Suppliers under financial pressure from retailers, report says

Suppliers are under financial pressure from retailers and brands, putting garment workers at risk, a new survey has found.

The Better Buying Purchasing Practices Index found that 55.4 per cent of suppliers surveyed reported being affected by high-pressure cost negotiation strategies, with many retailers not paying for samples (61.4 per cent), not paying on time (64.5 per cent) or not paying the full amount agreed upon (27.3 per cent).

The report found that action is required to facilitate an industry-wide transformation of purchasing practices.

According to the report, more than a fifth of suppliers said that less than 80 per cent of orders received from retailers or brands were priced to cover the social, environmental, quality and other compliance requirements.

North American retailers were more likely to forecast their orders more consistently and accurately than European retailers, which aids suppliers in their ability to plan production and spread goods through the year.

“From these actionable insights, retailers and brands can work to streamline their operations, create stronger partnerships with suppliers and monitor their effects over time,” Marsha Dickson, Better Buying co-founder, said.

“Similarly, suppliers can better evaluate current and potential customers and business partners and understand how to allocate resources more efficiently.”

The index surveyed 319 suppliers across 38 countries and measured the performance of 67 retailers and brands in Europe, the UK and North America, including Aldi, H&M, Zara owner Inditex, Nike, Debenhams and Nordstrom.

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