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Is ‘Lost Stock’ Helping or Hurting Bangladeshi Garment Workers?

By many accounts, any attempt to bail out struggling Bangladeshi garment workers facing starvation and ruin amid the COVID-19 pandemic would be a good thing. And for the most part, Lost Stock, a U.K. scheme that repackages jettisoned garments from canceled Western orders as “mystery boxes” for resale, appears to be a brilliant way to offset the one-two punch of inventory glut and unpaid employees.

But some critics now question the initiative’s effectiveness, arguing that yoking consumers rather than brands with the responsibility of rescuing workers merely puts a charitable gloss on the larger systemic issues that made something like Lost Stock necessary in the first place. They also wonder if the scheme lets retailers such as Topshop, Bestseller, C&A, Edinburgh Woollen Mills, Kohl’s, Primark, Sears and Urban Outfitters off the hook for invoking contractual force-majeure clauses to shirk payment, impose deep retroactive discounts or drag out compensation on completed and in-progress goods commissioned before the viral outbreak threatened to torpedo their already-floundering bottom lines.

“First of all this is not ‘lost stock’; this is product that brands ordered and now refuse to pay for, so what it really is is a crime scene,” said Scott Nova, executive director of the Worker Rights Consortium (WRC), a labor-rights group that tracks the companies that have committed to paying their suppliers—and names and shames those that have not.

“I know the people involved are well-meaning but I don’t think that selling small bits of this material to consumers is the best way to address the injustices that have been perpetrated here,” Nova added. “The proper approach to addressing this problem is maximizing pressure on brands and retailers to fulfill their moral and contractual obligations to suppliers and workers.”

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What is Lost Stock? 

When Lost Stock emerged in May as the brainchild of Edinburgh businessman Cally Russell, CEO of online retail platform Mallzee, Bangladesh’s garment industry, the world’s second-largest exporter of clothing after China, was already on the brink of collapse. Panic-stricken brands and retailers, anticipating the fiscal fallout of shuttered storefronts, soaring unemployment, tanking consumer confidence and a reduced appetite for new clothing in a time of duress, withdrew millions of dollars’ worth of contracts, seemingly overnight. Some have since pledged to honor their financial commitments, but many more have not.

To date, fashion companies have canceled or suspended more than $3.1 billion in orders from Bangladeshi suppliers, jeopardizing the employment of more than half of the country’s 4 million garment workers as factories operate at a fraction of their former capacity, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the South Asian nation’s largest trade group of apparel-factory owners. Coupled with slumping demand, the BGMEA expects the industry to face an “irrecoverable loss” of $5 billion, which is no inconsequential amount for an economy that relies on apparel for 84 percent of its export earnings.

Russell said he was moved to act after hearing a factory chief tell the BBC that “if coronavirus doesn’t kill my workers then starvation will.” He decided to make the most of his outrage, tapping his connections to mobilize tens of millions of pounds’ worth of garments and sorting them into 35-pound ($45.70) grab bags filled with 70 pounds ($91.45) worth of clothes—a minimum of three items—based on the purchaser’s size and aesthetic preferences.

Consumers get what they get and they can’t get upset—or exchange anything they don’t like. But their purchase also helps feed a worker and his or her family for a week through Lost Stock’s partnership with the local nonprofit Sajida Foundation, which distributes 37 percent of the price of each box in the form of food vouchers. (Russell says he would have preferred a cash disbursement, as was his original intention, but local laws didn’t permit it.) Lost Stock takes a 9 percent cut to pay for staff and marketing; the rest covers product, transportation, postage and transaction-fee costs.

The scheme has proved more popular than Russell expected. In a matter of months, Lost Stock has sold more than 109,450 boxes, surpassing its initial goal of 100,000 by the end of the year. It’s a win-win, he said: Consumers can snag a good deal while helping factory workers such as Fatema, a 30-year-old mother of two who was laid off without severance in April.

“It has been really difficult, my family is dependent on me, but now we are all helpless,” Fatema, a knot worker in the city of Narayanganj, told Sourcing Journal through the Sajida Foundation. “My kids aren’t able to go to school as their fees are overdue. I am not able to pay back my debts, our home rent and I can’t find any work.” The Sajida Foundation and Lost Stock have helped her get by. “As I am not able to earn any money, I can’t provide food for my family, and I am afraid that this is harmful for our health,” she added. “It’s stressful for me to be stuck inside my home due to the lockdown.”

Desperate times call for desperate measures

Not everyone is convinced by Lost Stock’s approach. Mostafiz Uddin, owner and managing director of Denim Expert, a jeans manufacturer in Chittagong, said factories are selling surplus goods to Lost Stock because they have no other option. Uddin himself has been vocal about the adverse effects of order cancellations on his business, which is teetering on bankruptcy because suppliers, rather than buyers, are liable for all of the upfront costs of production, including materials and labor.

“The stocks factories are selling to Lost Stock [are] at highly discounted rates in their desperate bid to save their workers and get rid of the huge bank liabilities as much as possible, which they incurred due to the cancelled and unpaid orders,” he said. It’s an imperfect solution, however, since the payment they receive is unlikely to cover the total value of the goods, which includes raw materials, worker wages, storage costs and bank interests.

