Rags2Riches / How one design and fashion house transformed a Filipino community

By: Janelle Retka - Photography by: Eli Hiller - Posted on: January 9, 2019 | Business

The Filipino community of Payatas has long been one of the country’s most famous urban poor centres and a focal point for short-term poverty outreach programmes. The local company Rags2Riches launched to expand upon the rich talent of local artisans, creating an international brand of handcrafted fashion accessories expected to bring in a quarter of a million dollars in sales this year

The foot rugs of Payatas began as a widely produced artisan item that earned crafters 20 cents a day in the fringe town outside Manila best known as being the home to the country’s largest dump. They were loosely woven to roughly 33 by 50cm. But they weren’t pretty, were inconsistently made and were known for easily coming unravelled, adding to the town’s rubbish heaps.

Today, the weaves that formed those rugs have been tightened and transformed into hand-woven wallets, backpacks and laptop cases of vibrant hues, mixed with accents of canvas, suede and leather. Products include an improved version of the old foot rug called the Regular Rug, for $1.50; the $75 Maricel Mommy Bag, a diaper bag that transforms into an overnight pack; and a chic bag for $200. The upgraded accessories sell in Paris, Europe and bourgie-curated clothing stores like Anthropologie.

The change began 11 years ago when a group of professionals decided to become business partners with the artisans behind the underappreciated rugs, and founded the company now known as Rags2Riches, which empowers over 100 community artisans.

“We didn’t have much of an idea, to be honest, when we started about what products we could make,” said Rags2Riches president and co-founder Reese Fernandez-Ruiz. “We looked at it from a very fresh perspective of, they have been weaving these rugs for years, so what can we do with these rugs and improve them so we can sell them for a better price and in effect give more value to the artisans who make them?”

Rags2Riches president and co-founder Reese Fernandez-Ruiz

Fernandez-Ruiz and her team worked through a series of transformations to get where they are today. Preconceived notions among the team, artisans and customers had to be broken: Payatas weaves are low quality; local products aren’t as valuable or in demand as imports and exports; poverty has clear-cut solutions. The list goes on.

“We had to unlearn a lot of the things we had learned in school or in our previous jobs so that we could really listen to the community artisans and understand where they were coming from, understand what they needed,” said Fernandez-Ruiz. They also had to build trust with a community accustomed to short-term and low-impact outreach programmes.

“The trust was really hard to get because the impression is that we’re going to give them something, take a few pictures, have a press release and then leave so that they will be part of some big viral campaign, but their lives will not change for the better,” she said.

Her journey began in 2007. Fernandez-Ruiz had just finished her university studies when a former professor invited her to join a partnership with the Payatas artisans to help elevate their products and livelihoods. The idea was that the group would together invest roughly 10,000 Philippine pesos, $190 at the time, to cover the labour and materials for three artisans to make rugs. They would give input on how to improve the products – weave it better or have better colours – and then they would help market the products in new venues for a broader audience. Fernandez-Ruiz said for months she went without pay until the business could sustain small salaries outside of those for the artisans.

About a year into the partnership, Rajo Laurel stepped onto the scene. The renowned Manila fashion designer, known best for his role as a judge on fashion design show Project Runway Philippines, proposed designing fashion bags and accessories out of the rug weaves – the vision that spurred present-day Rags2Riches.

Initially the company subcontracted local factories to create these more complex final products out of the artisans’ weaves. But this system proved unsustainable as factories began shutting down and moving to other Asian countries with a lower minimum wage or less stringent labour laws, Fernandez-Ruiz said.

The company hired a staff of 30 artisans and created an in-house workshop. The artisans began developing wallets, tote bags and other items to broaden the brand from within. They even had a quality control department to inspect the new bags.

It was a struggle to keep the whole machine turning. Within a year, most of the other co-founders had peeled away from the company, and today Fernandez-Ruiz is the only full-time founder remaining, she said.

Meanwhile, it took about four years to convince the artisans that Rags2Riches was in it for the long haul. It did so by continually engaging with the community, listening to their needs – “they actually really know a lot of the things that will help them, but they just don’t have a lot of access” – and helping with practical improvements in the lives of the community members. One example was the company’s partnership with a local microfinance institution to help their employees get documentation to open their own bank accounts.

Fernandez-Ruiz says that by being straightforward with employees she maintained their trust and dedication, which sustained the operation

As trust developed between the community and Rags2Riches, the company was able to grow the number of artisans it worked with. Today, it contracts over 100 artisans across eight communities who work from home. Another 15 artisans are employed directly in the workshop. They are paid fair wages, Fernandez-Ruiz said, and those who work full time now earn around $11 a day, more than minimum wage.

Of the three artisans with which the company launched the partnership, one remains dedicated to the workshop while another now manages the 12-person Rags2Riches business team.

Fernandez-Ruiz attributes much of the company’s success to a dedication to transparency. In 2016, it looked as though the company was going to fold after having scaled up too quickly. By being straightforward with employees, she maintained their trust and dedication, which sustained the operation.

About a year ago, the company decided to apply lessons from some of its bumps in the road to create Things That Matter, an online marketplace for positive-impact products, such as zero-waste and community-based items. It also serves behind the scenes as a network where companies exchange ideas. Things That Matter co-founder Audrey Ferriol calls it “Social Enterprises Anonymous.”

It’s grown out of a new era in the Philippines in which consumers are more environmentally and socially aware, Fernandez-Ruiz said.

“We definitely contributed to the trend and people seeing that it’s possible to have a product that has a good cause behind it but really looks good and can compete with other global brands,” she said. “So that definitely paved the way, especially for a lot of entrepreneurs that we know who were inspired by Rags2Riches – that’s why they started their own shop.”

Moving forward, the company plans to scale back its international focus to capitalise on the growing appreciation for “moral shopping” in the Philippines. In the past year, it has formed four corporate partnerships with companies that sell scrap materials to Rags2Riches, which turns those scraps into final products that it sells back to the partner for their retail stores, creating a circular economy.

The company’s prospects are strong. What once was fuelled by an investment of less than $200 is projected to reach roughly a quarter of a million dollars in sales this year, Fernandez-Ruiz said.

“Most of the things that we have right now, the systems we have for production, they are all from the conversations we’ve had with the community artisans,” she said. “[We set out to] become business partners with them – really, truly be there through thick and thin, and then we can create something great together… and that’s what we’ve done.”