According to new reports, an email was allegedly sent to some Boohoo suppliers with the retailer stating: “Based on significant decreases in freight, cotton and polyester prices year on year, we are rebasing our cost prices to reflect these improvements.”
It continues: “[In] previous years we absorbed a significant cost inflation across our operations but, as a strategic partner to Boohoo Group, we need to ensure that the savings now being experienced across the industry are in your cost prices.”
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Boohoo declined to comment following Just Style’s request.
However, GlobalData’s senior apparel analyst Pippa Stephens tells Just Style Boohoo must ensure it does not harm its relationship with its suppliers, or else it risks creating even greater problems in its supply chain further down the line.
Stephens continues that Boohoo might have requested supplier discounts as an attempt to return to profitability, after experiencing an operating loss of £82.2m ($104.29m) in its FY2022/23 to 28 February 2023, due to falling consumer demand and greater competition from the likes of Chinese fast fashion retailer, Shein.
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By GlobalDataAt the time Boohoo provided assurance that it is “working with suppliers” to address a surge in prices on the back of higher costs after allegations surfaced it is demanding higher discounts on goods.
The Boohoo spokesperson explained: “Over the last 18 months, the prices we pay to suppliers have increased as the cost of energy, transport and raw materials increased. More recently, the cost of these items has come down significantly and so we are working with suppliers to address this and ensure we can continue to deliver the best prices for our customers.”
Non-profit cooperative, Labour Behind the Label estimated to The Guardian that there were 1,000 factories in Leicester in 2020 and that this number has now halved. The site added that garment factories are reporting squeezed profits due to punitive practices such as last-minute order cancellations, unexpected changes to orders, and demands for discounts by retailers attempting to cut costs amidst disappointing sales.
The Guardian’s article cited a supplier that revealed a payment slip from Boohoo indicating a 10% reduction on the price of an order that had already been delivered. It said the supplier was not consulted or given a reason for the cut and expressed concerns about the financial impact.
