Calls for fashion watchdog of ‘unfair purchasing practices’ of High Street companies

Campaigners have called for a fashion watchdog to stop “unacceptable shopping practices” uncovered by researchers who named High Street stores Zara and Primark as among those treating suppliers unfairly.

In a survey of 1,000 Bangladeshi manufacturers, researchers found that big brands are paying below production costs, with most factories selling to major retailers paying the same prices despite rising raw material costs.

In a study by the University of Aberdeen and the charity Transform Trade, published on Sunday, the authors of the report found that suppliers listed 1,138 brands they had contracts with in February 2020, and 37% of them were involved in unfair practices.

More than half of suppliers said they were victims of unfair purchasing practices, including cancellations, non-payments, late payments and discount requests, with knock-on effects including forced overtime and harassment.

Fiona Gooch, Senior Policy Advisor at Transform Trade, described the results as a “wake-up call”.

“We need a fashion watchman to stop the unacceptable purchasing practices of clothing retailers using large consumer markets, as well as existing safeguards for food suppliers,” she said.

“Only when suppliers are able to plan ahead, confident that they will earn as expected, can they provide good working conditions for their employees.”

According to a report, Zara had 90 factories producing for the brand in March 2020.

Researchers found that 31% of factories reported canceling or partially canceling orders, 27% had price reductions, 10% had orders for which the company refused to pay during shipping or production, and 30% reported delaying payments for at least three months.

Meanwhile, Primark, which the report said had 35 factories working on products, canceled or partially canceled orders from 34% of factories surveyed, cut the price of orders by 20%, and 11% of factories reported late payments.

The study, titled The Impact of Fraudulent Practices by Global Apparel Retailers on Bangladeshi Suppliers During Covid-19, also found that a large number of companies were purchasing from factories struggling with rising raw material costs, with nearly one in five struggling to pay Bangladeshis. minimum wage £2.30 a day.

Larger brands buying from multiple factories were more likely to engage in unfair purchasing practices than smaller brands, according to a supplier survey, and every brand buying from 15 or more factories was involved in at least one of these practices.

The study also found that clothing factories reduced their workforce by a quarter after they closed, suggesting up to 900,000 workers may have lost their jobs, according to the report’s authors.

The report says that Zara had 90 factories producing for the brand in March 2020. (Yui Mok/PA)

Clothing manufacturing has become Bangladesh’s most important manufacturing sector, accounting for 20% of its GDP. Employing around four million workers, more than 12 million depend on the sector for their livelihoods, the researchers said.

Ms Gooch said when “retailers mistreat suppliers by breaching pre-set conditions, workers suffer.”

“If a retailer does not pay the agreed amount or is late with payments, the supplier has to reduce costs in other ways, which often spills over to its employees who have the least power in the supply chain,” she said.

“Reports of being rehired for less pay and conditions, intimidation and unpaid overtime are a predictable outcome. We need a fashion regulator to regulate UK clothing retailers on the same terms as the existing supermarket regulator.”

Supermarkets have a Groceries Code Adjudicator, a vigilante that enforces a statutory code of practice that prohibits certain unfair purchasing practices by large retailers against their suppliers of food and groceries, regardless of location.

A Primark spokesperson said “the rights and conditions of the workers who make our products are extremely important to us and we know how devastating Covid-19 has been for the global garment industry.”

“The unprecedented nature of the pandemic has forced all our stores around the world to close. At the time, and without an online presence, we had no way of knowing how long it would take,” the spokesperson said, adding that for these reasons, the company made the “incredibly difficult decision in March 2020 to cancel all orders.” which has not yet been communicated to us.

The company said all forwarded orders were paid within 30 days and there were no payment delays or price renegotiations, and by 2020, the company said it would pay for more than 100,000 orders.

The company has stated that adhering to its code of conduct is mandatory when working with Primark, and the company is a founding member of the Action Collaboration Transformation initiative.

In the report, Inditex, which owns Zara, said it had “developed a strategy to support these workers in the early stages of the pandemic” and “guaranteed payment for all orders already placed and in production, and worked with financial institutions to facilitate the provision of services.” loans to suppliers on favorable terms.

Leave a Reply

Your email address will not be published. Required fields are marked *