Business

Bangladesh suppliers’ row with Edinburgh Woollen Mill escalates

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On 26 May, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said in an open letter to EWM and the media that the group should stop asking for discounts, otherwise it would be blocked from placing future orders with BGMEA members. 

Bangladeshi suppliers to EWM accused it of taking “undue advantage of the Covid-19 situation” and “demanding unreasonable discounts”. 

In the letter, suppliers demanded payment by 29 May for goods already received by the group’s shipping agents before 25 March. It asked for payment by 5 June for those orders already placed.   

One of the signatories told Drapers: “[At the beginning of] April, EWM cancelled all the orders, meaning goods that were shipped out, in the sea, in the port, in the factory, all of it. Some time later, they asked for a 70% discount from many suppliers over phone. Then in mid-April, they called with the request of a 30% discount and payment after the goods were sold. We refused, as they were not willing to give any payment guarantee.” 

Another Bangladeshi supplier said: “At the beginning of the May, they called us and told us that whatever goods are already in the UK port to please return back to Bangladesh, which is quite impossible for us.

“They then called us again and asked for a 30% discount, which is also not possible and we let them know we are helpless. I think they will ask for a huge discount with our remaining goods also. We are really scared about the situation.” 

A third EWM supplier told Drapers: “They have called us over the phone and asked for discounts on many occasions – starting from 70%, then 30%, and then 5% with 180 days deferred.” 

Philip Day’s retail group, which owns Bonmarché, Peacocks, Austin Reed and Jaeger, has told Drapers that it had been negotiating with individual suppliers on a case-by-case basis. Last week, on 27 May, it said it had reached agreement with most of its suppliers, and “discussions with them have been wholly positive and constructive”, and were dependent on the amount of stock, the size of the business, and their needs. 

The retailer insisted it had “already paid for the majority of future stock”. This was for spring/summer 20 orders that were in delivery, production, or slated for future production (such as factories having had put in orders for fabric). As a result, it said the outstanding stock that was cancelled was not all the future stock at the time – most had already been paid for.

The company said the £27m the association has referred to is a combined amount for outstanding stock back in March. It added that the figure of outstanding stock is now between £2m and £3m, which is still under discussion and it hopes to resolve “amicably”. The rest has either been paid or negotiated on, said EWM. Drapers has contacted the BGMEA for confirmation on this. 

However, the BGMEA has since responded to EWM’s claims, saying it is “disappointed” the retailer has questioned its motives and been accused of misrepresenting facts. 

A letter sent by president of the BGMEA, Rubana Huq, to EWM chairman John Herring, and seen by Drapers, reads: “We are aware of your contribution to the industry and Bangladesh, and we were also clear that we communicated with you in the belief that during this global pandemic it was a time for all of us to unite and support each of our interests, which would help preserve and strengthen our relationship and the industry.

“We were also of the opinion such co-operation would avoid the criticism and allegations of big brands abandoning their partners and workers during this critical times of need and support in poor and developed countries. It is in this light, we request you to read our notices and comply with the requirements therein.”

A spokesman for EWM Group told Drapers: “When this global crisis hit, we had already paid for the majority of future stock, and we have since had productive discussions with individual suppliers about remaining stock. We have engaged with all our individual suppliers with openness, honesty, and the best of intentions, even when the circumstances are difficult.

“We firmly view these negotiations to be a reasonable approach in the face of a collective and global industry challenge, which isn’t just disrupting a single link in the supply chain. Nobody planned this international crisis, and it is only by working together constructively that we will be able to tackle a challenge as unprecedented as coronavirus.

“Our discussions with the vast majority of suppliers have been positive, and they have understood that we are trying to find a balanced way forward that matches the immediate, urgent challenges faced by high-street stores nationally and those of suppliers.” 

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