Important note: Information in this article was accurate in 2006. The state of the art may have changed since the publication date.

Reuters NewMedia - November 12, 2006
Chelsea Emery

A number of big companies have joined the Red initiative by donating some proceeds from selected products to help The Global Fund to Fight AIDS in Africa.

Gap and Motorola, for example, have seen plenty of demand for feel-good "Red" T-shirts and cell phones, though they still may not see much impact on their bottom lines.

That could change, analysts say, if retailers are able to sustain the buzz around the charitable gift items and stores attract more traffic to boost the sales of non-Red products.

Apparel company Gap Inc.'s (GPS.N: Quote, Profile, Research) T-shirt carrying the message "Inspi(red)" has sold out online and in many stores, while Apple Computer Inc.'s (AAPL.O: Quote, Profile, Research) original Red iPod Nano music player was so popular the electronics company issued a new model.

Motorola Inc.'s (MOT.N: Quote, Profile, Research) red RAZR cellular phone, first available only in Chicago, sold at 20 times the average rate of other RAZR phones.

Red products are sold by companies in partnership with The Global Fund's push to raise funds for AIDS counseling, education, anti-retroviral treatment and health centers. Sales in the 2-1/2 week period ended Oct. 31 raised enough cash to provide 10,000 people with a year's worth of a particular HIV treatment, the program's press office said.

Demand for the products, which also include a special line of Converse shoes, has exceeded expectations. But, since the product runs are relatively small and make up only a small portion of the company's overall offerings, sales likely are not enough to add much to the companies' top or bottom lines, said analysts and investors.

Gap said its store traffic rose in the first week after product launch, but a spokesman told Reuters in an interview that the line was too small to have a material impact.

Motorola, Converse and Apple did not respond to calls for comment on sales results or forecasts.

"For Gap, it moved the needle some but didn't raise overall sales," said Howard Hansen, a fund manager for Lord Abbett. "For the bigger guys like Apple and Motorola, I would guess similar results."

But, "if you orchestrate a campaign well, and this one was very well orchestrated, it can build the brand, build the image and get incremental sales benefits," he said.

MAINTAIN THE BUZZ

Maintaining the publicity and buzz around the campaign, plus increasing product availability, could help drive holiday sales.

"If (companies) expand the product line, beyond what they've initially launched, we could see some impact," said Arun Daniel, consumer analyst at ING Investment Management. "We really need to see them expand their offering."

Gap, for one, is bringing out a Red candle for the gift-giving season and said its Red cashmere hooded sweatshirts for women are selling well.

And, Emporio Armani is expected to launch a collection of jeans, shoes and other fashion items on Nov. 16. The Web site has already registered 6,000 people who want to receive notice of product arrival, a Red spokeswoman said.

"This campaign gets a lot of people, who wouldn't be shopping at these stores, to take notice," said Dana Telsey, a consumer analyst with Telsey Advisors.

"But you have to keep up the buzz and the products will have to be differentiated to keep up awareness. It'll depend on the marketing and the products -- it needs both elements."

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