Bangladesh factory collapse: What do retailers need to know?

Why are we talking about this now?

More than 1,000 people were injured after the eight-storey building housing garment factories collapsed outside the Bangladeshi capital in Savar. Cracks had been found in the building prior to the collapse, but owners told workers they should not worry.

Which retailers have been caught up?

Primark has been the main UK retailer to come under the spotlight as its supplier Simple Approach occupied the second floor of the building. Primark said it carried out annual inspections of the space it was using but did not inspect the building’s structure as part of it. Spanish fashion retailer Mango confirmed it had commissioned samples that were being tested at the Rana Plaza factory at the time. Bonmarche, Joe Fresh and C&A are understood to have also received goods from the factory while Matalan has previously ordered clothes from the site. Despite speculation, Walmart said it was not supplied by any firms at the premises.

Were retailers at fault?

While retailers are unlikely to be directly blamed for the incident they are expected to take responsibility for their supply chains. Primark said it is seeking an agreed methodology for testing the integrity of buildings where there are multiple factories on multiple floors with different tenants. “It is not easy to agree how this will be achieved, but this is what the company is seeking and it will ask the ETI [Ethical Trading Initiative] to look into this issue,” a Primark spokesman said.

Verdict Research senior retail analyst Honor Westnedge says retailers cannot be expected to take full responsibility. “It is incredibly difficult for large retailers to monitor everything in their supply chain when they may have hundreds of suppliers. It is very difficult for them to take ownership of everything that goes on and in truth the best option is for companies to work together,” she says.

ETI director Peter McAllister said: “There’s no doubt in our minds that the Bangladesh government and industry have a primary responsibility to ensure that factories are built to international standards and that they provide safe conditions for workers.

“International brands sourcing from countries know the conditions there, and need to do a lot more to make sure that the factories they are sourcing from meet standards, are well built, properly inspected, have fire escapes and are treating workers properly. There’s a shared responsibility here.”

What are the likely implications?

Retailers or third party auditors are likely to step up their accreditation processes to approve suppliers to multinational retailers. This may involve compulsory and regular building surveys. Westnedge also argues that retailers may consider sharing intelligence on suppliers to help improve conditions. Asda own label George, which sources from Bangladesh, introduced a set of principles named Lean to help garment manufacturers streamline operations and reduce waste to improve salaries as part of its Doing the Right Thing initiative. Other retailers may follow its lead with workers and working conditions under the microscope.

However, Westnedge believes the incident will not have an impact on Primark’s sales. “Primark have done a lot of work in the last two to three years to improve its image and corporate social responsibility,” she says. “I believe people will see that this was out of their hands.” However, campaign groups have already put pressure on Primark to sign up to an action plan to prevent further building collapses.

Should retailers stop sourcing from Bangladesh?

Bangladesh remains a key supplier to western fashion retailers and for retailers to pull the plug on supply would be costly to both the retailers and suppliers. Westnedge also argues the impact on the local economy would be irresponsible. “Bangladesh’s economy is built around textile production and stopping sourcing would be detrimental to a country which is already logistically challenging due to regular flooding and natural disasters,” she says.