Walmart-owned Asda has reportedly canceled around a quarter of clothing orders that haven’t yet been delivered for its George brand, blaming the coronavirus pandemic.
The retailer has also told its suppliers that they will only be paid for a percentage of the canceled orders due to the significant impact the UK lockdown has had on the fashion sector.
The move follows similar actions taken by a number of retailers, with suppliers in Asia citing American and British retailers in particular for canceling large numbers of orders.
There are particular concerns about this latest cancellation given that Asda stores aren't closed and customers are still able to buy products from the George range there, even if they may not be shopping in large numbers for categories such as fashion.
The order cancellations were reported by the Sunday Times, which also quoted a supplier saying that the "behaviour is totally unacceptable”.
But an Asda spokesperson defended its actions and told the BBC that it's not cancelling orders with no compensation. The company said suppliers will be paid 30% of the order value if the orders haven't yet been finished, 50% if they have been finished, or 60% in the case of manufacturers in Bangladesh. That country has been hit particularly hard by cancellations from western retailers and brands.
The company also said it will pay within seven working days and that suppliers are free to dispose of the orders as they see fit, such as selling them on to somebody else or donating them to charity.
"We have longstanding and valued relationships with our suppliers, and want to help them weather this crisis," the spokesperson told the BBC.
Asda, like other UK supermarkets, has seen strong demand during the lockdown as consumers have stockpiled food and continue to visit stores regularly. But given that the company sells a wide range of non-essentials, from fashion to beauty and other categories, it has an issue with storing items that are not moving off its shelves quickly. The company said it has invested in additional storage space for such products and called out the “severe downturn in the demand for clothing” as an issue.