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How are Primark’s clothes so cheap?

Campaigners say there are hidden costs that impact workers and the environment.

Primark is famous for providing cheap-as-chips fashion to the British high street. But that reputation sometimes butts up against a growing concern from shoppers regarding the negative ethical and environmental impacts that are often side effects of cheap stuff. These side effects include low wages and poor working conditions for employees, the diverting of limited resources towards endless amounts of not-necessary, not-highly-valued stuff for people in rich countries, and mass manufacturing’s contribution to climate change.

Economics has a specific term - externalities - for side effects like these which aren’t included in the price of an item. (Side note: externalities can also be positive things. Being able to land better jobs in the future is a positive externality of earning a degree, for example.) Externalities are often given as a reason governments should be able to set rules on economic transactions: if the ripple effects of any given purchase affect more people than just the buyer and seller, then other people should get a say. Governments that wanted to force companies to include the externalities discussed above in their prices might set minimum wage requirements or place limits on the amount of carbon factories can release.

But although new environmental and working rights legislation could well impact Primark’s prices, it may not impact them as much as you might think. That’s because Primark uses several other techniques to keep its prices low.

One big one is that it doesn’t spend much money on marketing. Unlike competing British fashion brands who plaster posters on bus stops and sponsor hit shows like Love Island, Primark relies predominantly on word of mouth. Advertising is expensive - H&M spends 4 percent of all its revenue on it - so this equals big savings. Primark is also unusual for a big retailer in that it doesn’t sell stuff online. While this has its disadvantages (especially during a pandemic when shops keep being shut by the government), it means no need to shell out for extra staff to do things like pack the deliveries, drive them to customers, and provide online customer support.

Primark is often discussed as an example of fast-fashion retailers who encourage people to buy low-quality clothing they quickly dispose of. Cheapness does encourage wastefulness. But Primark is actually a little less ‘fast’ on the fashion than many of its competitors - it changes its stock much less frequently than somewhere like Zara, for example. Because it doesn’t constantly have to get new lines into stores, it can save money on things like shipping (using slower boats rather than airplanes, for example) and manufacturing costs (by say offering contracts to garment factories in their quieter periods, when prices are cheaper).

None of this means Primark doesn’t engage in practices which can be considered harmful to people and the planet. But it does show that the higher prices in many other high-street stores may not be indicative of better ethical or environmental practices. And Primark’s model may be of reassurance to those who are concerned that more sustainable shopping is unaffordable for many people. It shows that companies who want to lower prices have other options than, say, offering bottom-dollar wages. Adopting Primark’s ideas en masse would still create some economic losers - fewer jobs for advertisers and HGV drivers, for example - but societies may consider that a better trade off than the current state of affairs in the fashion industry.

Read our explainer on: consumption.

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