According to UBS Evidence Lab’s Global App Monitor, Chinese fast fashion retailer SHEIN has become the “most downloaded” shopping app in the United States, as well as the “most searched (clothing) retailer in the United States.”
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Founded in 2008, the online retailer of cheap apparel, beauty and leisure products has become a global phenomenon in this TikTok era. According to the Wall Street Journal, the valuation of SHEIN in the latest round of financing has soared from $15 billion in 2020 to $100 billion now.
Robust growth in consumers “is the biggest reason for the growth in valuations,” UBS analysts wrote. “These data also lead us to believe that SHEIN is a significant and growing threat to U.S. specialty retailers,” including American Eagle (AEO), Abercrombie & Fitch (ANF), Urban Outfitters (URBN), Victoria’s Secret (VSCO) ), The Gap (GPS), “and some department stores and discount retailers.”
Despite not having a network of brick-and-mortar stores, SHEIN is already the #1 brand on TikTok, and is indeed a huge success with Gen Z. According to Piper Sandler’s semi-annual Gen Z survey, over the past two years, SHEIN has become the second-largest shopping site for teens (after Amazon).
SHEIN’s advantage with younger consumers comes from its ability to leverage social media better than many of its competitors.
SHEIN’s followers on TikTok increased by 162% year-on-year. According to UBS Evidence Lab’s TikTok tracker, the retailer has 1,060% more followers than Macy’s, which equates to 19% more Google searches for the company 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, young and with a lower income. Consumers on the site tend to buy casual clothing and underwear/pyjamas. designs.”
According to the survey, the top reason for American customers to take advantage of SHEIN is the affordable price. The site is as deep as it can get, with shirts for $2.90 and pajama sets for less than $15. According to the survey, other reasons for buying something at SHEIN are that it “fits my style” and “popular in design”.
SHEIN’s business model belongs to radical “fast fashion” and is data-driven, which makes it popular among consumers seeking affordable prices, but its unenvironmental approach has also drawn criticism. This poses a huge challenge for the fast fashion industry to drive sustainable development as well as its competitors.
UBS said the specialty retailer’s “share price will continue to be under pressure” dragged down by inflation, market sentiment and slowing sales.
“In our view, SHEIN represents another undervalued challenge that negatively impacts the earnings of listed apparel and footwear companies.”