Shein and Forever 21 Partner Up in Fast-Fashion Deal

On August 24, Shein, the E-commerce giant known for ultralow prices, announced a partnership with the SPARC Group, the US parent company of Forever 21. Shein will acquire approximately one-third of Sparc’s shares, and Sparc will become a minority shareholder of Shein. Through this alliance, Shein, established in China, aims to further expand its presence in North America.

Currently, Shein’s E-commerce base is spread across more than 150 countries and the company has more than 250 million followers on social media platforms. As part of the agreement reached, in the future Shein’s merchandise will operate as a shop-in-shop in Forever 21, while Forever 21 garments will be carried on the Shein website. Although specific financial figures have not been disclosed, the partnership agreement also includes equity investments by both partners in each other’s stock.

According to the news release by Sparc, the deal will provide Sparc Group a platform to further grow its brands.

“By working together, we will provide even more innovative and trendsetting products to fashion enthusiasts around the world,” said Sparc’s CEO Marc Miller.

Shein has quickly emerged as an “ultra-low-priced apparel” company that sells some fashion items for $5 or less, which is even lower than the price range of typical fast fashion brands such as ZARA and H&M. The opaque supply chains and poor labor conditions behind ultra-low-priced products are often problematic and subject to intense scrutiny in the United States. In addition, there are persistent concerns about carbon emissions due to the large volumes of polyester low-priced garments produced throughout the year. There have also been a number of other flare-ups, including lawsuits from several brands for imitating and selling designs from other companies’ products.

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Forever 21 is another brand that has quickly risen to become a global fast fashion brand, with 800 stores in its heyday. In recent years, however, the company has faced a difficult situation as many consumers have shifted to online shopping, mainly due to the company’s reliance on a mall-based strategy. In 2020, in response to this situation, the company was acquired by a consortium of brands that included Simon Property and Authentic, which managed to avoid bankruptcy.

The biggest similarity between Shein and Forever 21 is that both companies’ primary customer base is Generation Z. The partnership is expected to help both companies expand their online reach and presence to the right consumers.

Shein’s executive chairman Donald Tang said in a news release, “The powerful combination of Simon’s leadership in physical retail, Authentic’s brand development expertise, and Shein’s on-demand model will help us drive scalable growth and together make fashion more accessible to all.”

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