Governance & CSR

The UK budget clothing retailer has cut ties with three of its Indian suppliers, after a BBC Panorama investigation revealed that they were sub-contracting some of its work to factories that employed children to sew sequins onto its spangly tops. Primark, which claims that it had no idea this was going on, has immediately cancelled all new orders with the suppliers concerned and taken the clothes off its shelves. Now it’s trying desperately to dig itself out of the hole...

‘Primark takes this lapse in standards in its embroidery supply chain very seriously indeed,’ it said solemnly in a statement, insisting that child labour was banned under its supplier code of conduct. ‘Under no circumstances would Primark ever knowingly permit such activities whether directly through its suppliers or through third party sub-contractors. Primark does not tolerate serious breaches of its fundamental principles…’ and so on and so forth. (Apparently one problem was that these suppliers were sub-contracting work out to companies that encouraged home working – a strangely progressive HR policy for a child labour sweatshop…)

The row highlights a few important issues for the high street’s big retailers. First, the difficulty of monitoring every stage of the supply chain – if your clothes are manufactured in huge quantities over in China or India (where the factories will often sub-contract work out to boost capacity) before being shipped back to UK shelves, it’s not easy to keep a beady eye on every stage of this process, however strict your Supplier Code of Conduct. Primark says it’s now going to appoint an NGO in Southern India ‘to act as its eyes and ears on the ground’.

It also shows the importance of remaining squeaky-clean on issues like this – these days many customers demand certain ethical standards of their retailers, and any suggestion of dubious manufacturing practices can have a huge impact on a store’s reputation. Of course there will be some who couldn’t care less about the provenance of their new sequinned shoes, as long as they’re only £3.50, but it seems to be a shrinking minority.

Primark’s big problem, of course, is also its biggest strength: it’s just so cheap. We’re sure you’ve all wondered how it can manage to sell its clothes at such low prices. Which is presumably why its website includes an explanatory video (‘How do they do it at that price?’), while its statement this week insisted ‘Primark’s prices are low because we don’t overcharge our customers… We are able to offer good value and good quality because of low mark-ups and big volumes.’ Clearly it’s a bit sensitive on this point...