Chinese fast fashion giant Shein is poised to surpass both H&M and Zara in revenue this year, with the retailer reporting 23 billion dollars in earnings for 2022, as per data from the Wall Street Journal. The substantial growth in sales anticipated for 2023 further solidifies this position. In the initial three quarters alone, Shein's revenue reached 24 billion dollars, outpacing H&M's 16.4 billion dollars in the corresponding period. It will also likely overtake Zara's 18.3 billion dollars for the first half of 2022, positioning Shein as a formidable force in the fast fashion market by year-end.
Despite a decrease in valuation from the initial estimates of 100 bn dollars to a range between 60 bn and 70 bn dollars there is little doubt that Shein is transforming into a new-age Amazon. The company's expansion beyond apparel is evident, as it seeks to integrate its 12 dollar dresses and 5 dollar t-shirts into a diverse product catalog, including electronics and other categories.
August saw Shein forging a strategic partnership with US fashion retailer Forever 21, allowing for cross-sales and leveraging the physical stores of Forever 21 to reach Shein's expansive user base of 150 million. Sparc Group, the operating partner of Forever 21, expressed confidence that this collaboration would serve as a platform for the growth of its diverse portfolio of partnered brands, which includes the likes of Nine West and Brooks Brothers, both owned by Authentic Brands Group. Last month Shein acquired the IP and trademarks of British fast fashion etailer Missguided, making it the Chinese giant's first UK acquisition.
Shein takes 50 percent of US fast fashion sales
Quartz data from November 2022 also highlight Shein's dominance, where it took 50 percent of all US fast fashion sales, while H&M and Zara trailed at 16 percent and 13 percent, respectively. By May 2022, Shein briefly outshone popular social media platforms in the US, with more app downloads than TikTok, Instagram, and Twitter.
Critics of Shein have raised several concerns, such as the group's labour practices, with reports of low wages and poor working conditions in the factories that produce its clothing. There have also been allegations of exploitation and inadequate worker rights. Furthermore, the fast fashion model adopted by Shein, characterised by rapid production and turnover of inexpensive clothing, has been criticised for contributing to environmental issues. The use of non-sustainable materials and the generation of significant textile waste are concerns raised by environmental advocates.
Elsewhere some customers have complained about the quality of Shein's products, citing issues such as sizing discrepancies, poor stitching, and a lack of durability. Critics argue that the low prices come at the expense of product quality. Shein has been accused of replicating designs from independent designers and other established brands without proper attribution or authorization. This has led to allegations of intellectual property infringement and concerns about the ethics of the company's design practices.
Despite the company's lack of transparency, Shein's rapid gains of US market share and ever-expanding global footprint solidifies its position as a powerhouse in the fast fashion industry.