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NEWSLETTER 22, Oct 2006 Five Questions Low-Cost Retailers Must Answer

Low-cost retailers are doing big business in the UK, reports Martin Hearson, coordinator of the UK CCC (Labour Behind the Label) in a recently released report, but are garment workers being left behind? Some pressing questions for the shops that profit from the these bargain purchases.

Introduction: Fast Fashion is Big Business

The UK CCC's new report "Who Pays for Cheap Clothes: Five questions the low-cost retailer must answer", highlights the growth of bargain clothing retailers.

In the UK women's clothing prices have fallen by a third in ten years, while the "value end" of the market (where prices are low) is booming, doubling in size in just five years to snap up £6 billion of sales in 2005. UK shoppers now buy 40% of their clothes at "value" retailers (Sources: The Guardian (2006): "Going Cheap", February 28th; Mintel (2005): "Value Clothing Retailing - UK"; TNS Worldpanel (2006): Fashion Focus issue 29, online at www.tns-global.com/uk).

As prices fall, consumers have responded by buying more clothes, and by changing the way in which they buy them. Where high street stores used to change their collections just twice each year, the pressure is now on to have something new in stores every month, in response to rapidly changing trends. Such "fast fashion" gives shoppers the latest styles just six weeks after they first appeared on the catwalk, at prices that mean they can wear an outfit once or twice and then replace it.

In the UK the charge has been led on two fronts: by bargain chains Primark and Matalan and by supermarkets, led by Tesco and Asda-Wal-Mart. But low-cost retailers and supermarkets that sell clothes are phenomena known in other countries as well - think of Aldi, Lidl, Scapino and Zeeman. Therefore we are reprinting the questions the UK CCC suggests activists and consumers alike pose to low-cost retailers. Evidence from years of research in the garment industry suggests that the way in which "value" retailers demand ever lower prices and ever reduced lead times is driving down working conditions from what is already a very poor starting point. It's not just cam-paigners who say this, but also labour rights auditors, supply chain management consultants, and even some companies. These questions cut right to the heart of the impact this trend is having on workers' rights and challenges these retailers to ensure that workers are not paying for our cheap clothes with their human rights.

1. How much are the people producing the clothes you sell paid?

Clothing retail prices in the UK are falling, as the "value" sector of low-cost retailers expands. It is certainly not the case that workers producing more expensive clothes are necessarily paid any more than those producing for the low-cost retailers. That said, low-cost retailers achieve their low prices by squeezing suppliers hard, in ways that can often see the costs passed on to workers in the form of lower wages and other abuses of their rights. Low-cost retailers need to demonstrate that their price-breaking purchasing practices do not create conditions that make the payment of a living wage impossible, or force already low wages down yet further.

2. What hours do they work?

Low-cost retailers seek to reduce lead times and place smaller and smaller orders, with less certainty over future orders and deadlines. This takes place either to fulfill the requirements of such "lean production" or because these retailers' appeal is based on the "fast fashion" concept. Making smaller, more frequent orders with shorter lead times can lead to a pattern of feast and famine in factories, with periods of excessive overtime for workers, replacement of permanent jobs with casual temporary work, and subcontracting to less visible suppliers. Low-cost retailers need to demonstrate that workers are not subject to excessive overtime or poorer terms of employment as a result of the way they place orders with suppliers.

3. Can workers defend themselves?

Respect for - and promotion of - the rights to freedom of association and collective bargaining is not only an end in itself, but also a means to empower workers to defend their own rights, such as to earn a living wage. Yet low-cost purchasing practices aim to successfully screw down prices as low as possible, and the supplier trapped between the "rock and the hard place" often turns against workers who try to unionise because a militant workforce means a less compliant one. Low-cost retailers need to reassure us that workers in their supply chains have the right to freedom of association, in practice as well as in theory. They need to demonstrate that they support suppliers whose workforce is unionised, even when this has an undesirable effect on prices and lead times.

4. Do suppliers take you seriously on workers' rights?

Sourcing by low-cost retailers is characterised by pressure to lower prices and increase flexibility, which sends a mixed message when brands also adopt ethical criteria. Fickle relationships with suppliers and threats to move elsewhere, as well as the tendency to place smaller orders and to change suppliers frequently reduce the incentive for suppliers to make real efforts to comply with the brand's ethical standards, and the leverage the brand has over suppliers on working conditions. Just moving away from a supplier when problems are detected is a common knee-jerk reaction, but it helps no-one - least of all the workers who may lose their jobs. Low-cost retailers need to demonstrate that suppliers who do not meet their ethical standards are encouraged and obliged to improve. That also means integrating ethical concerns throughout the sourcing process.

5. Are you really sure what's going on?

The auditing systems used by low-cost retailers (along with the rest of the high street) are not comprehensive enough to reassure us that working conditions are OK. Given the evidence that their purchasing practices push working conditions down, this kind of reassurance is especially important from low-cost retailers. Effective studies of working conditions and the impact of purchasing practices need to be conducted in collaboration with the local organisations that know what life is really like for workers, and aren't afraid to say so. Low cost retailers need to demonstrate that they have gone beyond standard auditing systems, and that they have studied the impact of their purchasing practices on workers' rights. They need to make this information independent and public, along with the steps they have taken on other issues highlighted in this report, so that consumers concerned about the ethics of buying cheap clothes can shop easy.