[DaveO]

Re: The Price of Cheap Clothes : Tue Apr 30, 2013 4:24 pm  

Derwent wrote:

Yes I do, because that's what retailers do. They have to sell what the consumer wants to buy at a price they are happy to pay. If they don't they go under. Marks & Spencer are a prime example - a few years ago they were in serious difficulty because they hadn't moved with the times and were selling old fashioned items at high prices. They brought in new management who modernised their lines but reduced the quality and price. Sales improved massively. To do that they moved lots of manufacturing contracts abroad, as it was the only way they could be competitive on price. I'm not saying its ideal or preferable, just that its what happens.

What retailers do is maximise profit. M&S are still not a cheap place to buy clothes yet they did move a lot of manufacture abroad as you say. One of my sisters-in-law worked at a place called SR Gents near Barnsley that lost business as a result. My view is in some ways that contributed to their problems of a few years ago as people knew this had happened and were wondering why they should pay M&S prices for goods manufactured alongside those of Primark? I think this is still the case. There is always the suspicion that £15 polo shirt cost them a £1.

I also know the ethos of M&S as an employer is not what it was (a relative works for them as does a neighbour). It has gone in the opposite direction to John Lewis. Results at M&S are still lacklustre and only the other week made the news for being so.

Primark and its cheap prices has certainly done well because they are cheap but at least everyone knows why. What is going to be interesting is to see if this disaster has and kind of "Starbucks Effect" but I doubt it will as clothes are a more basic commodity. In an ideal world there should be a law that forces companies like Primark to ensure the factories that make their goods are not just at a minimum standard but at a good standard. If there was then maybe costs would be such that the attraction of overseas manufacture would not be so great. Never happen of course but not just because people want cheap clothes. The overriding motive will businesses such as M&S and Primark maximising profit.

Re: The Price of Cheap Clothes : Tue Apr 30, 2013 9:48 pm  

DaveO wrote:

What retailers do is maximise profit. M&S are still not a cheap place to buy clothes yet they did move a lot of manufacture abroad as you say. One of my sisters-in-law worked at a place called SR Gents near Barnsley that lost business as a result. My view is in some ways that contributed to their problems of a few years ago as people knew this had happened and were wondering why they should pay M&S prices for goods manufactured alongside those of Primark? I think this is still the case. There is always the suspicion that £15 polo shirt cost them a £1.

M&S ' clothes are generally rubbish in my opinion rubbish now they source abroad. They sell clothes that in my opinion and experience are of very poor quality compared with their stuff of yesteryear and at the same time sell less stylish basics than their major competitors for a higher price. In short they are a business that will die unless they change something in a major way. I have been saying this for years so fars as mens clothes are concerned. Mrs Dally now takes the same view on womens clothes after previously maintaining the womens clothes were OK.

Re: The Price of Cheap Clothes : Wed May 01, 2013 9:54 am  

DaveO wrote:

What retailers do is maximise profit. M&S are still not a cheap place to buy clothes yet they did move a lot of manufacture abroad as you say. One of my sisters-in-law worked at a place called SR Gents near Barnsley that lost business as a result. My view is in some ways that contributed to their problems of a few years ago as people knew this had happened and were wondering why they should pay M&S prices for goods manufactured alongside those of Primark? I think this is still the case. There is always the suspicion that £15 polo shirt cost them a £1.

The fact that the polo shirt in your example costs £1 to make is not the full story though as the retailer has to factor in all of his overheads into the selling price such as shop rents and running costs, staff wages, transport and distribution, advertising, VAT etc etc

Just about every major clothing brand you can think of has their goods manufactured cheaply in places where labour is cheap. The brother of a friend of mine has a factory in Mauritius producing clothing for major brands. He produces for Hugo Boss, Hilfiger, Next and New Look amongst others. All in the same place, with the same labour and often with the same materials. I once asked him what the difference was between a pair of Hugo Boss jeans and pair of Next jeans and he simply said "the label". He earns hardly anything extra from producing a jumper for Hilfiger that they will knock out for £150 than he does from a jumper for New Look which will retail at £20, the difference in price paid by the retailer is quite negligible.

In an ideal world the retailer would pay the manufacturer a better rate for the products, enabling the manufacturer to pay better wages. But of course the knock-on effect would be much higher prices on the High Street which would cause inflation and probably cost jobs in this country.

While a few people on here might get worked up about it the truth is that 99% of consumers do not think about/consider/care about the ethical issues in the supply chain. Their over-riding focus is paying as little as possible for what they want to buy. Fairtrade is a good example, its something that's been around for quite some time now and yet only accounts for 0.2% of the UK's grocery sales - people would rather buy a jar of Nescafe for £5 than pay £5.50 for a Fairtrade brand of coffee in the Co-op.

