Boohoo pressures suppliers to drive down prices, says BBC probe
Boohoo has broken promises to make its clothes fairly, an undercover BBC Panorama investigation has found, with the fast fashion giant allegedly pressuring suppliers to drive down prices, even after deals had been agreed.
An undercover reporter working at the company’s Manchester headquarters said they saw evidence of staff pressuring suppliers to cut prices, even after deals had been finalised.
On one day, the reporter was told to process a five per cent cut on more than 400 orders that had already been agreed, which would save Boohoo thousands of pounds.
According to the BBC report, sometimes price cuts were “even demanded on orders which had already been made and were ready for delivery”.
During the time the reporter was undercover, there was also a six-week period in the dresses department when it was taking more than 10 weeks on average between Boohoo placing an order and receiving it.
A new lead time of six weeks or under was then brought in as policy across the brand. Suppliers in China and India were given a week longer.
After a week’s grace, Boohoo introduced a five per cent price cut for every week a supplier’s order was late.
Boohoo, like many online retailers, has struggled financially in recent months after the cost of living crisis has led many shoppers to scale back on buying clothes.
Just last month, Boohoo’s said its revenues fell by 17 per cent in the six months to August to £729m, and warned of further sales falls in the year ahead.
Three years ago the company pledged to overhaul its relationships with suppliers after reports surfaced about the poor working conditions in factories.
The online fashion brand had been seeking to repair its reputation after it was discovered that some staff in its UK factories were being paid as little as £3.50 an hour.
The company introduced an overhaul that included promising to pay suppliers a fair price for garments, with “realistic production and delivery timescales”.
Boohoo told the BBC: “As with any retail business, the role of our sites continue to evolve over time.”
The company said it has invested “significant time, effort and resource into driving positive change across every aspect” of its business and supply chain.
It added that it has implemented “every one” of the recommendations [lawyer] Alison Levitt KC made in her 2020 review, including “improving corporate governance” and “strengthening the ethical and compliance obligations on those wishing to supply Boohoo”.
“The action we’ve taken has already delivered significant change and we will continue to deliver on the commitments we’ve made,” Boohoo said.
Russ Mould, investment director at AJ Bell, said: “The loss of momentum in Boohoo’s sales and profits (and stock market valuation collapse) suggests they have taken notice and acted accordingly, although Boohoo’s woes could also be the result of competition from Shein and others, as well as the cost of living squeeze on consumers’ pockets, rather than a rejection of fast fashion’s operating model.”
“But for all of Boohoo’s Agenda For Change, and the firm’s efforts to improve transparency of sourcing and pay for those in the supply chain, someone, somewhere is being put under a lot of pressure, and probably working very hard for very modest returns, so that very competitively-priced, short-shelf life product can be sold.”