What’s going on with rag??

News

by Robin Osterley

I’ve been in this job now for 8 and a half years – probably the best and most rewarding 8 and a half years of my working life by the way. One of the things I remember most clearly was being visited by representatives of the Textile Recycling Association (TRA) within less than a week of my arrival in November 2015. They were keen to apprise me of the problems associated with collection of clothing from charity shops – what we somewhat pejoratively tend to call rag – and to inform me that it was inevitable that the price of rag was going to decline. Indeed this proved to be true, but the decline that was being discussed was from some very high levels in the early 2010s to around 45 pence per kilo, where the price stabilised for many years until the pandemic. Post pandemic, the price of rag stabilised again at the lower level of around 35 pence; but now the market is facing a period of unprecedented turmoil and I thought I would take some time to explain what our take on the current state of the rag market is and what we can do to help.

Some of the antecedents of this discussion are as follows:

With colleagues, I went to Kenya in February of this year to help understand exactly what the state of play was in the downstream markets where ragged clothing ends up
Last week at a members’ webinar I presented some of the findings from that trip as well as making some suggestions as to how charity retail could help improve the conditions in the marketplace and the conditions in the end user markets in Africa
There have been many discussions with the TRA, with colleagues at WRAP, and internally

Our latest Quarterly Market Analysis is clear that our members receive on average no more than 1.9% of their income from the sale of used clothing to collectors. This perhaps surprisingly low figure is in contrast to the amount of energy that often is expended in having discussions with collectors to increase the price! In our view this way of dealing with collectors is likely to prove counterproductive, and I’ll explain why we believe that. But first some facts about the market we are working with.

The supply chain

The onward supply chain for used clothing after it leaves the back door of charity shops is extremely long. It comprises:

The collector
A sorter/grader
An exporter
An importer
A merchant on the ground in the end user markets such as Kenya, Ghana and Pakistan

Of course some of these roles might be played by the same organisation, but the need for each organisation to take its cut to ensure its ongoing profitability and sustainability creates a complex and expensive supply chain.

The perfect storm

Collectors are facing somewhat of a perfect storm. Some of the factors here are:

Geopolitical issues such as wars, political challenges, global transportation difficulties (for example restriction in movement through the Red Sea)
Local labour difficulties associated with Brexit, including the lack of availability of drivers
The fact that most sorting has moved overseas to reduce labour costs
The drop in quality of second hand clothing that collectors receive (due partly to the drop in quality that shops receive of course)

Because of all these issues it is by no means impossible that some collecting companies will be driven out of business – and in fact the crisis that I was being warned of in 2015 actually seems nearer to be the truth now than at any point since then.

The possible knock on effect

An increase in costs (including in the price paid to charity shops) and a decrease in available income for collectors is inevitably going to have a knock-on effect on our sector. We are already seeing a decline in service levels from some merchants; and worse still an increase in non-payment for collected goods.

Whilst I’m in no way wishing to minimise the importance of raising as much money as possible for charities – that is after all what we’re here for – in many ways the income we get from rag is less important than having the facility to have our excess clothing taken away. If we had to send it to waste instead the consequences would be very severe: not only would it increase our costs dramatically, but it would also compromise our position of being the UK’s leading facilitator of reuse. Further, it is not difficult to imagine what the public response would be if they became aware that a high proportion of what they are donating to charity shops ends up in landfill or incineration; not only would they probably stop donating, but our reputation would take an enormous hit.

What can we do?

CRA are keen to promote the view that our relationship with collectors should be much more based on partnerships rather than a straightforward commercial transaction. What we really need is a high quality reliable service, to be paid promptly and on time, and to have an environmentally and commercially sustainable way of clearing our stockrooms. In our view this is far more important than a penny here or a penny there on the rag price, given the 1.9% figure quoted above.

Please don’t get me wrong. Like everyone else I want charity retail to provide the maximum possible income for its parent charities and the good causes that they represent; however we do need to take a medium rather than a short term view on this. Such income as we do get from rag could be under threat if we don’t adopt a partnership approach and look at working closely with collectors to provide a combination of excellent reliable service, sustainability and a fair price.

The worst thing for for us as a sector – it might even prove an existential threat – would be if the whole collecting industry were to collapse. I don’t see that happening any time in the near future but there is no doubt that we need to play our part in ensuring their sustainability.

TRUST

The TRUST licensing system is an excellent way for us to ensure that our collectors and traders are not only adhering to proper health and safety and human resource standards but also are as environmentally sustainable as possible and are practitioners of sound business. This means that they are commercially viable, pay our members on time and deliver an excellent service. I would strongly urge all of our charity members to ensure that they only sell their excess stock to TRUST licensed merchants, as this will enable the system to continue to thrive and to provide as much reassurance as possible that the merchants with whom they are dealing are reputable and effective.

Summary

So our position is twofold.

Please ensure that the partnership with collector(s) is a two way discussion and that you maintain a reasonable approach when dealing with them over price and service levels
Please ensure that wherever possible you only sell your excess second hand goods to TRUST licensed merchants

In our view these steps are not especially difficult for charities to take, although I do understand that special circumstances might arise from time to time. However I’m clear that if we do not spend as much time as we can working in partnership with our merchants then there is a danger that the industry will start to suffer even more severely than it currently is, and that could have a knock-on effect for all of us who care so deeply about charity retail and the causes it serves.

26/04/2024 14:56