Re: The Price of Cheap Clothes : Wed May 01, 2013 10:33 am  

Derwent wrote:

In an ideal world the retailer would pay the manufacturer a better rate for the products, enabling the manufacturer to pay better wages. But of course the knock-on effect would be much higher prices on the High Street which would cause inflation and probably cost jobs in this country.

Please explain just how a retailer paying £2 for a polo shirt, instead of £1 would lead to "much higher prices on the High Street which would cause inflation and probably cost jobs in this country"?

Re: The Price of Cheap Clothes : Wed May 01, 2013 12:05 pm  

cod'ead wrote:

Please explain just how a retailer paying £2 for a polo shirt, instead of £1 would lead to "much higher prices on the High Street which would cause inflation and probably cost jobs in this country"?

If the retailer is selling it at £15 when its bought for £1 then, using an average 10% net margin rate, the fully absorbed cost to them will be around £13.65

Assuming most of those overhead costs are fairly fixed then your extra £1 will mean a price increase of £1.50, after adding on VAT and duty for imports from outside the EU, to maintain the retailers 10% margin.

So, the retailer is now selling the item for £16.50 but only making the same profit margin. On this one example you might say "well its only an increase of £1.50" but that translates to a price increase of 10%. Roll that out across the millions of products being imported and sold in UK shops (including food) and you'll soon have rampant inflation, accompanied by wage increase demands by UK workers for the hike in cost of living, which will ultimately lead to job losses.

You seem to think I'm against the retailer paying the manufacturer more, but I'm really not. I just appreciate that if that happens then the consumer in this country has to expect a significant increase (in %) in prices in the shops. I don't think that is what the vast majority of people want to happen and so ethics become a minor consideration. Bottom line is if you want ethical supply chains then be prepared to pay for it. I'm absolutely fine with that but many people wouldn't be.

Re: The Price of Cheap Clothes : Wed May 01, 2013 1:28 pm  

Derwent wrote:

In an ideal world the retailer would pay the manufacturer a better rate for the products, enabling the manufacturer to pay better wages.

How much extra pay would you demand for working in a building that was about to collapse and kill you?

Re: The Price of Cheap Clothes : Wed May 01, 2013 1:58 pm  

Lord God Jose Mourinho wrote:

How much extra pay would you demand for working in a building that was about to collapse and kill you?

If you were a NY firefighter - nothing.

Re: The Price of Cheap Clothes : Wed May 01, 2013 2:09 pm  

Lord God Jose Mourinho wrote:

How much extra pay would you demand for working in a building that was about to collapse and kill you?

How is that relevant to anything ? But since you ask, the answer is none because I am not in that unfortunate situation. Those people that are get the 'going rate' for the locality - it is not you or I that dictate the 'going rate' but the prevalent economic and social conditions in that area. The fact that the 'going rate' is awful and the conditions even worse doesn't change that fact - its one of those situations where if they didn't do the work then somebody else will and their family will starve instead. I don't like that any more than you do and you are sadly mistaken if you think otherwise.

Like I have already said, I am quite happy to pay more for goods to prevent such conditions. The problem is that there are many millions of people who aren't. In fact I'd wager that if you asked the general public if they'd permanently pay 10% more for their goods to help conditions in Bangladesh there would be a less than 10% acceptance. Its not me you need to convince.

Re: The Price of Cheap Clothes : Wed May 01, 2013 2:20 pm  

Derwent wrote:

How is that relevant to anything ? But since you ask, the answer is none because I am not in that unfortunate situation. Those people that are get the 'going rate' for the locality - it is not you or I that dictate the 'going rate' but the prevalent economic and social conditions in that area. The fact that the 'going rate' is awful and the conditions even worse doesn't change that fact - its one of those situations where if they didn't do the work then somebody else will and their family will starve instead. I don't like that any more than you do and you are sadly mistaken if you think otherwise.

Like I have already said, I am quite happy to pay more for goods to prevent such conditions. The problem is that there are many millions of people who aren't. In fact I'd wager that if you asked the general public if they'd permanently pay 10% more for their goods to help conditions in Bangladesh there would be a less than 10% acceptance. Its not me you need to convince.

With greater publicity and explanation to people about what theiir disposable clothing actually costs in terms of human suffering, I think plenty (but not all) would switch to better clothes, made better, for which the employee gets decent conditions and a living wage.
Unfortunately all the current marketing is about style and price.

Re: The Price of Cheap Clothes : Wed May 01, 2013 3:03 pm  

Derwent wrote:

If the retailer is selling it at £15 when its bought for £1 then, using an average 10% net margin rate, the fully absorbed cost to them will be around £13.65.

Can you explain this, I'm a bit baffled how you get from the £1 cost to a net cost.