Safety Takes Centre Stage: On Sites, In Stores, And In The Supply Chain 

This week, the European Commission formally designated fast-fashion e-tailer Shein as a Very Large Online Platform (VLOP) under the Digital Services Act (DSA). This designation comes after Shein reported an average of 108 million monthly users (far surpassing the 45 million monthly user threshold the European Union has set for designation as a VLOP). Following this development, Shein will have to comply with the most stringent rules under the DSA within four months of its notification (by the end of August 2024) including “the obligation to adopt specific measures to empower and protect users online, including minors, and duly assess and mitigate any systemic risks stemming from their services.” 

Other VLOPs identified by the EU include Meta, Apple, Amazon, and TikTok – underlining just how quickly principles designed to regulate “big tech” are cascading into other sectors. Or, from another perspective, it demonstrates how fast big retail is turning into big tech.

As part of its new status, Shein may have to reassess its modus operandi of attracting younger users with exceptionally low prices, trendy styles, and diverse product offerings. It’s difficult to imagine a world where the social media “hauls” that helped propel the company to its current valuations continue to be looked upon fondly by regulators who are scrutinising both social media use and engagement with large platforms.

A key aspect of a VLOP’s role involves assessing how its offerings could potentially compromise consumer safety and well-being. According to the EU Commission, this entails placing a strong emphasis on safeguarding the physical and mental health of underage users. This is not far off from the Commission’s investigation into TikTok into its “Lite” app and its potential to become addictive for young people – consequently affecting their mental health – because of its “task and reward program,” that incentivises users with points for specific types of engagement. This investigation marks the second time TikTok faces scrutiny, previously for its inadequate age verification measures and suspected addictive design. In a similar way, Shein is known for bombarding its users with daily coupon codes, referral incentives, and steep discounts, turning the shopping experience into a gamified, and possibly addictive process – one that social platforms like TikTok itself serve as a powerful acquisition funnel for.

And this week’s headlines remind us that it’s not only online where safety needs to be ramped up. Over the past year, frontline retail workers have seen in-store theft and violence increase – both at large retail chains or smaller shops. In an attempt to protect their employees and employees, fashion businesses have turned to technology – specifically using body cameras to extend both the purpose and the reach of their in-store surveillance. 

In January, public safety technology firm Axon unveiled a new range of body cameras tailored for frontline retail and healthcare staff. These cameras not only record high-resolution video of customer interactions and in-store activities but also function as communication devices in times of distress. With live capabilities, employees can request assistance instantly and the recorded footage can be shared internally and externally with law enforcement and other relevant parties. So far, companies that are using the technology include Walmart in the US, and Tesco and Co-Op in the UK; but it is likely that more in the fashion industry will buy in as the tech becomes more advanced and discreet, and as retail interactions remain contentious. 

For now at least, steps to protect retail workers are mainly proactive rather than reactive or mandated by regulations, but one area where fashion will have no choice but to step up safety is in the supply chain, thanks to the European Parliament finally approving the corporate sustainability due diligence directive (CSDDD), as well as associated forced labour regulation.  

The former represents the first time that the EU has come so close to holding big businesses to account for their environmental and human rights practices in their supply chains.  Even though the approved CSDDD legislation is a watered down version of the original proposed agreement, the sentiment remains clear: companies that breach their due diligence obligations will be liable for damages, including compensations for victims, which in this case are most likely to be garment workers in the supply chain. In a poignant coincidence, the vote happened on the 11th anniversary of the collapse of Rana Plaza in Bangladesh, where over 1000 were killed and thousands more injured. With the CSDDD in place, the EU is taking a firm step to regulate business conduct to prevent a tragedy of its kind from happening again – but only if both states and businesses fully commit and implement its rules effectively.

In similar news, the European Parliament on Tuesday approved new rules designed to stamp out products tainted with forced labour from the EU market. The law will ban goods made using forced labour, in a move similar to the import restrictions introduced by the US to target products linked to alleged human rights abuses in China’s major cotton-producing Xinjiang region. As with the CSDDD, the text will have to get one final approval from the European Council, along with publication in the EU Official Journal, following which member states will have to start applying it in the coming years. 

Again, like the CSDDD, the new law has attracted criticism for not taking a bolder stance – because only if the use of forced labour is proven (a high bar to clear) will officials seize the products at the borders and order their withdrawal from the European market and online retailers. This is in contrast to the Uyghur Forced Prevention Act (UFPLA) that has a built-in presumption of guilt for all products from the region. Nevertheless, in both cases, even if imperfect, the new legislation is a critical step to creating safer, fairer, and more sustainable supply chains throughout fashion. 

With these advancements from the EU – the new legislation as well as its watchful eye on TikTok – there is a lot of room for leveraging technology for good online and in the supply chain. Online platforms can implement advanced algorithms and AI-driven systems to monitor online marketplaces for potential instances of exploitation that can flag suspicious activities or products, allowing for swift investigation and intervention. This could also be an opportunity for more rigorous data governance practices and technology platforms to create transparent supply chains, enabling both regulators and consumers to trace the origins of products and verify their ethical sourcing. And when it comes to physical technology, body cameras being rolled out to downstream retail workers could even be used by supply chain workers to document and verify their safe labour conditions, providing a remote monitoring solution to due diligence and disclosure requirements for brands and retailers.