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Bestseller’s Reported Order Cancellations Deal Suppliers ‘Huge Financial Blow’

Bestseller is reportedly imposing retroactive price reductions, order cancellations and extended delays in payment of invoices “across its supply chain,” according to labor rights advocates.

Suppliers told the Workers Rights Consortium (WRC) last week that the Denmark-headquartered apparel retailer—which also owns the Jack & Jones, Mamalicious and Vero Moda brands—has canceled up to 20 percent of completed and in-process orders without compensation while imposing price cuts of up to 25 percent on the orders it is accepting. All of this is on top of the company’s enforcement of a 90-delay in all payments to suppliers, “without providing financing to enable suppliers to weather the delay.”

Despite Bestseller’s previously announced commitment to accept delivery of finished and in-production orders, plus its pledge to remain in “close dialogue” with suppliers amid the coronavirus pandemic, the retailer has not promised to pay for these orders in full, the WRC said in a statement.

“Instead, Bestseller, through ‘individual dialogue,’ is telling suppliers they must accept retroactive cancellations and price reductions on its orders, which vary in size from supplier to supplier and which, in the aggregate, constitute a huge financial blow to Bestseller’s supplier base and to the workers who make its clothes,” the organization added.

“When Bestseller retroactively cancels an order, in part or in whole, this means large financial losses for the affected supplier,” the WRC said. “No supplier would voluntarily agree to accept such losses, allowing a customer to ignore its contractual obligations at the suppliers’ expense.”

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Suppliers, the WRC said, are agreeing to sacrifice their own bottom line to benefit Bestseller’s because “they believe they have no choice—that if they do not accept Bestseller’s terms, Bestseller will not give them business in the future.”

“Unfortunately, the balance of power in apparel supply chains allows buyers to impose their will on suppliers, a dynamic that is playing out across global supply chains, at enormous cost to suppliers and to workers,” the organization added.

Bestseller does not own its own factories; on its website, the retailer states that its brands have approximately 220 million products manufactured at more than 700 factories across Europe and Asia that meet its code of conduct, which is “based on and follows the universal declaration of human rights, key United Nations conventions [and] International Labour Organization conventions and recommendations.”

In 2018, Bestseller launched Fashion FWD, a strategy designed to meet the “immediate need for inclusive and holistic action” on sustainability across is supply chain based on circular and climate-positive business models.

Also that year, Bestseller, whose tagline is “bringing sustainable fashion forward,” published its supplier list to promote transparency.

“As Bestseller does not own factories, it is imperative for us to work with our suppliers in an open and honest way. We continuously seek to create more transparency in our supply chain to address risks and promote positive change,” sustainability manager Dorte Rye Olsen said at the time. “In the light of this, and to provide increased transparency, we are making supplier factory information publicly available.”
When reached for comment, a Bestseller spokesperson told Sourcing Journal the company is still placing orders for autumn, although a “reduction in some volumes are sought to prevent over-production.”
“There is a projected sales drop and to our best ability we have to forecast the demand in the market, and to what level it will recover,” the spokesperson said. “Any changes in terms and volumes have been agreed with all our suppliers through these individual dialogues and all due invoices to suppliers have been paid enabling suppliers to cover their expenses. We are actively tracking that workers are paid in due time in all factories working with Bestseller, and will continue to follow this process carefully over the coming months.”