‘We have zero tolerance for forced labour’ – Shein’s Peter Pernot-Day

Fast-fashion firm Shein has insisted it will not tolerate forced labour following growing questions about its ability to produce clothes at a stunningly low cost.

Peter Pernot-Day, Shein’s global head of strategy and corporate affairs, said it was important “to dispel a myth that, somehow, in order to be price competitive, you have to be skirting some set of rules”.

Speaking at Collision conference in Toronto, however, he accepted that because Shein’s path to global success using innovative technologies wasn’t widely understood, the firm has faced tough questions about its work practices or ethical approach.

He said: “That technical innovation isn’t well understood, and I think that leads to questions about, ‘well, are you using illicit labor? Are you cutting corners on your environmental practices?'”

However Peter robustly defended Shein from such suggestions, saying: “We are a values-led company, and one of our core values is we have zero tolerance for forced labor. We also take visibility across our entire supply chain very seriously.”

Peter explained how Shein manages to keep its overheads low, saying: “The reality is that the intelligent application of technologies like a digital merchant management system, accurate demand measurement for mobile devices, and the effective use of first party data – combining all those things to break free from traditional retail’s seasonality […] has allowed us to compete on price in new and novel ways.”

“I think the reality is like everyone in the fashion industry, we have challenges, but our technology is what sets us apart. It isn’t abuse of our workers or our contract manufacturers, or misuse of materials in a way that’s environmentally irresponsible,” added the strategist.

In the last few years, explained Peter, Shein has carried out thousands of supplier audits, “typically unannounced, typically done by third parties, in order to get visibility across our supply chain and push our suppliers to do a better job“.

“We think [this] signals that we are a responsible global brand that’s committed both to our suppliers’ wellbeing and our suppliers’ workers as well.”

According to Statista, Shein is the largest e-commerce only fashion retailer globally. Peter was also asked “How do you make governments love you when you are so big?”, to which he replied:

“I think one of the deepest answers to your question is [that] it’s about direction,” said Peter.

“How, as a company, do you embrace values towards responsibility, and signal that your direction as a brand is committed to complying with the laws and all of the countries you do business with? We do business in over 150 countries – but we’re committed to working within those frameworks and to being a responsible global business.”

When quizzed about AI and if it is the secret sauce of Shein’s success, Peter responded: “We don’t cheat, we compete”.

“The way that we do this is through what I call an augmented system. So rather than use AI tools, rather than use algorithms, we take an approach that’s very similar and recognizable throughout the ready-to-wear retail space, which is we have design teams [who] are assigned to product categories, and they look for inspiration from multiple sources.”

This refers to a team of trend-spotters scouring social media, the Paris runways or the pages of major fashion magazines.

“That inspiration is what feeds back to the really innovative part of Shein and that’s where we use tools like machine learning algorithms, intelligent merchant management systems, and a digital first supply chain to achieve the extraordinary operational efficiencies that I think some attribute to AI.”

“But in the conversations that we have, we really are not an AI company. And there is no generative system that’s designing our clothes,” adds Peter.

“There’s no algorithm that scraping social media feeds for trends. It really is a process that mirrors those of pretty much every other major fashion designer you’ll see in the world today.” 

Peter’s comments were made as part of a wider discussion on the future of retail at Collision, which is returning to Toronto for its sixth year. Global founders, CEOs, investors and members of the media have come to the city to make deals and experience North America’s thriving tech ecosystem.

More than 1,600 startups are taking part in Collision 2024 – the highest number of startups ever at a Collision event. 45 percent of these are women-founded, and startups have travelled to Toronto from countries including Nigeria, the Republic of Korea, Uruguay, Japan, Italy, Ghana, Pakistan and beyond.

In total, more than 37,800 attendees have gathered at the event, as well as 570 speakers and 1,003 members of the media, to explore business opportunities with an international audience.

739 investors are attending Collision, including Vinod Khosla, founder of Khosla Ventures; Wesley Chan, co-founder and managing partner of FPV Ventures; and Nigel Morris, co-founder and managing partner of QED Investors, as well as nine companies on the Forbes Midas List, and 12 investors from those firms.

Top speakers at Collision include:

• Geoffrey Hinton, Godfather of AI
• Maria Sharapova, entrepreneur and tennis legend
• Aidan Gomez, founder and CEO of Cohere (an AI for enterprise and large language model company, which raised US$450 million at a US$5 billion valuation in June 2024)
• Raquel Urtasun, founder and CEO of Waabi (a Canadian autonomous trucking company)
• Jeff Shiner, CEO of 1Password
• Dali Rajic, president and COO of Wiz (a cloud security platform)
• Alex Israel, co-founder and CEO of Metropolis (an AI and computer vision platform)
• Jonathan Ross, founder and CEO of Groq (an AI chip startup)
• Keily Blair, CEO of OnlyFans
• Autumn Peltier, Indigenous rights activist

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Useful links

• Collision website: https://collisionconf.com/ 
• Collision media kit: https://collisionconf.com/media/media-kit  
• Collision images: https://flickr.com/photos/collisionconf 
• About Web Summit: about.websummit.com