high
High
Average
Low

Interpretation
Done at all times
Oftentimes done
Sometimes done
Rarely done

Very Low

Never done

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Table 3. Using the 5-point scale with the corresponding interval range, descriptive rating and interpretations to quantify the sustainability of the second-hand garment business practices in terms of profitability

Weight 5 4

Interval Range Profit
Php23,670 and above

Descriptive Rating Highly profitable

Interpretation
Sustainability is highly manifested

Php15,880-23,669

Moderately profitable

Sustainability is averagely manifested

3

Php7,890-15,779

Profitable

Sustainability is poorly

manifested

2

Php0-7,889

Not Profitable

Sustainability is very

poorly manifested

1

Php-1and below Negatively Profitable Sustainability is not

manifested

Note: The basis for the above 5-point scale is based on the information provided on page 37 in the Review of Related Literature section with subheading “Sustainable Profit”

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Procedure In conducting the study, the following steps were systematically undertaken by the researchers: 1. The researchers sent a letter of request addressed to the identified thirty-one (31) secondhand garment business owners. 2. When all of the 31 secondhand garment business owners gave the go signal to administer the questionnaires, the researchers then made a schedule at their most convenient time. The survey questionnaire was validated by person with knowledge and expertise on business research. 3. The research instrument was pilot-tested to the 30 second-hand garment business owners whose shops/stores were in the places outside Digos City specifically in the municipality of Bansalan, Davao del Sur. 4. Results were item analyzed and few items were discarded and revised. Using the Cronbach Alpha, the coefficient of reliability was determined. 5. The process of communicating information to the respondents and seeking their consent was to establish mutual understanding between researchers and participants. Each second-hand garment owner was individually called for and was given opportunity to ask question pertaining the survey questionnaire and to discuss the information and their decision if they wish to participate in the survey or not. Thus, information on the following matters were communicated to the respondents such as how the research would be monitored; contact details of the researchers; how privacy and confidentiality would be protected; the participant’s right to withdraw from further participation at any stage; along with any implications on the withdrawal, and whether it would be possible to withdraw data. After the individual briefing, all of the identified respondents agreed to the terms and conditions discussed by the researchers and gave their voluntary consent. 6. Validated questionnaire was administered to the 31 respondents of the study. 7. The data gathered are tabulated, computed, analyzed and interpreted.
Data Analysis The raw data was programmed, coded and encoded for further computation and analysis of the data gathered. 1. Frequency and percentage distributions were utilized for sub-problem number 1, to describe the business profile of the second-hand garment business store owners in terms of source of capital, starting capital, type of business ownership, type of establishment, number of years in business, 2. Mean score was used for sub-problem numbers 2 and 3, to determine the level of the business perception of second-hand garment in terms of environmental, economic and social area and the level of each indicator of sustainability of the secondhand garment business practices with regard to environmental resource efficiency, profitability and corporate social responsibility. 3. One-Way Analysis of Variance (1-Way ANOVA) was utilized for sub-problem numbers 4 and 5 to find whether significant differences exist in the business perception of secondhand garment store owners by the number of years in business and the indicators of sustainability of secondhand garment business practices when grouped according to the number of years in business. 4. Pearson product-moment correlation was employed for sub-problem number 6 to find the

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significant relationship between the sustainability of second-hand garment business practices and the business perception of secondhand garment store owners 5. Post hoc analysis was utilized if and only if significant difference was observed in the ANOVA Test. 6. Multiple Linear Regression for sub-problem number 6 on the extent of the relationships among variables was utilized to test the joint effects of the business perception of the second- hand garment store owners to the indicator of sustainability of the secondhand garment business practices which further determines the most significant predictor of sustainability of second-hand garment business. All interpretations were based on 0.05 alpha level of significance.
RESULTS AND DISCUSSIONS Descriptive Statistical Results
1. Business Profile of the Second-hand Garment Store Owners Most of the second-hand garment store owners acquired their source of capital through their own capital or personal savings with the frequency count of 30 or 96.77% of the 31 respondents. In terms of starting capital, 23 or 74.19 percent has a starting capital of Php 50,000 and below. Moreover, in terms of the type of business ownership, majority or 23 (74.19%) are into sole proprietorship and 8 (25.81%) are into partnership. According to Casmer, 2006, sole proprietorship is the simplest and least expensive business structure to form. Many start-up companies choose this form until it becomes practical to enter into a partnership or to incorporate. One of the advantages of the sole proprietorship is the ease of formation. There are fewer legal restrictions and it is the least expensive to form. Furthermore, most of the respondents are selling second-hand garment through shop/store which is 26 or 83.57%. Breidenbach 2011 supports this as some traders who sell used clothing with designer labels sell them at shops where banks, telecoms and companies have their headquarters. Those shops are normally patronized by young, corporate office workers who also want to buy good quality clothing but cannot afford to patronize the few shops that sell imported designer labels from Europe and North America. Finally, 3 or (9.68%) sell second-hand garments through boutique and 2 or (6.45%) are selling second-hand garment in the sidewalks. Thus, in terms of the number of years in business, 15 or (48.39%) operate their business for 5 years and below, 11 or (35.48%) operate for 6-10 years and 5 or (16.13%) operate for 11 years and above.
2. Level of Business Perception of the Secondhand Garment Business The secondhand garment store owners had generally moderately manifested or profitability is neither too much nor too less in their business perception in terms of environmental, social and economic areas. Specifically, the data also reveal that economic area got the highest rating with a mean score of 3.90 interpreted as highly manifested which means that in terms of business perception, the secondhand garment store owners consider economic area has something to do with making money or making profit which to them is essential for business success. (Holliday, Schmidheiny, and Watts, 2014).
3. Level of Sustainability of the Second-hand Garment Business Practices The overall mean score of the level of sustainability of second-hand garment business practices

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in terms of the three (3) areas is 3.25 with a descriptive rating of average interpreted as sometimes done for environmental resource efficiency and corporate social responsibility and high for profitability with a mean score of 3.81, interpreted as sustainability is highly manifested. This indicates that the secondhand garment store owners give much weight and concentration to maintaining and increasing their profit. A business that is not profitable cannot survive. Conversely, a business that is highly profitable has the ability to reward its owners with a large return on their investment. Increasing profitability is one of the most important tasks of the business managers. Managers constantly look for ways to change the business to improve profitability. These potential changes can be analyzed with a pro forma income statement or a Partial Budget. Partial budgeting allows you to assess the impact on profitability of a small or incremental change in the business before it is implemented. (Hofstrand, 2013).
BusinessSustainabilityTermsGarment Business PracticesBusiness Perception