Fast Fashion Friends: Shien strikes a deal with Forever 21
Shein and Forever 21 are set to join forces in the fast-fashion industry as the two rivals establish a partnership, allowing the prominent Asian e-commerce giant to feature Forever 21's collection of dresses, jeans, and accessories on its platform. As a potential future development, Shein may even set up its stores within the physical outlets of Forever 21, as stated by the companies.
The deal in detail
Let's delve into the technical aspects:
This strategic move by Shein signifies a significant leap forward from merely selling inexpensive clothing in limited quantities. Despite Shein's already established presence in the US and other countries through fast fashion, this alliance demonstrates their commitment to expanding further by offering a more diverse range of products to their customers, beyond their own creations.
In this agreement, Shein is acquiring approximately one-third of Sparc Group, the company that operates Forever 21. In return, Sparc Group will hold a minority stake in Shein.
Sparc Group is a fusion of Authentic Brands Group, a brand management company, and Simon Property Group, a mall ownership entity. Sparc Group is responsible for manufacturing and selling products for several brands owned by Authentic Brands Group, including Forever 21, Aéropostale, Nautica, Lucky Brand, Brooks Brothers, Eddie Bauer, and Reebok.
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And this will happen next:
- Forever 21 will be available on Shein's website, which is used by about 150 million people.
- It also opens up a chance for Shein, based in Singapore and founded in China, to be present in Forever 21's physical stores across the US.
- Shein has 560 stores worldwide, with 414 in the US.
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Forever 21 goods will be sourced and made by Sparc and sold to Shein, which will make them available on its website and mobile app.
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This will result in a decrease in the overall price of the clothing, as Shein makes items in small batches, a technique that Forever 21 also wants to learn.
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Shein's method of making clothes in small batches. This allows Shein to introduce tons of new items every day and not have too much stuff in storage.
Btw, Shein was valued at $66 billion recently, which is a lot of money, and Forever 21 in 2020 declared bankruptcy.
Donald Tang, who is the Executive Vice Chairman of Shein, mentioned that as Shein grows, they want to include more brands from others. He pointed out, "We can't create everything we offer."
Jamie Salter, the founder and CEO of Authentic Brands, mentioned that he got in touch with Shein over a year ago when he saw it was gaining ground over other fast-fashion sellers. The main focus of this deal is to make sure the products reach as many people as possible.
He explained, "Most of the people who buy our stuff go to physical stores. Most of their customers buy online." Salter thinks this partnership could grow in the future to include more brands from Sparc, especially as Shein evolves into something like an Amazon-style marketplace.
The environmental angle
Amidst this collaboration, concerns arise regarding its impact on the environment. Both Shein and Forever 21 have faced criticism for their rapid clothing production and alleged mistreatment of workers. While their affordability might be enticing, this partnership raises concerns about increased waste and environmental harm. However, a growing societal focus on sustainability could prompt these companies to adopt more responsible practices in the future. Only time will reveal the outcomes.
This merger also occurs in the midst of ongoing legal cases involving Shein, including a copyright infringement lawsuit filed by H&M.