Primark is trying to play nice with its factory partners.
Following public pressure to make good on cancelled orders that would have left many of its suppliers in limbo and the workers worse off, the Irish-fast fashion retailer has established a fund it says will cover the wage component of the orders it had cancelled, which includes goods that were due for shipment this month.
“Since March 22, Primark’s entire store estate has been closed, with the loss of sales worth £650m [$801 million] every month. The company asked suppliers to stop production as it already had some £1.6bn of paid-for stock in stores, depots and in transit. All of this stock has been paid for under its normal 30-day payment terms,” the retailer said in a statement. “On top of that, extended payment terms have been offered to suppliers to enable Primark to take and pay for further stock ready for shipment. This is despite the fact that nothing can be sold while the stores remain closed.”
Primark’s quick cancellation of all orders from its supplier factories prompted widespread criticism as other retailers followed suit and reports emerged about the grave impact the reactions would have on garment workers, particularly in places like Bangladesh, where wages are already substandard. A source close to factories that make product for Primark told Sourcing Journal just two days before the retailer’s statement that it had evoked the force majeure clause as a way out of its obligation to the placed orders—for which raw materials and wages would have already been paid by the factories.
Now the retailer’s messaging addresses its concern for the impact on workers, who, in accordance with Primark’s fund, will reportedly see wage payments from Primark, which will be adjusted to factor in any government support packages already being provided.
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The fund covers suppliers in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam.
“Every one of our stores around the world is closed. With a backlog of stock in stores, depots and in transit, we have had to make the very difficult decision to cancel orders for future stock. Finding a way to ensure that workers in our supply chain in these countries are paid has been a priority over the past two weeks and we are pleased that this fund will provide relief to these workers,” Primark CEO Paul Marchant said.
“Our focus now is to work with the suppliers, factories, trade unions and NGO’s in these countries to make sure wages for the orders we have cancelled are paid to the workers,” he added.
Primark’s action follows similar changes of heart for H&M, Inditex, Marks & Spencer, Kiabi, PVH Corp. and Target, which last week said they would keep their commitments to factories for already produced or in-work orders. Others, however, have yet to come forward, and order cancellations are still piling up at factories in key sourcing countries, including in China and in Bangladesh, where cancellations had reached upward of $3 billion last week.
Some suspect that with so much revenue withdrawn or suspended, and factories on lockdown amid COVID-19 preventative actions, many of these facilities may not be able to keep workers around long enough to pay them anyway. Many could be forced to shutter by the summer, damaging an industry that expects to resurface at some point post-COVID-19.
In an effort to take brands to task for their actions, Remake, a community of millennial and Gen Z women committed to putting an end to fast fashion and its adverse effects, launched a #PayUp petition. The aim is to pressure brands into paying for what they’ve ordered, and on payment terms originally negotiated—not new, extended terms that many brands are pushing for, which would still leave suppliers in a bind.
The movement calls on brands to take responsibility for the vendors they have relied on to make low-cost fashion and build up their businesses.
“No brand has placed future orders, and by the summer, many factories will shutter. We need brands to #PayUp now, not based on prior contractual terms of shipment and 60 to 90 days of payment delay,” Remake said. “Even if brands #PayUp for cancelled and in-production orders, the future remains uncertain. Brand foundations and multilaterals must step in and provide emergency relief funds to garment makers being impacted by shuttered factories.”