BooHoo! How millennials fall into the wage gap trap


By Sandeep Raghuwanshi

Every time we tune in to sustainability forums and webinars, we are told that companies need to change how they operate because millennials are consumers with conscience. They care about the planet and justice, are data savvy, and vote with their money. But is it really true?

Recently ultra-fast fashion icon BooHoo came under spotlight for worker abuse in their supply chain. The company was darling of customers and investors alike, and had a meteoric rise of growing its sales ten times in five years. The online first company adds a new collection to its website every single day. Using a “test and repeat” model, it produces small batches of lots of new styles, and then rapidly ramps up production of the best-selling pieces. The time between design to sales is as little as two weeks.

During sudden lockdown, when the rest of competition was struggling to find ways to survive, BooHoo instantly switched its collection to loungewear, pyjamas, and joggers as customers spent time at homes being locked in. The sales skyrocketed.

It doesn’t take much to figure out that the company couldn’t have had these comfort clothing collections in inventory as nobody saw the pandemic coming at this scale. BooHoo’s primary customers are 18–24 year old millennials. So one has to wonder that when these conscious millennials were browsing through the online collections to find a large range of loungewear clothings for £5 or less per piece, what thoughts popped up in their minds? Did they wonder how the company is continuing to operate when everyone is struggling to survive, and on top of that how are they managing to produce clothing so cheap.

Clearly the millennials were not asking these questions since in the three months until May, BooHoo’s sales grew by 45%.

It all came to light when a news journal published investigations showing workers at Leicester’s—an industrial city about 100 miles from London—where garment workers worked throughout the lockdown earning as little as £3.50 per hour which is way below the UK National Minimum Wage of £8.72. The investigations revealed that workers were forced to work despite being infected and contract violations were widespread. Boohoo was by far the biggest buyer with purchases about 70 per cent of the total garments produced by several hundred garment factories in Leicester.

BooHoo’s defense is that they didn’t know anything about what was happening. The company announced proudly stating that they will stop working with the accused factories. But for their fundamental model to continue, they will have to survive the situation and repeat somewhere else. With the fabric price, trim price, their marketing budgets, head office salaries and insane management bonuses; it is simply not possible to have anything else, but cheap labor. The company calls it ‘value’ clothing, but it is ‘value’ for customers only because someone else is paying for it.

The fact is that most consumers have no idea where their clothing is made—in the UK or in some far away country? While sustainability advocates may want to pressure businesses to put better hang tags, most customers don’t even check the label on the clothing while browsing, forget about having thoughts about the working conditions of factories where the piece of clothing was made. With such a state of mind, is it realistic to expect that they would be prepared to pay a little more to help workers get to a living wage?

Brands sell clothing at price points that are set by the market i.e. by the consumers. BooHoo captured the space for ultra cheap, ultra fast fashion and served what the consumers wanted. Tomorrow, if Boohoo disappears, another company will take its place doing exactly the same thing till there is consumer demand for such fashion.

In this entire saga, no one is asking a fundamental question—how the buying habits of an entire generation of consumers, who view clothing as a commodity with no intrinsic value, juxtaposes with the need to have better price realization so that it can lift the value chain. But behavior change is a slow and long process, and it cannot be achieved purely by spreading awareness. It needs to be induced by a combination of regulation and pricing along with education. Till then such scandals will continue to break and grab headlines.

Sandeep Raghuwanshi, CEO and Founder, ESG Robo. It is a startup that aims to improve sustainability in the fashion industry’s supply chain.





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