It’s for this reason that Uddin doesn’t plan on selling his wares to Lost Stock. Doing so may even end up costing him since he would have to replace any buttons, rivets or zippers that might betray the garment’s original buyer. “Many manufacturers like me have not opted for or welcomed this option [because we’re] waiting [for our] buying partners to take delivery of the goods without any further delay,” he said. Restrictions are easing in several countries, he reasoned. With some stores reopening, surely stir-crazy consumers, venturing outdoors after months stuck at home, will be eager to crack open their wallets again.

Lost Stock negotiates a cash price with each factory in Bangladesh it works with, said Melanie Gray, who handles communications for the program. This amount is then topped up with financial support for workers through the Sajida Foundation. “This is designed to ensure that workers benefit directly from Lost Stock and we can offer transparency to consumers who buy from us,” she said. “Combined, these payments aim to match and in some cases exceed the [free-on-board] rates that were originally agreed with retail brands.”

Some critics question Lost Stock's effectiveness in holding fashion brands and retailers accountable for their canceled garment orders.
Some critics question Lost Stock’s effectiveness in holding fashion brands and retailers accountable for their canceled garment orders. loststock.com

A ‘short-term hopeful solution’

For Ayesha Barenblat, founder and CEO of Remake, a grassroots organization that has been urging brands to act responsibly through its #PayUp social media campaign, Lost Stock is an interim charitable act that “doesn’t get to the heart of the problem” of suppliers not being paid for work they have done. Though she’d like assurances that Lost Stock isn’t behaving in a predatory manner, say, by asking for discounts suppliers can’t really afford, “ultimately it comes down to brand accountability.”

“[Lost Stock] has a short-term hopeful solution of clearing up some of the inventory and getting immediate relief to workers who we know are becoming food and housing insecure,” Barenblat said. “But in the long term, the industry is still a hot mess, right? And we have to fix some of these structural issues, which allow brands to essentially not pay for this labor.”

Lost Stock, she said, lets consumers feel good about doing something without the effort of actively advocating for garment workers, most of whom continue to bear the brunt of unrelenting sourcing squeezes by buyers who wield all of the bargaining power.

Garments, Barenblat added, are delivered with the tags snipped off and replaced with Lost Stock branding, which further obfuscates their origin and reason for being. (Russell says Lost Stock has to remove brand labels by law; in some cases, the retailers that commissioned the products have since gone out of business.) “From a traceability standpoint it would be really helpful, even if they cut off the labels, to give some sort of metadata that says ‘this is the stock that we’ve bought from these brands,’” she said.

Mixed messages

Then there’s the underlying message behind the scheme, said Christie Miedema, a Clean Clothes Campaign advocate who spoke to Sourcing Journal on behalf of its fellow nonprofit Labour Behind the Label.

While people who buy Lost Stock boxes think they’re doing the right thing, it presents the flawed idea that “we can shop our way out of the crisis,” she said. “And that the responsibility for solving it lies with consumers, who then have to give money for clothes, which they haven’t seen before, which is also problematic in the sense that that’s not the sustainable kind of shopping that we want. We want people to [buy] what they’re going to wear for years [to come]. I don’t know how many people are actually going to be really happy with what’s in that box or not.”

Garment workers shouldn’t be holding out for charity, Miedema said. Rather, they should be receiving the wages they worked so hard for. “There’s still a narrative that the responsibility for making the garment industry more responsible lies with consumers who have to pay attention to where they buy their clothes, inform themselves to make the right choices—all of that,” she said. “So the idea that consumers can solve this is just highly problematic.”

Miedema recognizes, however, that in the middle of these philosophical debates, there is the very real issue of people who need urgent relief, and she says there are many organizations, including the Clean Clothes Campaign, Arisa, the Awaj Foundation and the Bangladesh Centre for Worker Solidarity, that are providing emergency cash without strings attached. Food vouchers from the Sajida Foundation, on the other hand, have a limited impact.

“Workers need housing, they need education, they need medicine,” said Nazma Akter, founder and executive director of Awaj Foundation, which is based in Dhaka. “So the question is how helpful Lost Stock is, when it’s acting as a middleman without any direct accountability to workers.”

Playing different roles

Russell says he sees Lost Stock as part of a broader movement, with its own role to play. “The problem that has been created by the situation is massive,” he said. “And in reality, we need lots of elements to work together to create a solution. There needs to be organizations that are holding brands accountable, and there needs to be organizations that are focused on getting the right kind of support for workers straightaway.”

The person who might purchase a box from Lost Stock “may or may not sign a petition or may or may not go down the activist route,” Russell said. “That’s why we’ve focused on being a mass-market offering that targets consumers from all different backgrounds and all different types of belief systems and approaches to action. And we hope that [in the] long term, it’ll engage people in the kind of problems in these countries that have been created by some of their previous choices.”

Lost Stock, which recently rolled out a children’s version of its box, may have even bigger ambitions than it has let on, though it remains to be seen how they’ll pan out exactly. “I can’t tell you all about it, but what I can say is that this is the first stage of what we’re doing,” Russell said. “We are working day and night to create something that we think can can fundamentally change how people buy product, but more importantly, do so in a way that is good for the world and good for workers.”

Labor advocates, like WRC’s Nova, on the other hand, have little doubt there’s only one effectual and sustainable way forward—and it doesn’t involve selling clothing in an anonymous, piecemeal fashion, however good-intentioned.

“What is going to ultimately enable suppliers to survive and protect the rights of workers is effective advocacy to get brands and retailers to fulfill their obligations,” Nova said.