The High Price of Cheap German Discount Clothing Chain Exploits Staff and Suppliers
Despite the economic downturn, business is booming for the German clothing discounter Kik. But the bill for this success story is being paid by young seamstresses in Bangladesh and underpaid employees back home in Germany.
Stefan Heinig founded the clothing discount chain Kik 15 years ago. Since then, the former retail associate has been working to drive prices down. He offers Germans the cheapest clothes on the market -- or at least that's what he claims.
At Kik, a pair of jeans goes for as little as 2.99 ($4.37). This spring, with a little help from Germany's top-selling tabloid, Bild, Heinig offered the country his so-called "people's T-shirts" for just 1.99. And for the past few weeks, German TV celebrity Verona Pooth has been advertising Kik jackets with a "leather look" for just 19.99.
Rock-bottom prices are the key to Heinig's success. He has made this simple idea the cornerstone of a business empire that continues to grow even during the economic downturn. The discount chain even has stores in upscale resort areas, such as those on the North Sea island of Sylt. It now boasts over 2,800 outlets in six countries, with more opening almost every day.
Kik belongs to the Tengelmann Group, which has holdings in a number of major retail chains, including A&P and Plus supermarkets. Last year, the discount clothing chain reported sales of 1.1 billion.
Still, this success is based on deception. A closer look reveals that Kik's products are in reality not cheap -- employees, suppliers and often even customers actually pay a high price to provide Germans with the bargain clothing. And the highest price of all is paid by seamstresses in the Bangladeshi factories that produce nearly half the retailer's goods.
Out of Sight, Out of Mind
Girls like Sathi Akhter, 16, make Heinig's much-touted "people's" prices possible. She worked in a factory of a Kik supplier in the Bangladeshi capital Dhaka. Working days that can stretch from between 10 and 16 hours, she brings home the equivalent of 25 a month. She lives with her parents and her brother in a six-meters-square (65-square-foot) shack, with barely enough room for four people to sleep side-by-side. There is no clean water in the factory, says Akhter, and there often isn't even water to flush the filthy toilets.
She and two coworkers describe a plant manager who is often aggressive, is extremely slow to pay them and often doesn't compensate them for overtime at all. And, they add, the factory also employs children under 14, in violation of Bangladeshi law.
Still, there's never any problem finding people to work jobs like these in a country filled with 156 million people, of whom 35 million -- or over 20 percent -- go to bed hungry every night.
When confronted with reports of such appalling work conditions, Kik likes to refer to its code of conduct, a commitment to corporate social responsibility that is actually supposed to prevent such conditions. It guarantees things like freedom of association, a minimum wage and the ban on child labor. Since late 2006, the discounter has had its roughly 100 suppliers in Bangladesh pledge to operate in accordance with the code.
As a precautionary measure, the code of conduct also addresses those situations in which children actually do toil in sweatshops to produce Kik clothing. In such cases, it calls, in a vaguely worded phrase, for "suitable measures to improve the situation."