The Best Way to Protect Garment Workers | The Week Ahead, BoF Professional

A SHOWDOWN IN BANGLADESH

• The Bangladesh Accord on Fire and Building Safety, a landmark agreement passed in 2013 in response to the Rana Plaza disaster, expires on May 31

• Unions want to expand the Accord to other countries; brands and factory owners support replacing it with a Bangladeshi government-supported alternative

• Some worker advocates say the new agreement weakens key elements of the Accord

The Bangladesh Accord was a rare thing in the fashion industry. It was an agreement that actually created tangible progress in improving the lot of garment workers, who labour for little pay in often dangerous conditions to produce clothing, shoes and accessories for international brands. Now that framework is in danger of falling apart, as unions representing Bangladeshi workers last week said they opposed a replacement supported by many large brands, factory owners and the Bangladeshi government.

Accountability is at the core of the dispute: the unions allege the new agreement lets brands off the hook when it comes to paying for and enforcing improvements and protections because it isn’t legally binding. They may have a point; most apparel is manufactured by independent factories, which must offer the lowest prices to secure work from international brands. They have little incentive to upgrade facilities or raise pay on their own, and the Accord’s legally binding penalties and system of independent audits were often effective at drawing attention to unsafe conditions and abuses. Workers’ rights advocates are amping up public pressure on global brands ahead of the Accord’s expiration, but so far companies aren’t budging, and time is running out.

The Bottom Line: Brands say they are committed to ensuring safety standards in Bangladesh. While the fashion industry faces more scrutiny of its supply chain than it did before the Rana Plaza disaster, its track record on policing suppliers is poor.

NEW YORK REOPENS

• New York Gov. Andrew Cuomo has ordered most indoor capacity restrictions lifted on May 19

• Many US states fully reopened weeks ago; the UK will lift all restrictions next month, while France will allow non-essential shops to open with limited capacity this week

• Warmer weather, rising vaccination rates and falling Covid-19 infections across Europe and North America all bode well for fashion retailers

This week will mark a new chapter in the fight against Covid-19 in many parts of the world. In the US, New York, New Jersey and Connecticut will lift most capacity restrictions, joining other states in effectively declaring victory against the virus. That may yet prove premature, as vaccination rates haven’t approached the 75 percent needed for herd immunity, and new flare-ups are possible in the meantime. In Europe, France is continuing to tiptoe toward reopening, allowing non-essential shops to reopen, while indoor entertainment and hospitality venues reopen in the UK on May 17. What does this all mean for fashion? Those lines outside newly reopened stores aren’t going to last — most stores weren’t exactly packed before the pandemic, after all. But the more “normal” people feel, the more likely they are to spend their money on “normal” things, i.e. clothes designed to be worn in public, uncomfortable shoes and all the other items shoved to the back of the closet in 2020.

The Bottom Line: A global return to normal is still far off. Outside the US and Europe, the situation remains dire, with infections spiking in India and much of South America.

GOOD TIMES FOR RETAILERS

• Macy’s, L Brands, Kohl’s, VF Corp, Ralph Lauren and MyTheresa are among the brands and retailers reporting quarterly results this week

• Most are expected to show strong sales growth and improving margins, as they leave the pandemic’s lockdowns and discounting behind

• Rising supply chain costs and lingering transportation issues may provide headwinds

We are in the thick of retail earnings this week. Executives will be keen to tout robust post-pandemic spending in the US and Europe. But they may also signal mounting pressures on their supply chains, from shortages of key materials to inflation concerns. It’s often the calls with analysts that follow earnings releases where these sort of economic pressures first surface. Companies will also get a grilling on restructuring plans. Of the companies reporting this week, L Brands and Ralph Lauren have made some moves, with the former outlining plans to separate Bath and Body Works and Victoria’s Secret into separate, publicly traded companies, and Ralph Lauren selling Club Monaco to a private equity firm. This is also MyTheresa’s second quarter as a public company, and its results should offer insights into the highly competitive luxury e-commerce space.

The Bottom Line: It’s a good time to be a fashion retailer, but the biggest and best (not always the same companies) are using this opportunity to make moves to secure their future.

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