LONDON – Online apparel brand Boohoo is selling some dresses at a loss to drive website traffic. Carol Kane, joint CEO of Boohoo, explained the strategy when telling MPs how the business managed to sell some dresses for as little as £5 when the UK minimum wage is £7.83. Kane also suggested consumers have become overly accustomed to cheap and disposable clothing. She told the Commons Environmental Audit Committee: “I believe this all comes back to consumer demand. I’ve been in the industry for 32 years, and within that time I’ve seen prices decline considerably.”
Also talking to the committee was Paul Lister, head of ethical trade and environmental sustainability at Primark. The fast fashion brand is known for retailing some of the cheapest staple items around, such as t-shirts, pyjamas and jogging bottoms. Asked how the business could sell T-shirts for just £2, Lister said the company spends very little on advertising and works to tight profit margins, which helps it keep prices low.
He said: “Primark has never done any significant advertising at all, and that can save us in any year £100m to £150m compared to some of our larger rivals. That goes straight into price. That keeps our pricing low.
“We often buy on longer lead times in quiet periods for the factories and then we pay the factories early, so if you’re a factory owner you’ll able to give Primark a better price to reflect that.”
He added: “It’s our business model that takes us to a £2 T-shirt.”
Lister also said Primark is planning to launch a take-back scheme for consumers next year, where old clothes can be returned and used again by overseas charities.
Addressing the issue of stock destruction was Leanne Wood, Burberry’s chief of corporate affairs. She told MPs Burberry has now pledged to stop the activity, but she also pointed out: “It is an industry practice. We’re the only luxury business that’s reported it in their accounts… but it is something that happens in the industry.”
