Quiz has launched an investigation into one of its Leicester-based suppliers, the second UK fast-fashion retailer to do so in under a week, after allegations of non-compliance with living wage requirements at its factories surfaced.

Reports have suggested there are nearly 10,000 victims of modern slavery working in the city.

The fashion company has suspended work with the supplier following an investigation by The Times that revealed workers in Leicester had been offered as little as GBP3 (US$3.80) an hour to make clothes for the firm. It follows a similar investigation into Boohoo last week. 

In a statement to the London Stock Exchange this morning (13 July), Quiz said it was “extremely concerned” by the reports and is currently investigating the allegations.

From an initial review, the company said it believes the Leicester supplier subject to the complaint, has used a sub-contractor “in direct contravention of a previous instruction from Quiz”.

The company said relationships with any suppliers that fail to comply with the group’s Ethical Code of Practice, or meet the group’s standards, will be terminated.

Quiz monitors its supplier base through audits and site visits and said in the statement it is in the “advanced stages” of appointing an independent third-party partner to provide more regular audits of suppliers in the Leicester region.

“We are extremely concerned and disappointed to be informed of the alleged breach of National Living Wage requirements in a factory making Quiz products,” said Tarak Ramzan, chief executive of Quiz. “The alleged breaches to both the law and Quiz’s Ethical Code of Practice are totally unacceptable.

“We are thoroughly investigating this incident and will also conduct a fuller review of our supplier auditing processes to ensure that they are robust. We will update our stakeholders in due course.”

Quiz said its board has committed to a full review of the group’s current auditing processes to ensure they are “robust enough to ensure on-going compliance” with its Ethical Code of Practice throughout the supply chain.

Boohoo Group last week saw a 52% drop in its stock price after media reports surfaced of exploitation and unsafe conditions at one of its Leicester-based supplier factories. A number of major online fashion retailers, including Next and ASOS, dropped Boohoo’s brands from their websites over the claims.

The online fashion group has launched an immediate independent review of its UK supply chain, led by Alison Levitt QC, and has committed to investing an incremental GBP10m (US$12.5m) to eradicate supply chain malpractice.

Modern slavery allegations

According to a report published by The Sunday Times newspaper, the Jaswal Fashions factory in Leicester, which supplied Boohoo, was operating during a local coronavirus lockdown in the city, without additional hygiene or social distancing measures in place.

Campaign group Labour Behind the Label says workers reported serious breaches of lockdown regulations, with employees pressured to work with little to no social distancing or provision of personal protective equipment (PPE).

Andrew Bridgen, Conservative MP for North West Leicestershire, told LBC Radio yesterday (12 July) there could be around 10,000 modern slaves working in the city in around 250 “sweatshops”.

He said the Leicester sweatshops were an “open secret” in the city that politicians never acted on.

“I would point out that all the factories are in the constituency of Leicester East, which is the hotspot of where the virus has flared up in Leicester, and anyone saying there’s not a link between those conditions, the poverty wages and the fact that Leicester’s in a lockdown, it just doesn’t add up,” he said.

The National Crime Agency says it is working alongside Leicestershire Police, HMRC, the Gangmasters and Labour Abuse Authority (GLAA), the Health and Safety Executive, Leicester City Council, Leicestershire Fire and Rescue and Home Office Immigration Enforcement in assessing and investigating the reports.

“Our primary focus is on the protection of vulnerable people and safeguarding them from harm,” it said in a statement last week. “As part of that, in recent days NCA officers have joined partners in attending a number of business premises in the Leicester area to assess some of the concerns that have been raised in respect of modern slavery. These visits are likely to continue.

“The NCA does not intend to give a running commentary on our activity, but once our assessment is complete we will look to engage with partners to deliver a response at the appropriate level.

“Tackling modern slavery is one of our highest priorities, and we are committed to working with partners across law enforcement, the private, public and charity sector to pursue offenders and protect victims wherever they may be.”

The GLAA, meanwhile, says officers from the different agencies have spoken to business owners and workers to discuss concerns and provide advice around how to protect workplaces from the risk of coronavirus. Further visits are expected to be carried out in the coming weeks.

The agency says no enforcement has been used during the visits and “officers have not at this stage identified any offences under the Modern Slavery Act 2015”.

“We are committed to working with partners to ensure that workers in Leicester are safe during the coronavirus pandemic and are not having their employment rights eroded or abused,” said GLAA head of enforcement, Ian Waterfield.

“Allegations of labour exploitation are something we take extremely seriously and we will continue to take appropriate action to safeguard potentially vulnerable workers.”

Rebuilding confidence

Bank of America analyst, David Holmes, believes there is a lack of visibility around the severity of the situation.

“Transparency provided from the independent review will be critical but will likely take time. The key unknown is the extent to which underpayment of workers is prevalent. If small scale, bad actors can be identified, relationships terminated and capacity shifted to abiding factories. The incremental cost in such a scenario should be limited.

“Labour behind the Label has suggested issues are endemic in Leicester. If that’s the case, it could be harder to terminate relationships. Wage increases may have to be passed on to Boohoo via higher buy-in prices. Currently, it’s hard to completely rule out this scenario.”

Holmes says transparency of the supply chain is critical, and that Boohoo does not appear to have a full picture of all first/second tier suppliers at this stage.

“This is where the company has left itself exposed, we believe. Perhaps a company operating at such scale should have more visibility on the supply chain. Disclosure and communication through the independent review will be critical to rebuilding investor confidence over coming months. This process will likely take time.”

Flora Davidson, co-founder of production and software firm SupplyCompass, believes there is a misconception that manufacturing close to home means good factory conditions and workers’ rights.

“However, local doesn’t guarantee ethical standards are met. Some of the most exceptional factories we’ve visited have been in India, Nepal and Sri Lanka.

“It appears Boohoo has dropped the supplier in light of this, rather than sticking with them to work through this together. It highlights once again the power imbalance between brands and their suppliers, similar to what we’ve seen happen during Covid-19 with large retailers cancelling orders. Brand – supplier relationships shouldn’t be transactional or throwaway. The future is about durability and quality, both in terms of products and relationships.”

Bernstein analysts, meanwhile, question why Boohoo management hasn’t issued a strong message following the allegations. In order to restore investor and consumer confidence, it suggests management “speak out loudly and clearly”, and offers five action points that could accelerate the recovery.

#1 Get the CEO and co-founders’ voice out there.

#2 Announce that the company will publish the entire supplier list within two months.

#3 Reinforce ESG credentials, with immediate effect.

#4 Ramp-up proactive engagement with analysts and investors on ESG.

#5 Turn off social media for a week.