Boohoo boss John Lyttle insists he is not embarking on a personal crusade – but it might be heading that way, whether he likes it or not.
Tomorrow, the online fashion firm’s chief executive will visit Leicester amid a storm of negative publicity over allegations that workers in the company’s Midlands supply chain were being underpaid.
There, Lyttle will visit the site of a new project he hopes will provide a very visible sign that the company wants to bring about a change after it was forced to axe two suppliers from its roster earlier this month.
Radical: John Lyttle wants Boohoo to produce its own clothing
In a radical plan, Lyttle wants to build a ‘model factory’ in Leicester. It is part of a strategy that he says could seek to emulate the success of £26billion Spanish fashion giant and Zara owner Inditex, which makes its own clothes so it can replenish stock more rapidly in its shops.
‘Some of the stories have been upsetting,’ Lyttle says of the headlines in recent weeks. ‘Because if there’s stuff wrong in Leicester I’d rather find it and fix it, not run for the hills and say, ‘That’s it, we’re out of here – let somebody else sort it out.’ ‘
Since allegations emerged this month that a supplier was paying workers as little as £3.50 an hour, £1.7billion has been wiped off Boohoo’s stock market value. The firm said it found no evidence that one of its suppliers was paying that amount, but confirmed its code of conduct had been breached.
In the furore that has followed, Home Secretary Priti Patel ordered the National Crime Agency to investigate factory conditions in Leicester. This week, Boohoo is also expected to provide details on its plans for a major independent investigation, to be led by Alison Levitt QC.
Lyttle, an experienced retailer, was hired from Primark 16 months ago to exert a professional grip on Boohoo’s ever sprawling business empire, which was founded by the Kamanis – a family whose personal life is as colourful as the clothes it sells.
If things are wrong, then we’ll fix it
Lyttle wants Boohoo to begin producing its own clothing with a local joint-venture partner as soon as September. The ambition – almost unheard of in modern-day retailing in this country – is to employ as many as 250 manufacturing workers on the site or open a temporary factory nearby if it cannot be readied soon enough.
Speaking to The Mail on Sunday through video link from his Manchester headquarters, the Boohoo boss explains: ‘Number one: this factory is a commitment to UK manufacturing. But it’s also about making sure we can support our growth with a level of in-house production.’
Lyttle also wants to demonstrate for the doubters it is possible to make clothing in the UK ‘in a particular way’ – which means without cutting corners or taking risks that end up with damaging headlines. The strategy would double-down on its UK production model and its reliance on Leicester.
Lyttle explains: ‘Inditex have a number of joint ventures in Spain and in Portugal that they work with and that really help their flexibility – it’s not dissimilar to that.
‘Let’s get this one up and running, prove the model. And then decide and see where we go from there. We’re not manufacturers but we feel confident we can execute this and we can make this factory successful.’
Model behaviour: John Lyttle hopes that Boohoo’s plans will help it to emulate the success of Zara owner Inditex
Other factory partnerships are likely to follow – possibly even elsewhere in the country where the dying embers of Britain’s old rag trade are fading. Lyttle says Boohoo has even considered buying warehouses for its supply manufacturers to shield them from fixed costs such as rent charges.
He says Leicester’s factories – ‘the most expensive by far’ of all the world’s factories he buys from – can replenish orders for just a few hundred items in as little as two days. That gives Boohoo the edge over rivals who import clothes from China. The six-week shipping journey can leave clothes ‘out of fashion’ even before they arrive onshore, Lyttle explains.
We want to be a truly global player
In the past fortnight, he has also ordered factories supplying Boohoo to ensure workers have details of a confidential whistleblower hotline – something campaign group Labour Behind the Label recently said was an essential step to fixing Leicester’s reputed shortcomings.
Lyttle says much of this, including the launch of an independent factory auditor Verisio to conduct spot checks, was planned before the recent bad publicity. But the efforts have clearly been given a new impetus.
Boohoo sources 40 per cent of its clothing from UK factories, mostly in Leicester where it dominates the city’s trade despite having a tiny office of just ten people.
