Reference no: EM132681061

Joe Fresh was founded in 2006 as one of Canada's premiere men, women, and children. Joe Fresh products are available in over 340 Loblaw Companies Ltd. stores in Canada, as well in 650 JCPenney stores in the United States. Pioneered by one of Canada's leading fashion moguls, Joe Mimran, Joe Fresh signed three partnership agreements in 2014 that brought the brand into 23 new countries. The agreements represented the first expansion beyond North America into key growth markets in the Middle East, North Africa, Europe, and South Korea.61 With the backing of grocery giant Loblaw, the discount clothing line will roll out up to 141 Joe Fresh stores in 23 countries over the next four years. "This is representative of what has been a long-standing belief on our part that there is an international level of opportunity for the Joe Fresh brand," said Galen G. Weston, Loblaw's executive chairman 62 Going global for Joe Fresh meant partnering with companies that had integral knowledge and expertise of the local retail dynamics and consumer preferences. 63 When Joe Fresh entered the United States, it chose to stay away from the large capital cost of opening stand-alone stores and entered into a supply arrangement with JCPenney. Weston said the deal hasn't gone according to plan due to restructuring and leadership changes at the struggling US retailer. So instead of putting clothing in existing stores, the global strategy is a partnership to build new stores and leverage local expertise from companies such as Fawaz A. Alhokair & Co. and Retail Arabia International. Joe Fresh's "extreme pricing" is one of its selling points, but in 2013 that approach was brought into question with the collapse of a factory in Dhaka, Bangladesh, killing 1100 people. Called the worst disaster in the history of the garment industry, the tragedy spurred Loblaw to join fellow retailers Sears Canada and Walmart Canada at an emergency meeting of the Retail Council of Canada to make plans to improve working conditions in sweatshops. These types of tragedies typically bring enormous pressure on retailers to investigate the rights of Third World factory workers. In these countries, rampant corruption exists at every level, where garment factories are policed by thugs who threaten workers who do not want to enter unsafe premises or who try to leave before working 13- or 14-hour shifts, typically seven days a week.67 Loblaw provided compensation for the families of victims, as well as aid and resources to the neighbourhood of Savar, where the collapse took place. Senior Loblaw executives met with local officials to discuss "finding an approach that ensures safe working conditions, drives lasting change in the industry and [helps prevent) other tragedies," the company said in a press release. Queen's University marketing professor Tandy Thomas said Loblaw has the power to ensure working conditions are up to a certain standard by saying, "You're not going to get our business unless you do things correctly. This type of economic pressure is effective in eliciting a faster response than waiting for local governments to make changes. The typical consumer reaction to this sort of incident, Thomas said, is usually boy-cotting, but she felt Loblaw was doing the things it should be doing to make it right. Rather than using a PR firm to boost its image, Loblaw is working at a local level to prevent these tragedies from happening in the future. Thomas said consumers will take notice of the mistake and the response of Joe Fresh. Thomas believes consumers will forgive, "and, in many cases, they come back with a stronger level of loyalty because they know they can trust the company to do the right thing again in the future.

1. Who is to judge what is morally correct for companies operating in the global marketplace?

2. Joe Fresh continues to manufacture clothing in Bangladesh. Do you believe this is ethical behaviour?