It may be 5.30am and pitch-black on the outskirts of Shirebrook, Derbyshire - but the roads are busy. A stream of cars, typically packed with eastern Europeans, wind their way along country lanes and deliver about 1,500 people to a massive facility surrounded by farmland.  After stopping in an overflow car park, most shuffle silently across the road and into an illuminated 800,000sq ft structure that seems to emerge out of the darkness like a visitation in some bad science fiction film.  The crowd clutches packed lunches that have been stuffed inside transparent plastic shopping bags, which allow hovering security guards to quickly inspect what is being brought inside. A fingerprint scanner grants access to the building through security barriers, while everybody remains under constant surveillance from cameras. If you are spotted wearing unauthorised clothing, you are immediately pulled aside by the guards.  Related: Revealed: how Sports Direct effectively pays below minimum wage  These security procedures are not designed to monitor people attempting to gain access to some secret organisation engaged in highly classified work – or even individuals visiting dangerous criminals. This is the routine grind for low-paid staff reporting for work on the nine-hour “day shift” at the warehouse of Sports Direct, the thriving sports retail empire founded and controlled by the billionaire owner of Newcastle United, Mike Ashley.  The publicity-shy tycoon and his business have been widely criticised for the conditions at Shirebrook – known locally as “the gulag” – where up to 5,000 staff clock in each day. It is hard to discern why the place is so maligned when you first arrive, but slowly the reason emerges.  Step by step, minimum-wage workers are informed of what is expected of them for the headline rate of £6.70 an hour (in reality, many receive less) – including being told they will walk almost 20 miles each day inside the warehouse as they pick products off the shelves.  They can occasionally be harangued by name via tannoy if they don’t move quickly enough – “please speed up with your order as soon as possible”, the speaker system barks – while “crimes” against the company – called “strikes” and including “errors”, “excessive/long toilet breaks”, “time wasting”, “excessive chatting”, “horseplay”, “wearing branded goods” and “using a mobile phone in the warehouse” – are punished. Six strikes in six months and you’re out.  There are other requirements, too. A daily search – part of Sports Direct’s zero tolerance of theft – involves workers lining up before being ordered to strip to the final layer above the waist and empty their pockets. They are then asked to roll up their trouser legs to reveal the brands of their socks and expose the band of their underwear. Occasionally workers are hauled into a side room for a more detailed search.  Agency workers are given a list of 802 sports and clothing brands they are prohibited from wearing. They include Sports Direct’s own brands such as Dunlop, Slazenger, Karrimor, Sondico and Lonsdale as well as third-party labels including Nike, Adidas and Reebok. Despite these restrictions, the daily searches still take time and it seems to take most workers about 15 minutes to leave the building after their shift has ended. The extra time is unpaid.  Few know details of the working practices at this successful retailer, as executives are extremely loyal to the company’s founder and rarely speak publicly. Meanwhile, many agency workers, who have few rights and can be dismissed without notice, seem to exist in constant fear that any indiscretion could cost them their job.  During November, the Guardian placed two undercover reporters inside the Shirebrook warehouse, as well as speaking to scores of current and past Sports Direct workers.  The story that emerged shows Ashley refusing to increase productivity by investing in new technology. He believes productivity gains promised by the new technology are non-existent unless you know what products your warehouse will be handling years in advance. Instead, he focuses on building a retail machine whose cogs almost entirely consist of people: cheap people, typically from eastern Europe, who understand little, if any, English. To accommodate them, all signs and announcements inside the building are made in Polish as well as English.  “It’s voodoo retailing,” says one former executive colleague of Ashley’s. “He makes money out of financial engineering. The buying and manufacturing is very simple and done in the dumbest way possible. There is no complexity. Everything is bought as cheaply as possible. There is one warehouse, located in one of the cheapest places in the country, there is no sophisticated computer system. If you go to the Amazon warehouse it is all very automated. At Sports Direct it is very manual.”  Related: Mike Ashley: the ins and outs of Sports Direct tycoon's empire  The first thing that strikes you when entering the facility is its sheer scale. The main warehouse is the length of 13 Olympic swimming pools placed end-to-end – about 2,100ft long and 410ft wide. It houses row upon row of goods stacked in cardboard boxes, which in turn are perched on blue and orange metal shelving that rises more than 50ft into the air. There is another floor above.  Next door a second warehouse of a similar size is being constructed, and life in both is relentless: Sports Direct operates its warehouses 24 hours a day, 365 days a year.  Inside, the workers – about 2,000 on the busiest shifts – buzz around wearing unbranded clothing, safety boots and various colours of high-visibility jackets. If you wear a white jacket, you are a new starter whose main aim is to avoid getting lost and receiving a rollicking. You get a yellow bib once you’ve earned some stripes, typically after being there about a week; and, most importantly of all, there is a blue jacket for the bosses. “Just do whatever the blue jackets tell you,” new recruits are told on their first day.  And you do exactly that – no matter how laborious or seemingly pointless the task. The nature and the tedium of the jobs on offer is illustrated at the rear of the facility, where rows of workers are engaged in what is known as “tunnelling”.  