“We are aware of it, but it doesn’t worry us in the least,” Kamani concluded.
Anyone older than Generation Z probably would have had the same answer until recently. But he doesn’t make mistakes. Like Boohoo – whose shares have dropped more than 60% since that call, in the face of staggering competition from Shein – we’re all likely to feel the impact of her $ 5 dresses and $ 10 jeans very soon.
The retail giant is considering a funding round with a $ 100 billion valuation and is in talks with investors including General Atlantic to raise about $ 1 billion, people familiar with the matter told Bloomberg News. week.
Those numbers aren’t particularly outlandish. Shein could record sales of $ 20 billion in 2022, according to Morgan Stanley, enough to surpass Fast Retailing Co. to make it the fourth largest apparel retailer in the world. Ratings of at least five times sales are roughly a rite of passage for fast fashion brands in their pomp (Boohoo was valued up to 10 times its sales at one point) and would seem more than deserved by the double-digit growth. by Shein Vote.
It’s a sign that the Chinese clothing trade, long believed to have lost ground to rivals in Bangladesh, Vietnam and even Europe, still has a lot of life left. It is also proof that fast fashion, far from slowing down, is only accelerating. The avant-garde is shifting from the speed at which clothes can be produced, to predicting consumer tastes before consumers even know them.
In a way, Shein’s business is completely conventional. Rather than relying on a global network of factories or high-tech automation, his core supply chain wouldn’t seem out of place in the 19th century. Based on a report last year in Jiemian, a local business news website, the company operates as a tight-knit group of more than 300 vendors sweating under ceiling fans and churning out hundreds of pieces a day on sewing machines from table.
Zara by Inditex SA managed to revolutionize fashion in the 2000s by reducing delivery times from months to weeks to get new clothes from concept designs to retail stores. Shein takes it one step further, with the product cycle taking a few days at most. This is mostly the result of old-fashioned efficiencies, such as placing small orders and using local clothing stores. Most are within a five-hour drive of Guangzhou headquarters, Bloomberg reported last year. Most are located in a single suburb.
Shein’s particularity is not its supply chain, but the way it has combined traditional business style with a dizzying pace of market research and customer acquisition. Founder Chris Xu has a background in search engine optimization – the dark arts of bringing results to the top of Google’s charts – and those talents are evident in Shein’s vast social media presence. It is the most visited fashion site globally and Google’s searches for the brand recently surpassed those of H&M of Hennes & Mauritz AB and Zara of Inditex SA:
In her meteoric rise, Shein has drawn her fair share of criticism, accused of everything from selling racist phone cases, robbing designers and contributing to excessive consumption. She also benefited from some of the Trump-era fiscal policy quirks in both China and its end markets that allowed the company to undermine competition.
However, the biggest threat to Shein at this point is not a backlash from any of these angles. Inditex and H&M were once the children of unethical, disposable fashion. But as their core demographic has aged, they’ve cleaned up their image and moved into the exclusive market, something Shein is already doing with her own MOTF brand. While such tax advantages certainly give the company an unfair advantage, even that advantage could prove surprisingly resilient, given China’s desire to support forward-looking export industries and the reluctance of Western governments to slap costs on one of the few categories. of products where prices are going down these days.
The greatest risk for Shein, in fact, is the same as it now poses for conventional fashion brands: that the barriers to entry for the best clothing retailers in the world continue to decrease. Once, Zara and H&M ravaged the traditional rag trade. So Asos Plc and Zalando SE have put those in-store retailers on the defensive with faster, cheaper, and online-only models. Shein’s nocturnal arrival as the new giant killer suggests that the scheme is far from played. In a company that always changes the seasons, one day winter will also come for Shein.
Related to Bloomberg Opinion:
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From Gucci to De Rucci, innovation always comes from imitation: David Fickling
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
David Fickling is a Bloomberg Opinion columnist who focuses on commodities as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, Wall Street Journal, Financial Times and Guardian.