Does Penneys deserve its media pounding?

Primark (or Penneys to the Irish) has reacted swiftly - though some say inadequately - to television reports that its subcontractors exploit workers in India

AT THE beginning of June an intriguingly titled documentary called The Devil Wears Primark disappeared from Channel 4's schedule. It had been promised the programme would shine a light into dark corners of the Indian rag trade, where people are employed by unscrupulous contractors to work long hours in intolerable conditions for a pittance. The show reportedly went undercover at clothes suppliers and subcontractors and exposed a dangerous, filthy world where unpaid overtime, verbal bullying and even child labour were rife.

Within hours of the show's no-show, Channel 4 issued a statement denying speculation that a threat of legal action from Primark, which trades as Penneys in the Republic, had forced it to pull the programme. The station said it had been rescheduled for a more prosaic reason. It wasn't finished.

It had been shoehorned into the schedule in haste because rumours had reached Channel 4 that the BBC was preparing a documentary with a similar theme, the broadcaster claimed. When it became apparent that the rival programme wasn't on the immediate horizon, The Devil Wears Primark was rescheduled to allow some finishing touches to be added.

But the station's complacent view that it could take its time because it was so far ahead of its principal rival in the race to broadcast its exposé was misguided.

Days later Channel 4 was scooped by the BBC, whose Panorama team had uncovered evidence that subcontractors making clothes for Primark in southern India were employing children to do the embroidery on some of its clothes

After being presented with the evidence, Primark acted swiftly. Last Monday it announced it had stopped buying clothes from the three factories in southern India mentioned in the Panorama report as they did not meet its ethical standards for working conditions. It also said it had taken the garments in question off its shelves.

A lengthy statement was e-mailed to newsdesks across Ireland and Britain confirming that factories making clothes for Primark had subcontracted embroidery and sequin stitching to unapproved firms. It said the store had carried out an investigation and found that the garments accounted for 0.04 per cent of Primark's supply.

"The subcontracting involved home working, and in some instances children were also found to be working at home," the company said. "We take this lapse in standards very seriously indeed."

It added that "under no circumstances would Primark ever knowingly permit such activities, whether directly through its suppliers or through third-party subcontractors".

The company also announced plans to appoint "a highly reputable NGO in southern India as a partner to act as its eyes and ears on the ground, continually investigating how and where garments are made, to identify any unauthorised subcontracting".

The story didn't die there. Labour Behind the Label, the UK-based workers' rights group, criticised Primark for the "knee-jerk cut and run". Its campaign co-ordinator, Martin Hearson, said that when abuses were uncovered retailers should stay with the factories with a view to making conditions better.

"This reaction from Primark smacks of old-school reputation management and falls far short of the response we would expect to see from a company that claims to be committed to ethical trading.Cutting and running from suppliers following exposure by campaigners or the media only serves to punish those workers brave enough to speak out about their conditions. It certainly won't do anything to improve their lives," he said.

While Hearson accepted that Primark was no better or worse than other retailers on the British high street, he said the company needed to "take a long hard look at the way it buys from suppliers. Illegal sub-contracting is often a result of the pressure to produce large amounts of clothes quickly and cheaply, a key component of Primark's business model."

PRIMARK GOES TO great lengths to rebut charges that its business may be less than entirely ethical. It is a member of the Ethical Trading Initiative (ETI), whose voluntary code of conduct requires all employers to pay a living wage and not to force staff to work long hours.

The most prominent link on its home page (primark.co.uk) points to a section of the site devoted to its ethical trading policy. There's even a YouTube-style video called How Do They Do It?, although a better title might be It's Not What You Think, Honest. In the clip, executives share the secret of the company's success over images of brightly lit, airy factories filled with happy, productive workers.

The company claims the reason it can sell T-shirts for a couple of euro, bikinis and jeans for less than €10 and heavy coats for less than €30, and still make a handsome profit, is because of low mark-ups, low overheads, big volumes and a refusal to pay for expensive advertising.

A phenomenal stock control system also helps. It brings in new clothing lines to its 166 stores every few weeks. If stock doesn't shift immediately, it is marked down to cost or even below cost to get rid of it. The Primark philosophy is that if it's not selling, not only is it not making money, it is actually costing money by taking up valuable floor space.

Despite the company's best efforts to convince the buying public of its inherent goodness, many are sceptical. At the end of 2006 a report by British charity War on Want said Bangladeshi workers making cheap clothes for Tesco, Primark and Asda were being paid as little as eight cent an hour and forced to work for up to 96 hours a week. All three stores denied the allegations.

Ethical considerations aside, the rise of Primark over the last 10 years has been astonishing and relentless. Limerick-born Arthur Ryan was appointed by Associated British Foods (ABF), which is controlled by the Weston family (another branch of which owns Brown Thomas), in 1969 to open the first Penneys store on Dublin's Mary Street. Its first British store, trading under the name Primark, followed four years later.

While Primark made money throughout the 1970s and 1980s, it was insignificant compared with its multi-billion-dollar parent company. The store was also a long way from cool. It wasn't until the late 1990s that its fortunes turned around and Primark became a major force in British retailing.

It was Ryan who convinced ABF that flogging a dizzying array of ever-changing product lines for half nothing to fashion-conscious girls and women under 35 was where the real money was.

IN THE MID-1990S Primark started hoovering up more established British retail outlets, taking over divisions of CA, British Home Stores and John Lewis before eventually buying the Littlewoods chain in 2005 for more than £400 million (€510 million). It kept one-third of the chain's 120 stores open under its Primark brand and sold the remainder. It now sells 10 per cent of the clothes worn in Britain and is second only to Marks Spencer in British clothes retailing.

A little more than a decade ago, ABF's annual sales of £5.7 billion came mostly from its food business. Primark made up less than 5 per cent of annual turnover and its contribution to group profits was a paltry £13 million. Last year, with its 166 stores in Ireland, Britain and Spain, Primark had revenues of £1.6 billion (€2.04 billion) and £200 million (€255 million) in operating profits.

In recent years it has been name-checked by Vogue as a source of cool, cheap clothes. So much excitement surrounded the opening of its first central London store in Oxford Street in April 2007 that mounted police were used to keep a bargain-hunting crowd of 3,000 under control.

Sorca O'Brien is a third-year medical student and while she wasn't fighting her way through the Oxford Street crowds, she could have been. Like many of her peers, she regards Penneys as a fashion staple.

"I don't have a lot of money to buy the new-season clothes in Oasis or Warehouse," she says. "A dress in one of those shops might cost upwards of €70. In Penneys you will get something similar for around €30. And like all the other stores they are copying what comes off the catwalks at the big fashion shows. You can get a decent winter coat for €30. They might not last forever, but they will certainly get you through one winter. And that's all I'd really want. When I was in Belfast recently I went into Primark and saw a dress which was reduced from a tenner to a fiver. When I actually went to the till, however, I was only charged £3. That's the price you'd pay for a sandwich.

"I don't know how they do it, how they can sell this stuff for so cheap."

She is not alone in wondering.