A deal struck by Shein and Forever 21 could see the digital retailer and legacy fast-fashion brand converge online and in person.
Shein, the biggest online retailer for womenswear, has acquired a third of Forever 21 operator SPARC Group, which also owns brands like Reebok, Brooks Brothers, and Eddie Bauer. As part of the deal, SPARC Group will have a minority stake in Shein. The news was first reported by The Wall Street Journal.
In a press release, Shein wrote that the company brings “e-commerce expertise and global reach to provide SPARC Group a platform to further grow its brands.” The company also hinted that Shein mini-shops and customer services like returns could come to Forever 21 physical retailers.
Long before Shein’s rapid rise, Forever 21 gave shoppers an early taste of cheap, trendy clothing produced at scale, season after season. At around $25 for a dress, Forever 21’s prices were already inexpensive; Shein hyper-charged the fast fashion business model, offering dresses for as little as $5 or $10.
Though Forever 21 is something of a forebearer of Shein, the shopping landscape has changed; Shein’s never-ending stream of small-batch daily releases has catapulted the company. When Forever 21 filed for bankruptcy in 2019, just 16 percent of its sales were online. Brick-and-mortar Shein stores within Forever 21 shops could lure in the foot traffic Forever 21 depends on.
For both companies, the shockingly low prices are coupled with long-standing disputes over how the clothing is made. The Asian Pacific American Legal Center sued Forever 21 in 2001, saying workers producing garments at Forever 21 contractors were subject to long hours, illegally low pay, and dangerous working conditions. Forever 21 denied wrongdoing, and the two parties settled.
And last year, Shein said it would spend $15 million “improving standards” at suppliers’ factories after a documentary revealed long hours and withheld wages. Following the investigation, an independent audit found workers at factories in China were subject to illegal 12.5- and 13.5-hour-long days. The money is to be spent over the course of three to four years.
Despite the concerns around labor violations, Shein is as popular as ever on platforms like Instagram, TikTok, and YouTube, where influencers regularly make “haul” videos showing off dozens of garments purchased for just a few dollars. In June, a Shein brand trip attended by a handful of content creators went off the rails when influencers began posting about the good working conditions in Shein factories — essentially sponcon saying, “No forced labor here!” The backlash faced by the handful of influencers hasn’t stopped others from shopping — and promoting — the brand.
If Shein begins carrying Forever 21 products, it will mark another step toward building a sprawling online marketplace in the style of Amazon or Temu. Shein already allows third-party retailers to list items on its site ranging from laptop sleeves for $7.30 to bedroom dressers for $42.99.