Arcadia Group isn’t the only fashion company threatening to cancel production orders if it doesn’t receive deep discounts from clothing manufacturers.
George, the clothing arm of British supermarket retailer Asda, is reportedly offering suppliers 50 percent toward the price of canceled orders on a “take it or leave it” basis, despite the fact that many of its stores and distribution centers remain open in the United Kingdom.
The company framed its offer as a “gesture of goodwill, with no admission of liability and to support your business during this unprecedented and difficult time,” according to an email obtained by Apparel Insider. To sweeten the deal, Asda is allegedly offering to pay invoices within seven working days, rather than the typical 30.
Asda is also offering 30 percent of the originally agreed price for any orders still in progress, along with the opportunity for suppliers to sell canceled orders as long as the George label is removed, Apparel Insider said.
Asda did not immediately respond to a request for comment.
A spokesperson told Apparel Insider that the company wants to help its suppliers “weather this crisis” and be in the “best place possible” to continue working with it once the pandemic passes.
“We have been in close contact with our suppliers and advised them that we intend to honor our commitments on the overwhelming majority of our orders and wherever we are able—for example, we will be taking 80 percent of our planned orders,” the spokesperson said. “Where there is product that we are not able to sell at this time we are offering to mutually cancel the order and pay a proportion of costs within seven working days, as well as agreeing suppliers can resell items or donate them.”
Asda is a wholly owned subsidiary of Walmart, which founded the Sustainable Apparel Coalition with Patagonia in 2012 with the goal of driving multi-stakeholder collaboration in the fashion industry.
A list of first-tier factories on the Asda website includes countries such as Bangladesh, Cambodia, Laos, Pakistan, Slovenia, Turkey and Vietnam.
Bangladesh, the world’s second-largest exporter of clothing after China, has been pushed to the brink of catastrophe after a slew of cancellations from Western brands and retailers, even for orders that have already been produced, have choked off cash flows, leaving unemployed and furloughed workers staring down the twin specters of destitution and starvation.
Fashion orders worth $3.2 billion have been nixed by global brands, affecting 2.26 million workers, according to the Bangladesh Garment Manufacturers and Exporters Association. At least 10,000 workers from 37 factories have lost their jobs, though the number could be much higher, Kalpona Akter, founder of the Bangladesh Centre for Worker Solidarity, told Reuters Tuesday.
For its Bangladesh suppliers, Asda is offering an” additional option” of deferring receipt of items on discounted terms.
“This approach gives our valued suppliers the benefit of a cash injection into their business in the immediate term so that they may pay their workers, as well as a clear path towards planning for next seasons ranges with us,” the spokesperson said.
Just last week, Arcadia Group, which owns Topshop, Topman, Dorothy Perkins and Miss Selfridge, told suppliers it is entitled to cancel “any order” at any stage of production, but it was prepared to accept goods at a 30 percent discount, plus extended payment terms of 90 days.
Asda workers at a George distribution center in Newcastle recently circulated a petition not only claiming it was impossible to maintain a safe six-foot distance from colleagues but also questioning if a clothes depot should be deemed an “essential service.”
“Asda George distribution is a distribution centre for clothing only. They do not supply any essential items and cannot be deemed as key working,” the petition read. “Other clothing distribution centers in the area have rightly been closed down in accordance with the lockdown regulations. This is…a blatant disregard to their staffs’ well-being to keep a strong preference on profit.”