HOW NOT TO RESPOND TO COVID-19

This week I called my Landlord and asked him to consider a reduction or break in rent payments. With my partner and I both working in retail, in the broadly considered ‘non-critical’ side of business, ironically called ‘sustainability’; like most others, we are facing income cuts and potentially worse.

Whilst the answer was no, he was empathetic to our situation and offered respite if the Government was to put in place any action to relieve mortgage payments. End of story, at least for now.

Now let’s compare this to the retail industry; and let’s start with Primark, who were in the news last week for ‘refusing to pay ￡33 million in rent’.

When you understand they have 360 stores worldwide and employ over 70 thousand staff, one may feel sympathetic to their situation to ‘afford’ rent in this global economic lockdown.

But if a company has decided to exponentially expand its global retail portfolio; building a billion dollar empire while the sun was shining, shouldn’t we expect them to be prepared for when it is not?

If a business can generate ￡7.79 billion in revenue (in 2019) and the group owner’s (Weston Family) net worth is roughly ￡8.7 billion; is it acceptable to play the ‘affordability’ card when times get tough?

If my salary is reduced or I am made redundant, I must right size my lifestyle accordingly. I am also ‘means-tested’ for Government hand-outs. If I have assets or rich parents, I cannot collect. If I don’t pay my bills, I don't get to get one-up on property agents. I am prosecuted.

If individuals cannot legally or socially acceptably refuse to pay their bills, is it right that the ‘big boys’ can?

Which brings us on to issue of the knock-on impacts a business of this behemoth size will have at a time like this on all their direct and in-direct stakeholders.

When trade is thriving, a retail company like this is the place to seek business.

As a supplier of goods or services it is the dream to sign contracts where order quantities are high, relationships are relatively long-term and it’s highly efficient, simply because it is cheaper to do so.

With Covid-19 spreading across the world, Brands and Retailers are breaching agreements, cancelling orders and withholding payment for finished goods, with devastating impacts to suppliers everywhere.

The BGMEA has reported buyer cancellations in Bangladesh alone are leaving vulnerable factories in dire straits. From Primark (US$273 million) to VF Corporation (US$56 million); the list goes on; Walmart, Target, C&A, Inditex..

The vast quantities of clothing and goods these retailers buy means that the cancellations, pushed through on the basis of a force majeure clause in contracts, will be devastating for suppliers facing non-payment for orders already being made.

To put it simply, if you don’t pay your suppliers you don’t care about anything in your supply chain. It is not possible to ‘be committed’ to ethical trade and sustainability whilst behaving in this way.

How can we let unethical and immoral behaviour like this be perpetuated at such a grand scale?

My challenge to Primark and the rest of the industry is to step up and set a better example.

A better example of how to value stakeholders (direct and in-direct) as an interconnected and fundamental asset of their business. If it is not possible to employ empathy and exercise good ethics as one would expect to be treated oneself, then you are either too big or doing it wrong.

All businesses are facing the very real economic challenges of operating in the current climate. It is unrealistic to think that between growing ecological and social crisis’s this will ever not be the case.

The choice of how to operate vs. how much money to make is yours. It is a gift to be able to run a business of any size; the larger you are the greater the obligation.

We all know the way business has been done up until now has been flawed. There are a number of retailers stepping up and showing what good looks like; from protecting salaries to investing in resilience. 

So isn’t it time that we held all the big guys to account? If there is one thing the world has realised in all this craziness, it is the fragility of our entire system but also our collective power of influence.

I dream the business of model of the future to prioritise these 3 things:

1. Responsible shareholder ownership. I’m no expert but limited liability appears to have a lot to own up to in regards to the ever expanding wealth gap and de-risking/de-ownership of so called ‘long-term’ risks. Refusing to pay suppliers is a classic short-term-thinking move that will cut you off at the knee’s when suppliers emerge from the fog with a vengeance and more bargaining power than you bargained for. 

2. Integrated business accounting. The people making your products in your supply chain are social capital. You rely on them as a fundamental input to make your business run. Accounts should reflect that. If the way you run your business has a negative impact on that, it should be law to report this, not just the selection of hand-picked positive ‘sustainability’ stories you felt your shareholders would like to hear to sleep better at night. 

3. Long-term, collaborative business networks. Most of the retailers on the list above share the same bloody factories. A high-school student can find this information available online. The future of retail has to be anti-competitive. It should be socially, if not legally unacceptable to shield information and protect intellectual property of product design, supply chain data or innovation in a way that fills the pockets of the rich and slows progress.

As the belly of this industry lays dormant during this trying time; I hope we all use the space to demand what type of future we want. For me, it's one where business not only accounts for the system it operates within, but actively prioritise its resilience. How about you?