Shein’s pain is high street retailers’ gain

{"text":[[{"start":3.4,"text":"Shein, the ultra-cheap fashion machine that delivers clothes to customers’ doorsteps, is finding growth hard to come by. That, at least, is the message from its maiden set of results as a Hong-Kong listed company, which knocked 12 per cent off its stock. While Shein’s investors reach for their cash flow models, its cut-price rivals will be reaching for the champagne."}],[{"start":null,"text":"

"}],[{"start":24.84,"text":"The juggernaut’s business model relied on offering infinite choice while undercutting rivals on price. But that cost competitiveness is coming undone as a growing number of countries join the US in putting an end to duty-free treatment for low-value imports, prompting Shein to raise prices. Its sales in Europe, where the “de minimis” loophole recently closed, were down almost 14 per cent in the second quarter."}],[{"start":48.56,"text":"That creates an opening for local fast-fashion groups. In the US, the beneficiaries from Shein’s retreat included Gap-owned Old Navy, Ulta Beauty, Nordstrom Rack and thrift store chain Savers Value Village, according to data provider Consumer Edge. With the rules now in effect in Europe, cheap online retailers such as German operator Zalando have reason to cheer."}],[{"start":71.12,"text":"The glad tidings are soon to reach the UK high street, with the de minimis exemption scheduled to be scrapped in late 2028. The country’s low-cost fashion operators have a lot of ground to reclaim: UK consumers spend an estimated £4.7bn a year on Chinese ultra-low-cost platforms such as Shein and Temu, equivalent to roughly 5 per cent of the country’s non-food online sales, according to consultancy Retail Economics."}],[{"start":98.56,"text":"Potential beneficiaries of a UK rule change include Asos, Debenhams Group — owner of Boohoo and PrettyLittleThing — and ABF-owned Primark. And the bonanza from also hobbling Temu, which sells tools, tech, home furnishings and virtually anything in between, would extend to non-fashion groups such as Currys, Argos and car parts provider Halfords."}],[{"start":119.48,"text":"Of course, it is just about possible that, over the next two years, Shein will tweak its customer proposition so that it is less dependent on simply being super cheap. One idea is that its customers may be willing to pay more for products if they have to spend less time waiting for them to turn up at the door: the company is therefore building local warehouses, including a recently opened facility in Birmingham, to cut shipping times. Its plan to move upmarket might help too: plenty of Chinese-manufactured products initially attracted customers by being cheap and then became cool in their own right."}],[{"start":152.36,"text":"But all that is as yet untested. The likeliest outcome of Shein’s retreat is a redistribution of fast fashion’s spoils and one that consumers, deprived of the lowest-cost provider, will partially pay for too."}],[{"start":166.76,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790742401_9275.mp3"}