Shein, Forever 21 merger doubles down on fast fashion | CBC News (2024)

In what could be the most powerful fast-fashion alliance yet,Chinese e-commerce juggernaut Shein has struck a deal with Forever 21.

The agreement will allow the popularonline fashion retailer to sell Forever 21 clothing, accessories and beauty products on its site. In return, Shein could soon operatedistinctretail spaceswithinForever 21 stores.

While Shein has experimented with pop-up stores, including one in Montreal last month, it has no brick-and-mortar stores in North America.

The move came as a surprise to some, given the two companies were seen as one of each other's biggest rivals.

"In terms of price point, definitely they're very, very close," said Sheng Lu, an expert in the global textile and apparel industry at the University of Delaware in Newark, Del. "Shein could be one of the largest competitors for Forever 21."

Lu says this was part of the calculation, with the two companies opting to work together rather than directly compete.

The deal comes as Shein looks to expand in the United States. Last month, it launched an Amazon-style marketplace where third-party vendors can sell everything from housewares to appliances directly to consumers.

"The partnership will focus on meeting the needs of customers in the U.S. and around the world who enjoy affordable, high-quality fashion," wrote Shein in a press release.

Shein, which is based in Singapore, has seen its popularity skyrocket in recent years. Its trendy and dirt-cheap clothing is especially attractive to gen-Z shoppers, many of whom take to TikTok to post videos hashtagged #sheinhaul, where they show off large quantities of Shein items they purchased for next to nothing.

Last year, Shein was valued at $100 billion US— more than fast-fashion giants H&M and Zara combined.

On the other hand, Los Angeles-based Forever 21 has faced a number of challenges in recent years. In 2019, it filed for bankruptcy and closed more than 30 per cent of its stores in the U.S. and all of its stores in Canada. Since then, the company has reopened a few stores in Canada.

Experts say Shein may be looking to Forever 21 for more than just its retail space,viewing it as a trusted American brand that could help the Chinese company with its image in North America.

Shein's image problem

Shein has repeatedly been in the hot seat overitslabour practices. Last year, a Bloomberg report found thatlab tests on two occasionsshowed Shein's clothing was made from cotton from theXinjiang region of China. The country has beenaccused of exploitingthe Uyghur Muslim minority in the region for forced labour, including in the cotton and garment industries, andCanada and the U.S. have barred the import of such goods.

An investigation by Channel 4 in the U.K. last year also revealed some employees at Shein garment factories in China worked up to 18 hours a day, seven days a week.

In an email response to CBC News, Shein stated it has zero tolerance for forced labour and denied sourcing any cotton from China or having any manufacturers in the Xinjiang region.

Forever 21's cultural and retail knowledge could be seen as an asset to Shein, says Natascha Radclyffe-Thomas, a professor of marketing and sustainable business at Glasgow Caledonian University's British School of Fashion in London.

"I think that partnership is probably [intended] to give that more solid, trusting brand that people recognize … and maybe remember from retail in-store experiences,"she said. "Whereas Shein hasn't really got any of that because it has been primarily in an online space."

Lu says when it comes to Shein's image, the new partnership can only do so much.

"If Shein really cared about its image … it has a lot of space, a lot of opportunities to improve … even if Shein acquires Forever 21, these concerns about Shein will not go away."

Favouring growth over sustainability

Some experts CBC talked to raised concernsabout what the new partnership means for sustainable fashion.

"I can see that it looks like this sort of fast-fashion marriage made in heaven," said Radclyffe-Thomas. "In terms of sustainability, I think it's a nightmare."

In 2021,Sheinwas responsible for about 6.3 million tonnes of carbon dioxide equivalents,according to theBusiness of Fashion, an online platform focusing on the global fashion industry.Sheinsaid 99 per cent of thoseemissionscame from its supply chain. In comparison, ASOS,the British online fashion and cosmetic retailer, says it emitted 1.5 million tonnes of CO2 equivalents in2021.

Sheinhas also been criticized for contributing to the industry'senvironmental footprint by sellingclothing that's not made to last.

"It encourages consumers to keep purchasing cheap clothing and dump them," saidLu.

WATCH |How a Shein PR campaign went wrong:

While Shein'spopularity continues to rise,there are alsogrowing callsfrom some consumersand governments for fashion companies to produce clothing that is ethically made and environmentally friendly. The European Commissionis drawing up new regulations that will require fashion companies to produce clothes in a more sustainable way and take accountability for their environmental impacts.

With Shein's track record, Radclyffe-Thomas says, further expansion will only do more harm.

"They have an extremely low score on the Fashion Transparency Index," she said, referring tothe online database that ranks companiesaccording to the information they disclose about their social and environmental policies, operations and supply chain.

"They bat off any kind of comments about labour exploitation.… There doesn't seem to be anything proactive about actually trying to be sustainable."

Lu agrees. "[Shein] wants to keep growing rather than focus on solving those current concerns."

Two different models

There are also questions around how successful the partnership will be given the two companies have fundamentally different business models.

Shein'smodel operates on ordering small batches of clothing and scaling up if there's demand, using its own data and technology to identify what's popular. Because of this, Lu says,Shein is not concerned with keeping items in stock, which can be tricky when operating in a retail space.

"Shein does not care about replenishment," he said. "It does not care about whether its products are selling or not selling because it always keeps launching new products based on new consumer data and newly emerging fashion trends."

WATCH | Shein's Amazon-sized ambitions:

Radclyffe-Thomas also questions how Shein's business model might fit with Forever 21's, given that normally,Shein comes out with hundreds of new products every single day.

"If you're doing direct-to-consumer shipping, you're not shipping until someone's buying," she said. "But if you have a retail store, you obviously have to have stock. So I'm not sure how they would address having those volumes of stock.… It's completely different from Forever 21."

However, Dave Xie, an expert at Oliver Wyman consultancy who focuses on China's retail sector, sees similarities between the two brands, particularly in their price points.

"Both of them are fast-fashion 'value-for-money' brands," he said.

There is noword yet on when Shein might be sold at Forever 21 stores in Canada.