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The saying "If it seems too good to be true, then it probably is" is something that is being levelled at online retailer Boohoo. The company's low-price strategy may have led to corners being cut, with factory workers in Leicester producing clothes carrying Boohoo and sister brand Nasty Gal labels allegedly being subjected to unsafe working conditions during the Covid-19 pandemic and paid just £3.50 per hour, according to a report and an investigation by garment industry campaign group . 

Shares in Boohoo Group, which also owns other brands such as Karen Millen, Coast and PrettyLittleThing, fell 23% in the aftermath of the story. The company admitted that conditions at a Leicester factory were "totally unacceptable and fall woefully short of any standards acceptable in any workplace". 

"We will not hesitate to immediately terminate relationships with any supplier who is found not to be acting within both the letter and spirit of our supplier code of conduct. This includes very clear expectations on transparency about second-tier suppliers," Boohoo said in its statement in reponse to the findings.

But what does this mean for the Boohoo brand? ±±¾©Èü³µpk10 asked industry commentators if poor treatment of workers leads to reputational damage of brands.

Martin Roach

Founder, Brands with Values

What makes the latest outrage to engulf Boohoo different is that it is so close to home. Most large retailers have been involved in a supply chain scandal of some sort. In 2013, 1,100 factory workers died when the eight-story Rana Plaza building in Dhaka, Bangladesh, collapsed. Primark had a third-party supplier factory in the Rana Plaza building, yet the Primark brand continues to be strong.

There has been an initial downward spike in Boohoo’s shares and the media attention is sure to affect it in the short term, but our addiction to fast fashion may outweigh our moral outrage. The branding textbooks tell us strategists that Boohoo is in hot water and it surely is. However, we live in a time of precarious wage packets – who can afford to vote with their feet and leave Boohoo behind? Not many.

Suki Thompson

Founder, Let’s Reset; chair, Oystercatchers; chair, Xeim

Covid-19 has heightened the priority customers put on employee welfare. Shareholders are asking about the risk to company reputation, which has increased scrutiny into workforce management. Business now has an opportunity to reset, and its conscious is the customer.

Through powerful social media and movements, companies and brands can be held to account, so they need to be "glass boxes". Anyone can see in and workers can see out: processes, production methods, compensation, diversity, inclusion, well-being and ethics. I hope for more brave leaders creating inside-out and outside-in brands fuelled by the well-being of their workers and their customers. 

Aron Caplan

Strategy director, M&C Saatchi

The brand is an ecosystem with numerous internal and external connections, all of which must align to it. Treat employees well, word gets around and it helps build an employer brand. That attracts a more diverse range of applications and the ability to select higher-quality candidates. Mobilising a quality employee base around a strong internal brand has proven to raise productivity and ensures consistently high quality of performance and service to customers. The acid test for a powerful external brand is that the best people just crave to work for it.

Louise Nicholls

Managing director, Suseco

From Dhaka to Leicester, the poorest people working in global supply chains are the hardest hit by the pandemic. Working in exploitative conditions with low pay, long hours and no ability to raise concerns or bargain for better working conditions and, because of their low pay, living in cramped poor living conditions detrimental for their health too.

Labour concerns in Leicester have been highlighted by journalists for the last decade. So Matt Hancock’s comment is surprising: "Clearly some problems have been under the radar in Leicester." I would argue the radar is not working; we need better legislation and enforcement. Brands should be required to transparently report on their supply chain’s locations, labour issues and what they are proactively doing to tackle the root cause of issues and how their purchasing practices are rewarding suppliers who create better places to work. 

Nick Stickland

Founder and executive creative director, Odd

When you look at popular culture, there are countless characters with bad boy/girl reputations who experience no adverse effects on their product or credibility. In fact, a myriad of individuals have indeed thrived under that exact persona. But when it comes to brands, few manage to do so well. A squeaky clean image really is the only option, especially in such a precarious vertical as fashion. 

So for a brand built to service Gen Z, one can only assume that their core customers' outspoken distain on the ill treatment of our planet and our people will cause a revolt against the bad practices that have existed for too long. Unless, of course, what we've been hearing is the vocal minority.

Only time will tell whether consumers genuinely will #BoycottBoohoo or if the fast-fashion paradox will continue to fuel sales of £5 bodycon dresses behind closed teenage-bedroom doors. I certainly hope it’s the former. Because whilst consumers (and shareholders) might benefit from the embarrassing mountain of sales of impossibly cheap clothing – we know that someone, somewhere, along the supply chain is paying the true price.

David Frymann

Strategy partner, The Beyond Collective

It reinforces the fact that Boohoo sells cheap clothing, so whilst it’s negative PR, it enhances its image as a value player. In Bryon Sharp terms, it reinforces memory structures. Furthermore, these types of painful stories tend only to reach and engage people who actively care about the lives and livelihoods of others – and I suspect those people aren’t Boohoo’s target audience.

For Boohoo’s clientele, the key drivers are to be on trend and to win compliments for nailing the latest look – as opposed to gaining kudos for choosing to buy fashion with a conscience. So, in short, yes it affects brand reputation, but in all likelihood only among non-shoppers.