Supermarket chain Asda has become the latest retailer to turn up the pressure by cancelling orders and reneging on full payments to its clothing suppliers.
The retailer wrote to its clothing suppliers last week to say they would be paid just 30% of an order’s value as a “gesture of goodwill”, rising to 50% for already completed orders, according to the Sunday Times.
The move has infuriated its suppliers because products from Asda’s clothing range George are on sale across its store estate, which continues to operate during the ongoing coronavirus pandemic.
Supermarkets have experienced a huge upsurge in sales during the coronavirus pandemic and have also enjoyed access to business rates holidays and other financial incentives rolled out by the government during this period.
One supplier said it would be “ridiculous” for a company the size of Asda’s parent company Walmart not to pay for its clothing orders.
A spokesperson for Asda committed to paying the agreed costs to suppliers within seven days, as well as allowing suppliers to resell items or donate them to charity.
“We have long-standing and valued relationships with our suppliers and want to help them weather this crisis,” the spokesperson said.
The coronavirus outbreak has seen a severe downturn in demand for clothing, which has hit retailers’ sales and caused problems for manufacturers and suppliers.
A number of national fashion brands have cancelled or curtailed orders over the past month or so, including Primark, Edinburgh Woollen Mill Group and Arcadia, which has refused to pay agreed amounts for goods already delivered.
Last week thousands of clothing workers in Bangladesh demonstrated in the country’s capital to demand outstanding wages and protest against terminations and layoffs.
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