Blog: Leonie BarrieA week in the news...

Leonie Barrie | 28 July 2008

Perhaps the most sensational story on just-style last week was the disclosure that a New York based garment contractor for some of the top US retail brands has been involved in a range of labour law violations including withholding $5.5m in unpaid wages.

Jin Shun Incorporated has operated under a number of different names, and was found to have underpaid more than 100 workers over several years. The Department of Labor stated that the contractor kept false records and coached its workers to lie to inspectors. The investigation also revealed that workers routinely worked 12-hour days, six to seven days a week.

Unfortunately allegations of worker exploitation in overseas apparel factories are all too common. But the discovery of the same problems closer to home has once again fuelled the debate over the adequacy of social responsibility systems and the relentless drive for lower prices.

There’s more bad news for UK retailers too, with a new report warning they should brace themselves for a decade of woes, characterised by bankruptcies, job losses and falling sales. This was certainly borne out in June, when UK retail sales posted their sharpest monthly fall since records began - with clothing and footwear sales down nearly 7%.

But it seems some firms are still optimistic that there’s growth to be had in the luxury market. Private equity groups Phoenix Equity Partners and Sirius Equity have bought a 70% stake in UK fashion brand LK Bennett and plan to open new stores in the UK and overseas. The owner and chief executive of UK fashion firm Jaeger have purchased a 60% stake in luxury footwear label Beatrix Ong in a bid to expand it into a global luxury accessories brand. And artists and designers Viktor Horsting and Rolf Snoeren have sold a majority stake in their Viktor & Rolf label to the owner of the Diesel brand.

Other top apparel brands including Levi’s and Adidas, however, are finding that as they expand their retail presence in markets such as China they are having to face up to a barrage of counterfeiting. According to a new just-style management briefing, they are hitting back by market and shop raids and hiring investigators to probe warehouses.

Meanwhile, there are signs that China is losing its competitive edge in textiles and clothing. Not only is it facing mounting costs on several fronts, but new sources of supply in Bangladesh, Cambodia and Vietnam mean many buyers will not return to China when safeguard quotas are removed at the end of this year.


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