its supply chain.  “We’ve got a very good understanding of what our factories do. What we want to understand is what our component manufacturers do,” Orrock told Inside Retail. That includes factories that make zippers, buttons, and other parts that go into a finished piece clothing. Because retailers tend not to have a direct relationship with component manufacturers – their first-tier factories typically order the parts – it can be difficult to know what working conditions are like.  Sedex essentially crowdsources this information, with over 60,000 buyers, suppliers, and auditors from over 180 countries using the platform to share data about their global supply chains, such as audit reports. This makes it easy for retailers like Best & Less to see how their second-tier suppliers stack up. “I like to sleep well at night. There’s a lot of risk in these areas if you don’t have the right process approach, tools, and also values,” Orrock said.  “There’s always that voice in your head that says, ‘The factory was ready for our audit, but how do they go with other people who might not be as big as us? Am I as comfortable with my partner, or my partner’s partner, as I should be?’”   Pricing pressure The partnership with Sedex is just one of several backend changes that Best & Less has made to meet its living wage commitment. It also rolled out a new product lifecycle management solution, which has given it a more granular understanding of its labour costs.  “That’s an important building block because it enables us to move to a very micro level on our component costs, which means we can pull the labour [costs] out and understand if we’re paying appropriately for that [component] based on what we understand the labour costs to be,” he explained.  Orrock says he is prepared to raise prices if he finds that Best & Less isn’t paying enough for its component parts to support a living wage. “The only real way you can improve your product costs by reducing your labour costs is if there is a productivity gain or a machinery improvement that might drive that outcome appropriately, and you have to be able to test for that to prove it,” he said. If Best & Less does raise its prices, it would be for the “right reason”. “We understand why we made that commitment – because it’s important to us in terms of our values as a business, and it’s important to our customer,” he said. “We deal with parents of children, and I’m sure that they don’t want the clothes their kids are wearing to be tainted in terms of how they’ve been sourced.” Focus on ESG Best & Less posted a strong first-half result last month, considering that it lost over 21 per cent of its trading days due to government-mandated store closures. Like-for-like sales were in line with the prior corresponding period, though EBITDA for the 26 weeks ended 26 December 2021 was down 20 per cent to $30.6 million, and revenue was down 14 per cent to $287.5 million.   The response to Best & Less’s financial results was generally favourable, but Orrock believes more attention should be paid to the company’s ESG (environmental, social, governance) initiatives. “Everybody writes up the financial outcome, and I don’t think enough about ESG actually gets written up,” he said.  Besides the living wage commitment, Best & Less is also committed to using 100 per cent recyclable, reusable or compostable packaging by 2025, and it is currently in the process of eradicating plastic kimbles – the thin piece of plastic used to connect price tags to clothing – from the business. “I’m quite passionate about these sorts of things,” Orrock said.  “I think value retailers often get a pretty bad rap for their approaches. We are very focused on the commitments we make.”