Chinese fast-fashion brand SHEIN ‘increasingly threatens US specialty retailers’, says UBS [Video]
Chinese fast fashion retailer SHEIN has become the “most downloaded” shopping app in the US, according to UBS Evidence Lab’s Global App Monitor, as well as the “most searched” app. [apparel] retailer in the United States”
Founded in 2008, the online-only retailer of inexpensive clothing, beauty and lifestyle products has become a global phenomenon in the age of TikTok. SHEIN went from a $15 billion valuation in 2020 to $100 billion in a recent funding round, reports the WSJ.
Strong consumer momentum “largely explains the rise in valuation,” the UBS analysts wrote. “The data also leads us to believe that SHEIN is a major and growing threat to US specialty retailers” such as American Eagle (AEO), Abercrombie & Fitch (ANF), Urban Outfitters (URBN), Victoria’s Secret (VSCO), The Gap (GPS) “as well as department stores and off-price retailers”.
Despite lacking a physical store network, SHEIN is the #1 brand on TikTok and has proven to be a huge hit with Gen Z. The e-commerce site has been the second favorite website for shopping at teens (behind Amazon) for the past two years, according to Piper Sandler’s biannual Gen Z survey.
The retailer’s strength with a younger consumer comes from leveraging social media better than many of its competitors.
SHEIN’s TikTok followers are up 162% year over year. According to UBS Evidence Lab’s TikTok Tracker, the retailer has 1060% more followers than Macy’s (M), and that translated to 19% more Google searches than Macy’s in May.
A UBS survey of 7,500 consumers in the US, UK, Germany, China, Japan, South Africa and Australia found that the average SHEIN consumer is female, younger and older. low income. Consumers on the site tend to buy casual wear and underwear/sleepwear.
According to the survey, the top reason US customers buy SHEIN is because of its affordability. The site takes discounts to the extreme, offering blouses for $2.90 or a pajama set for less than $15. Other reasons consumers are drawn to the site, according to the survey, are its “style that suits me” and “trendy designs.”
SHEIN pursued an aggressive, data-driven “fast fashion” business model, which made the brand popular among price-conscious consumers, but also drew criticism for its huge environmental footprint. This poses a formidable challenge for the industry’s push towards sustainability as well as for competitors.
“We continue to believe [specialty retailer] share prices will remain under pressure,” the UBS analysts wrote, citing inflation, market sentiment and decelerating sales. “SHEIN represents another underappreciated headwind that is negatively impacting earnings public Softlines companies, in our opinion.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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