Who really loses from Castro’s low prices?

Who really loses from Castro’s low prices?

Those who entered the Castro this week found clothes thrown on the floor, customers running over clothes with carts and general chaos. The reason: clearance sale following the winter that didn’t come. It is important to mention that between the winter that does not come, the loss prices, the collapse of the Israeli fashion industry and the general chaos, there is a direct, clear and circular connection – one leads to the other and God forbid

Photo: Yulia Katz Marketing

Castro customers were amazed to discover this week an end-of-season sale in which all of the current season’s clothes were sold in sales of 3 for 100 and even 3 for 60, and on the website all the items were sold for a maximum price of NIS 33. The reason for such low prices, even in relation to fast fashion, is the winter that refused to come. In later interviews senior executives in the industry said that the entire fashion industry suffered from weak sales this year due to the winter that did not come, which forced them to start the end of season sales already in November, more or less at the beginning of the season. The same senior officials also said in interviews that in Castro’s case the choice was between destroying and selling at a loss, and that when it comes to their companies they prefer the destruction of goods. The point is that there is also a third option, which the executives forgot about – to keep the stock and sell it again next year if and when winter comes.

At first hearing this may sound like an economically unwise decision. If they had chosen Castro to keep the inventory, they would have been required to pay for storage, and give up the quick cash flow that the sale brought them. However, in the long run, selling at loss prices is never profitable. Or as one of the customers put it, “Now we understand what the real price of these products is. Jeans should probably cost NIS 30” and it can be assumed that the customer’s line of thought continues: “Now that we understand what the real price is, we will never agree to buy jeans again.” for 300 NIS.

Piles of clothes being sent to Africa (Photo: Martin de Jong, shutterstock)
As if the option to produce less does not exist | Photo: Martin de Jong, shutterstock

There is always someone else who pays the price

The thing is, NIS 30 is everything but the real price of the clothes. The fashion industry is among the most polluting and exploitative industries, one that manages to reach such low prices solely thanks to the heavy exploitation and severe pollution of workers and areas in the global south, in fact only in 2021 141 workers worldwide were killed in accidents in textile factories and more than 800 were injured, when these only The cases that reach the media, the real number is much higher. Simply put, there really is no such thing as cheap clothes, there are only clothes that someone else has paid the price for, and that someone is always the weakest.

From an environmental point of view, the price is also very high, the mass production of fast fashion has enormous environmental consequences: the fashion industry emits more greenhouse gases than all flights and vehicles combined, and is responsible for hundreds of thousands of tons of textile waste that is buried in the ground every year, mostly in African soil. The main reason the fashion industry has become so polluting is overproduction and selling at too low prices. Prices that teach consumers not to respect the clothes and those who produce them. When Castro complains that they are losing sales because winter is not coming – the irony is celebrated. Winter is not coming because Castro, like many fast fashion companies, produce too much and then produce a false representation in which they have to choose between destruction and polluting landfill and selling at loss prices, as if the option to produce less does not exist.


In the fast fashion race, everyone loses

Let’s go back to Israel for a moment, another negative consequence of selling at loss prices is of course the consumer who gets used to such low sellers and then refuses to buy clothes at prices that reflect the production costs. Already today the Israeli consumer aims to buy many items at the lowest possible price, in fact among the countries of theOECD The Israeli consumer buys clothes at the lowest price per item.

We buy a lot and cheaply, and our consumption habits are primarily the reason for the collapse of the Israeli fashion industry – a collapse that led to the loss of tens of thousands of jobs in the economy. The consumption habits of the Israeli consumer are fed by the Israeli fashion giants like Castro, and thus a vicious circle is created that obliges the fashion companies to sell at loss prices. Among the Israeli fashion giants that are trying to compete with the international fast fashion giants, a race to the bottom has arisen, in which each company tries to reach the lowest possible price and in this cannibalistic market they all lose.

My heart goes out to the Castro and Rutter families, I have no doubt that no one in the company planned to end up in this situation. More than that, Castro is a company that started out as an Israeli company that advocates local production, Israeli fashion and a great deal of respect for clothes and those who make them. It is clear to me that the images of clothes being trampled in the chaos of shopping hurt them more than me. But if Castro and other fashion companies like it, want to return to prosperity in the coming years, and not just keep their heads above water, they must find a relative advantage that is not the cheap price. Quality fashion produced with fair employment, in small quantities and with minimal harm to the environment could be the relative advantage they are looking for.

Mittal Pelag Mizrahi is a researcher and lecturer on fashion and environmental justice, Tel Aviv University and Tel Hai Academic College.


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