Shein is plotting world domination, should UK retailers be worried?
It’s not difficult to understand why Shein is a success, with only a few clicks of a button shoppers can buy a wedding dress, blackout curtains and a new top for less than £30.
The Chinese fast fashion behemoth has been in the online shopping scene since 2008 but has only really come into the mainstream over the last three years, partially thanks to young women vlogging their budget purchases on TikTok.
It is expected that Shein’s chokehold on shoppers will get even greater. Earlier this week the company made its first UK acquisition, taking the ailing brand Missguided out of Frasers Group’s hands.
News of the deal was not surprising, Shein has been trying to get a foothold in the British market for some time now, initially making first bids for Topshop when Philip Green’s Arcadia collapsed three years ago.
It was said to be circling the former queen of the high street again following rumours that owners Asos are planning to sell the brand to secure extra cash.
The multi-million-pound company has also been getting pally with Ted Baker owner Authentic Brands Group,(ABG) entering into an agreement to sell and design Forever 21 clothes on its website.
This came months after the pair announced a joint venture which saw Shein acquire a third of Forever 21’s operator Sparc Group — which owns the retailer with ABG — and Sparc take a minority stake in Shein.
The rapid success of Chinese owned Shein comes as the health of once seemingly indestructible British online retailers has deteriorated.
Its growing presence in the western market has been described as “unprecedented” and it is expected that many British retailers will be watching over their shoulder to see what the brand is doing next.
Jonathan De Mello, head of JDM Retail, said that with the acquisition of Missguided, Shein will have now surpassed Asos and Zara in terms of their share of the UK apparel market.
“They clearly have some way to go to get close to the likes of Next, Primark and others — but the pace of their growth from next to nothing a few years ago is, frankly, unprecedented,” he said.
Shein and Mike Ashley’s Frasers Group are also said to be plotting a partnership following the sale of Missguided.
De Mello said this would likely involve the use of Frasers’ physical outlets for returns, and Frasers selling their various brands via Shein’s platform.
The rapid success of Chinese-owned Shein comes as the health of once seemingly indestructible British online retailers has deteriorated.
Boohoo and Asos have seen their profits flatline over the past few years as cash-strapped shoppers scale back on shopping. Meanwhile, Shein said it made over £1bn-worth of sales within the first two years of its UK presence.
“I believe Shein poses the biggest threat to discount retailers — so the likes of Boohoo,” Charlie Huggins, head of equity at the Wealth Club, said.
He added: “Shein has the advantage of scale as well as significant supply chain advantages that enable it to offer very low prices and very fast replenishment. It’s no surprise that it has done well because consumers on a budget will always be attracted to the cheapest prices.”
The only threat to Shein’s rise to the top appears to be the company’s ultra-fast fashion and factory working practices.
Shein’s pop-up shops in London are regularly protested against by environmentalists in the wider UK.
Its attempt to acquire more and more British brands could be seen as an attempt to sanitise its image as rumours swirl that it could try to go public in New York as early as next year.
Huggins also said: “One of the concerns with Shein is around sustainability. There is often a trade-off between price, sustainability and quality.
“Consumers are starting to care more and more about sustainability issues and where their clothes come from. Shein will probably need to step up its game on that front if it is to truly capitalise on its long-term potential.”