Such a reliance on British sewing machines would be alien to major high street chains, most of whom shifted production to Asian suppliers decades ago. There had been speculation Boohoo might be preparing to follow its rivals sourcing more of its clothes from the Far East.
But Lyttle says: ‘I think we can get on top of this. I mean, remember, this is the UK. This is not a country on the other side of the world. This is a city in the UK.’
Boohoo has been one of the few beneficiaries of the coronavirus pandemic.
Shift: Boohoo gets 40 per cent of clothes from UK sites – many in Leicester
But it’s impossible to shake the impression that the demands on Leicester factories, supposedly under lockdown restrictions, have brought the problems in the city’s fashion industry to a head.
Leicester garment factories operate from hundreds of unremarkable warehouses and sometimes semi-derelict industrial sites. Visit any and the owners will roll out anecdotes of malpractice at their rivals.
Tales abound of illegal conditions, tax avoidance and ‘phoenix’ firms forced to close only to reopen under a new company name within weeks. The truly determined, people say, have myriad ways of staying one step ahead of the authorities – with CCTV monitoring factory front doors and back exits so they can quickly clear packed factory floors.
But there is another side to the story: one of cash-strapped factories struggling to get by from one week to the next. Limited and sporadic orders that abandon firms to a hand-to-mouth existence as they wait for the next order of the latest favoured fashions, which in Leicester are invariably the simplest to make. More complicated designs are almost all made overseas.
Lyttle says Boohoo – whose nine brands also include Nasty Gal and PrettyLittleThing as well as former high street brands Karen Millen, Coast and Oasis – works with ‘150 operations’ in the city, often switching between them. But his top 40 suppliers make up 80 per cent of production.
Boohoo man John Lyttle, 53
Lives: With his family in Sevenoaks, Kent; travels by train to Manchester to work through the week.
Hobbies: Keen runner.
Typically wears: An H&M T-shirt and a pair of Paul Smith jeans. ‘I’m not a Gucci fan but also I don’t wear BoohooMan because that would be really bad for a teenager to see me wearing that.’
On Boohoo’s fabled £5 dresses: Lyttle says campaigners often charge his firm with making a dress for a price ‘too good to be true’ with hidden costs of cheap labour. He says: ‘The £5 dress…do you know what we do? We ring up three of our big guys [factories] and ask them to get all the bits of fabric they’ve got left over – enough for a hundred dresses of that colour and 50 dresses of that. Put it together, give me a price. We’re going to run a very simple dress for this promotion, easy to manufacture, and then we’ll take a view on the margin. It’s just a marketing tool. You’d think it was 50 per cent of our sales. It would be less than one per cent. Our average price is double figures.’
Lyttle has worked for some of the most famous rag trade tycoons in Britain: Sir Philip Green and Matalan’s John Hargreaves, themselves no strangers to newspaper headlines. He was at Primark during the nightmarish Rana Plaza factory collapse in Bangladesh.
He says bigger factories with more consistent orders and healthier finances are the key to the future – for his own suppliers at least. It’s also helping some firms to plan production schedules ‘four, five months’ ahead which would be key ‘to guarantee continued growth because that clearly means more demand and guaranteed jobs.’
Last year, Boohoo also launched what he describes as a ‘world-class’, 14-day payment promise to ease cash flow, compared with 60 or 90 days at many other retailers. ‘I’m trying to move forward. This was a way of really helping these businesses and not making them take risks.’
But has the spotlight of the last few weeks dented sales? Lyttle shakes his head. ‘We’ve given guidance to the market. So if we thought we were changing that we’d need to update, but we’re not doing that.’
It clearly hasn’t dented the group’s ambitions either. Lyttle, wearing Paul Smith jeans and an H&M T-shirt, describes himself as ‘Irish – a straight talker and whatever’.
He says: ‘I’m not the person picking the product. But clearly I understand retail. But equally, you know, I understand technology, I understand logistics, supply chain and how you pull all that together to make it work.
He name checks the worldwide success of Inditex and H&M as ‘where we want to be but online.
‘We might have started in the UK market. But really what we want to be is truly a global player.’
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