The Chinese fashion giant Shein, which rose to the top of the fast fashion industry based on the internet, has partnered with the American fashion brand Forever21. From now on, Shein's products will be available for purchase at Forever21 offline stores worldwide, including in the United States.
According to the Wall Street Journal (WSJ) on the 24th (local time), Shein will acquire about one-third of the shares of Spark Group, which operates Forever21, while also transferring a minority stake to Spark. Additional financial terms have not been disclosed. Shein's corporate value, which is scheduled for an IPO in the United States this year, is estimated to be at least $66 billion. WSJ reported that "Shein and Forever21 will become fast fashion friends."
As a result of this share exchange, both parties will sell each other's products on their platforms and in their stores. Not only will customers be able to purchase Shein's products at Forever21 offline stores, but they will also be able to return or exchange Shein products previously purchased online. Currently, Forever21 operates 560 stores worldwide, including 414 stores in the United States. Having gone through bankruptcy and acquisition struggles in the past, Forever21 will now be able to sell products on Shein's platform, which has 150 million subscribers, thereby expanding customer accessibility.
This partnership is expected to expand to other brands beyond Forever21 in the future. Spark, a joint venture created by Authentic Brands Group (ABG) and Simon, produces and distributes products not only for Forever21 but also for Aeropostale, Nautica, Brooks Brothers, Reebok, and others.
Jamie Salter, CEO of ABG, told WSJ, "Most of our (Forever21's) customers are in stores, but most of their (Shein's) customers are digital," evaluating that this partnership is aimed at maximizing distribution. He revealed that as Shein rapidly expanded its market share in the fast fashion industry, they had been in contact with Shein for over a year. WSJ reported that Forever21 hopes to learn Shein's small-batch production know-how through this partnership.
Shein, which became a fast fashion powerhouse based online, is also expected to increase its influence in the offline market through this partnership. Known as the "Chinese Uniqlo," Shein has been actively developing a marketplace selling third-party products since early this year, directly competing with Amazon.com, Alibaba, and Temu. During the pandemic, the company rapidly grew by offering about 6,000 items daily at prices cheaper than competitors, targeting customers sensitive to SNS trends. On platforms like TikTok and Instagram, the so-called "Shein haul," where MZ generation users try on various clothes purchased from Shein, has become a trend.
However, at the same time, this "ultra" fast fashion operating model has come under scrutiny for its environmental impact, various design plagiarism controversies, and copyright infringement lawsuits. In U.S. political circles, there are also allegations that Shein used cotton produced by forced labor in China's Xinjiang Uyghur region to maintain ultra-low prices. In response, Shein has denied using Uyghur cotton and emphasized its status as a multinational corporation by relocating its headquarters from Nanjing, China, to Singapore in 2021. The supply chain is also being diversified from China to other countries including India. It has been confirmed that most of Shein's $23 billion revenue last year was generated in the United States, Europe, and Brazil.
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