Cages of garments are manually sorted, tossed onto tables corresponding to certain stores that are lettered A to N, or slipped on to coat-hangers and transferred to numbered rails for internet orders. The products are then inserted into polythene covers, on which the worker applies a sticker, before returning the item to the rail for somebody to wheel to another point in the warehouse. The rails are transferred up to the higher levels of the warehouse, where rows and rows of them are stored, waiting for the pickers to select the products to be dispatched.  Apart from the “tunnelling” sorters, who use handheld scanners, the most cutting-edge piece of technology on display is a biro, which is used to mark up labels so colleagues know which rail the garment is heading for. These workers do this job for eight hours a day, some chatting away to each other eastern European languages and occasionally managing the odd word in English. “It’s easy,” grunts one young Romanian male, who appears built for heavier lifting. Meanwhile, another new Shirebrook recruit, who had previous experience of working in a more automated UK warehouse, was astonished at the scene: “It is all paper-based. There are no computers or anything.”  What these people may never guess – and are certainly never told – is that they are providing Sports Direct with one of the retailer’s key competitive advantages: a process whose outcome is so valuable it is envied by at least one of the country’s most respected retail veterans.  It is a system that quickly reroutes products that are not selling in some Sports Direct stores to outlets where those items are being bought, or to the online store. So “tunnelling” means Sports Direct can stock its shops with more products that sell, while keeping overall stock, re-ordering and unwanted discounting down. There is clever computer code working out where every product should be sent – all written by Ashley’s brother John – but it is hard to see how this key system could possibly work without lots of cheap labour doing menial jobs.  Yet while the work is basic, the pressure to perform feels intense.  Back in the main warehouse, the pickers are handed sheets listing rows of products they need to fetch and place into their stillage – a metal cage on wheels for transporting goods around the warehouse. Pickers are given an “estimated finishing time” for this task, which is virtually impossible to hit without running down the aisles.  Related: Sports Direct staff scared to take time off with sick children, teachers claim  The picking list is scanned at the start of a session, and then again at the end, so managers can see how long employees are taking. Every employee’s performance is published on league tables outside the staff canteen – showing what percentage of their target they have achieved next to their name. The best performing employees are listed in the “premier league”.  The constant monitoring is justified as a reasonable way of ensuring workers don’t slack off. “There is nothing to worry about,” says one “blue jacket”. “The targets are just there for the gabbers.”  Yet later that day the same boss takes a different view on the pressures of Shirebrook, when overheard talking to a peer. “I get the blame for everything,” he moans. “For attendance, for performance.”  Literature handed to new starters by employment agency The Best Connection makes the culture clear. “Your performance onsite will be monitored and if you do not meet the expectations of Sports Direct then your assignment will be terminated,” its welcome letter states. Transline’s literature is more succinct still: “Transline reserves the right to end an assignment at any time without reason, notice or liability.”  The result seems to be a workforce afraid of the sack – but also afraid to quit and seek a job elsewhere. “People won’t leave because they don’t think they will find anything else. Most of the Polish people who work there don’t speak a word of English,” says one eastern European worker. “Everyone’s afraid of the [employment agency] office. As soon as you go into the office you think they are probably going to sack you.”  That office, perched in an elevated room overlooking the warehouse at the centre of the facility, houses the employment agency bosses. They can’t see everything from there, but it feels as though they can, and workers have to file past them as they make their way to one of the staff canteens for each of their two 30-minute breaks.  In this case, the term “canteen” is possibly too grand. The room, about the size of a local authority swimming pool, contains rows of picnic tables lined with workers, most of whom bring their own food rather than use the vending machines at both ends of the room, or another canteen that serves hot food. Stacked in wire shelving are the packed lunches in transparent shopping bags. At the start of each break workers snap open large plastic containers and wolf down spoonfuls of cold pasta and meat. Some then file out to one of the smoking terraces.  Amid the low hum of gloomy conversation in foreign languages, thoughts always seem to be drifting back to work.  Workers are warned that if they clock in one minute late – or clock off one minute early – they will be docked 15 minutes’ pay. Some even wait by the screens for the precise moment their break is due to start before clocking off, despite being warned that this is considered a cardinal sin. “If they see you waiting to clock out, you can get into a lot of trouble,” says one coordinator.  And yet, the system does not quite work the same the other way around. Clock out late – even if you have been finishing a job – and there is no extra pay. Meanwhile, workers are also not allowed to leave the warehouse at the end of their shifts until they have been searched. “It’s annoying,” says one worker waiting in the queue to leave, “especially after a nine-hour shift.”  At that point it is back out through the security barriers and into the overflow car park to share a lift home. You are drained, yet 14 hours later, you return to do the same thing. And you dread it.
Guardian undercover reporters explore retailer’s working practices – from losing wages for being a minute late to body searches and constant fear of being sacked