Shein challenges the fashion industry from Italy

«As the epicenter of fashion and design, Italy serves as an indispensable source of inspiration for Shein», Peter Pernot-Day, global head of strategy and corporate affairs, explains in an exclusive interview with MFF. The ultra-fast-fashion giant is opening its Milan headquarters at via Meravigli 3 and has activated its second European logistics hub in Stradella, also within the region of Lombardy. «Italy is a key market in which we are investing. Europe is our second-most important market after the US».

While the unlisted company does not disclose exact figures, it releases between 3,000 and 6,000 products online daily. According to an interview with Jamie Salter, founder and ceo of Authentic brands group, given to CNBC on January 8th, the company boasts an annual turnover «significantly exceeding 30 billion». Shein holds a stake in the Forever 21 chain through Authentic brands group. The company is expected to attract over 260 million consumers by 2025. In recent years, Shein has formed strategic partnerships with major retailers like Forever 21 (controlled by Authentic Brands, with which it has opened a series of pop-up stores in the US, ed.) and has acquired the British brand Missguided from Frasers group. According to its head of strategy, Shein will persist in exploring a hybrid model through collaborative partnerships within the industry. Regarding the highly anticipated ipo in the US, Bloomberg reported that investors are evaluating the online fashion Giant at no more than 55 billion dollars. However, in a fundraising round last May, Shein achieved a valuation of approximately 66 billion dollars.

In recent days, Reuters has reported that Shein is awaiting approval from the China Securities Regulatory Commission for its listing. However, the listing project is facing opposition from a group of US lawmakers who have urged the Securities and Exchange Commission, the American regulatory body, to delay the ipo until it can confirm that the company does not engage in irregular labor practices. «We do not disclose figures, as we are not listed», Pernot-Day explains with polite firmness. All he can say about the US, where the ipo is expected, is that «it is our primary market». Shein, founded by Chris Xu in 2012, has become one of the most downloaded shopping apps in both Europe and the US.

Over the past decade, Shein has made a powerful entrance into the fast fashion segment, traditionally dominated by few big players, and undergoing significant systemic changes. This includes managing the shift from a business model rooted in consumerism in an increasingly sustainability-focused world. How does Shein respond to accusations of greenwashing? «We are actively working on a sustainability initiative that requires time. In the past year alone, we’ve quadrupled our checks on our supply chain». Moreover, Shein has already introduced the Shein Exchange platform in the US, specifically designed for peer-to-peer sales of second-hand clothing. The Company has imminent plans to expand this platform into European markets such as Germany and France, with an introduction to Spain scheduled for 2024.

How do you manage to keep prices so low? For example, skirts for 6 euros?

Our model is based on “manufacturing on demand”. We develop a design and request up to 200 units from suppliers for global distribution. Items go online, we assess the consumer response, and we produce according to demand. In cases of limited interest, surplus items are discounted and not reintroduced. This strategy enables us to significantly reduce waste.

With over 200 million customers, how many products do you launch in a year?

We introduce 3,000 to 6,000 products globally every day, resulting in 600,000 to 650,000 available items on our website. However, each item starts with just 100-200 units.

Where is your production concentrated?

We do not own factories; instead, we rely on third-party suppliers. While the majority are in China, notable suppliers also include Turkey and Brazil. Moreover, we are currently expanding in India.

How do you respond to accusations of copying designers from Diesel to Ralph Lauren, Sergio Rossi to Zara?

Shein respects intellectual property rights and takes infringement reports seriously.

Last week, Uniqlo sued you for allegedly reproducing their crescent-shaped shoulder bag. What is your response?

We are currently investigating this matter. Copyright is a central concern for us, and we take reports very seriously.

In the US, you have focused on pop-up stores in collaboration with Forever 21. What about Italy?

In 2023, Shein hosted successful pop-up events with significant participation in Italian cities such as Turin in March, Naples in June, Milan in October, and Rome in December. We plan to revisit this project.

How many people work in your style offices to produce all these items?

We have 11,000 employees across 30 countries, but we do not provide specific numbers for those in creative roles. However, we have programs like Shein X, which supports emerging designers and involves 3,000 creatives worldwide. We test their products, assess their manufacturability, and, if feasible, we feature them on our website. They retain the intellectual property rights to their designs.

Shein X participated in a fashion show in Paris. Are there Italian designers involved?

In the latest Shein X fashion show in June, the young designer Harry Giovanni Paredes Moncada from Terni, in the region of Umbria, secured the prestigious second place, with English designer Amy Sala taking first place. Until last year, the competition was exclusively open to submissions from EU member states and the UK. However, in response to the significant demand for participation, the competition has now been extended to designers worldwide for 2024.

What are your target markets?

The US leads in revenue, followed by the EU, with France and Germany at the forefront. Italy is an important and expanding market.

Why did you decide to open pop-up stores?

For us, it is a means to connect with consumers and expand our customer base. We currently have no plans to open physical stores, but as a young company, I cannot rule out the possibility.

Sustainability has been the primary concern for Shein until now. Do you think consumers prioritize price over this issue?

A substantial segment of our consumers undoubtedly prioritizes price, while another segment prioritizes sustainability. In my opinion, Shein is an example of sustainable fast fashion, as it is significantly reducing waste. (All rights reserved)