Thanks to Nasty Gal, PrettyLittleThing, and its namesake Boohoo brand, among others, Boohoo Group has garnered itself the title of one of the fastest growing fast fashion groups in the world since it first set up shop in 2006. Situated among the likes of Fashion Nova and fellow British entity Missguided, Manchester-headquartered Boohoo and its brands are part of the new fast fashion establishment, a faster, vaster, and sometimes even cheaper take on the model pioneered by the likes Forever 21, H&M, and Zara in the early 2000s.
With their sweeping social media footprints, digitally-native operations, and bevy of Instagram-famous endorsers (from Kourtney Kardashian and Paris Hilton to Zendaya and Hailey Baldwin), Boohoo and co. have turned the traditional understanding of fast fashion on its head. “It is a slick business model that has made ultra-fast-fashion retailers a force to be reckoned with even in a pandemic,” the New York Times’ Elizabeth Paton wrote this week, noting that “Boohoo [Group’s] sales grew by 45 percent to £367.8 million, or $462 million, from March through May compared to [the same period] last year, according to the company.”
However, the company’s seemingly unencumbered rise – even in the face of the COVID-19 health pandemic that has seen stores across the globe shuttered for weeks and consumers spending on necessities, as opposed to fashion – was brought to a swift halt over the weekend when British publication the Sunday Times revealed that suppliers tied to Boohoo have been engaging in rampant labor and wage abuses all in the name of lightning-fast fashion.
Revelations that garment workers in Leicester, a city in central England, were making trendy wares destined for Boohoo – whose marquee brand introduces 100 new styles to its e-commerce site on a daily basis – and being paid as little as £3.50 ($4.39) per hour to do so made headlines around the world, serving to shed light on the ugly underbelly of some of the market’s hottest mass-market fashion companies.
“Cramped high-density living conditions,” and workspaces dominated by extreme temperatures and poor air quality are the norm in many of these factories. The situation has been worsened as of late, though, given the lack of personal protective equipment, “inappropriate social distancing measures, and continued business operation during the [COVID-19] lockdown” – all of which is accompanied by pay rates well below the country’s minimum wage. Such conditions place an eye-opening microscope on the workings of suppliers to Boohoo and other entities just like it; and in fact, “may have also played a part” in the recent surge in coronavirus cases in Leicester, according to Nottingham Trent University’s Ian Clark, Huw Fearnall-Williams, James Hunter, and Rich Pickford.
Looking beyond the pandemic-specific health risks, the heart of the problem, the Nottingham Trent researchers say, are employers – including those in the business of producing and packing garments – “that use informal business and employment practices, and that often operate beyond government regulatory institutions, imposing norms and values that erode accepted business and labor practices.” While these companies “operate in plain sight,” as documented in a 2018 report from the Financial Times (which exposed the expansive network of exploitation-ridden “dark factories” in Leicester), they “often fail to comply with employment law, workplace health and safety rules, and environmental regulations.”
The striking allegations involving Boohoo have prompted pushback from consumers and British regulators, alike. According to a report from the Guardian, within days of the publication of the Sunday Times’ findings, which were the result of an undercover investigation, the company saw the value of its publicly-traded venture drop by a whopping £2 billion ($2.5 billion).
With such wage and labor violations in mind and the potential health risks at play, particularly in light of a surge in COVID-19 cases in Leicester, the British government has enlisted the National Crime Agency to investigate practices of “modern slavery” in the region’s clothing factories. The country’s Health and Safety Executive also announced that it would carry out investigations, alongside the Leicestershire police and city council.
Meanwhile, Boohoo has vowed to launch an independent review of its supply chain, and says that it has already “cut ties with two suppliers that infringed on its code of conduct, but said there were inaccuracies in the newspaper report,” per Bloomberg. In a statement, the company – which revealed that it will add two independent non-executive directors to its board with backgrounds in environmental, social and governance issues – asserted that it is “committed to doing everything in our power to rebuild the reputation of the textile manufacturing industry in Leicester.”
A New Type of Fast Fashion
The consumer outrage and the financial consequences that have followed from the reports of abuse within Boohoo’s supply chain have been swift and significant. Yet, the allegations, themselves, are hardly unheard of when it comes to this specific – and relatively new – breed of fast fashion companies. In fact, the Boohoo revelations come just months after Fashion Nova made headlines when it was disclosed that behind the burgeoning fast fashion brand’s $25 denim and $35 velvet dresses is a web of “secret underpaid workers” laboring in factories in Los Angeles in order to churn out low-cost garments and accessories that have been heavily endorsed by mega-stars like Cardi B and the Kardashian/Jenners.
According to a December 2019 report from the New York Times, California-based Fashion Nova’s clothing is “made in dozens of factories [in Los Angeles] that owe $3.8 million in back wages to hundreds of workers,” with some allegedly paying “their sewers as little as $2.77 an hour,” as a result of pay-for-piece wage structures (as opposed to hourly wages). The assertions mirrored those that have long-plagued no small number of domestically-headquartered retail companies, with the now-bankrupt Forever 21, among others, being cited on more than one occasion by the Department of Labor’s Wage and Hour Division in connection with its manufacturing practices.
Such recurring revelations of subpar working conditions and grossly-imbalanced pay structures raise questions about how fast is “too fast” when it comes to fashion, and how cheap is simply too cheap?
Part of Boohoo’s problem, according to Bloomberg’s Andrea Felsted “is that it has been growing at breakneck speed, [and] as sales fly, [its] suppliers struggle to keep up, and so they subcontract to other companies, further removed from the retailer.” The same goes for other similarly-situated companies, which rely on large networks of suppliers – and their various contractors and even more far-removed subcontracts – to produce the garments and accessories that they hawk by way of their e-commerce sites.
As for prices, the situation is similarly complex. Fast fashion brands are in the business of frequently changing their suppliers of choice in search of those willing and able to manufacture at the extreme lowest costs, and exerting leverage over the terms of the contracts, thereby, making it possible to source garments and accessories for previously unimaginable costs. Moreover, they are, in most cases, shielded from liability due the multi-layered nature of their supply chains, thereby, enabling them to reap the benefits of cheap labor and thus, inexpensive price tags, without the legal risks.
Beyond the practical elements of the supply chain that make such prices possible, years of widespread marketing by way of advertising campaigns boasting inexpensive H&M and Zara garments, for instance, or Instagram ads touting dirt-cheap Fashion Nova looks have led to a collective belief among consumers that these prices are how much clothing should cost, and anything above these prices reflects an unnecessary markup. In other words, consumers have come to expect increasingly inexpensive wares.
The result comes in the form of bottom-of-the-barrel prices across an entire section of the market, which have become the norm rather than an outrageous (and often human rights abuse-ridden) outlier, as fast fashion brands are forced to deliver on such consumer expectations in order to remain competitive. This is further exacerbated by the relative drop-out of middle-market players – like J. Crew and Abercrombie – thanks to the rise and price-setting domination of fast fashion retailers, and particularly the digitally-native ones.
Taken together, these factors have made the workings of this new group of fast-er fashion retailers a hot bed for abuses. That reality may be starting to change, however, in light of consistent probes into these increasingly fast fashion retailers’ operations and a burgeoning push for sustainability among millennials and Gen Z, who are precisely the ones that have been among the biggest consumers of such cheap, trendy garments and accessories in the past. As Matthew Earl, managing partner of specialist hedge fund ShadowFall, which maintains a short position in Boohoo, told the Guardian this week, “The market finally seems to be coming around to our view that Boohoo’s margins may not be sustainable if greater scrutiny continues to be applied,”