SHEIN invests in Forever 21 parent company, testing offline channels

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“LatePost” learned that SHEIN acquired 1/3 of the equity of SPARC Group, an American clothing brand operator. SPARC Group owns a number of clothing brands, including fast fashion women’s clothing Forever 21, outdoor brand Nautica, mid-end men’s clothing brand Brook Brothers (Booker Brothers), etc.

This is SHEIN’s first investment in a mature brand since its establishment. The two parties did not disclose the specific investment amount, but “LatePost” has learned that the investment is not entirely a cash transaction. Upon completion of the transaction, SPARC Group will hold a small minority stake in SHEIN.

Forever 21 products will be listed on the SHEIN website and mobile applications, attracting a big merchant for its North American platform operation. Forever 21, which mainly focuses on offline retail, will also get considerable online traffic. SHEIN has 150 million users worldwide.

SHEIN will also open a “shop-in-shop” in Forever 21 stores in the United States to test display products, consumer experience, and provide more convenient return and exchange services. In recent years, SHEIN has opened pop-up stores in many places in Europe and America, trying to operate and market offline.

An online fast fashion giant has taken a stake in an offline clothing group

SPARC Group is a joint venture established by American brand management company ABG (Authentic Brands Group) and American real estate company Simon Property. This company specializes in buying brands that are in crisis, reorganizing and improving business performance.

The company was established in 2016, just in time for the migration of American clothing consumption to online, and a large number of offline stores closed and brands went bankrupt. SPARC Group successively acquired fast fashion brands Aéropostale (2017), Lucky Brand (2020), Forever 21 (2020); outdoor brands Nautica (2020) and Eddie Bauer (2021); mid-end menswear brand Brook Brothers (2020); sports brand Reebok (2021). Part of the acquisition was jointly completed by SPARC Group and ABG.

In 2020, SPARC Group acquired Forever 21, which is undergoing bankruptcy and reorganization, for US$81 million. In 2022, Forever 21’s sales have almost returned to the peak period in 2015-more than US$4 billion.

SPARC Group CEO Mac Miller said in an interview with the media that the company sets the product direction for the acquired brand, handles marketing and sales, and is responsible for wholesale and sales. ABG is responsible for the overseas authorization of the brand; Simon Property provides the brand with shopping malls and stores and collects rent.

Simon Property specializes in investing in shopping malls and outlets, and is the largest owner of shopping malls in the United States. The offline stores and warehouses of SPARC Group’s brands cover the whole United States. Forever 21 has more than 400 stores in the United States, and Brook Brothers has about 170.

Forever 21 has the same “cost-effective” and “fast fashion” labels as SHEIN, but failed to do a good job in e-commerce channels. Instead, it aggressively expanded offline when the American market was declining, and filed for bankruptcy and reorganization in 2019. Even after the transformation, more than 70% of Forever’s sales still come from offline.

Entering SHEIN will help increase Forever 21’s online sales. SHEIN will also use Forever 21’s retail and warehousing facilities in the United States to increase the offline exposure of products and improve the return and exchange experience.

SHEIN’s new attempt: e-commerce platform, offline experiment

After the sales of the self-operated “fast fashion” have stabilized, it is SHEIN’s task to seek new growth breakthroughs. In the second half of last year, consumption in Europe and the United States returned to offline channels, and offline fast fashion giants such as Zara resumed growth. Pinduoduo also launched the cross-border e-commerce platform TEMU in September last year and has rapidly expanded its market in more than 20 countries and regions this year. SHEIN needs to be more responsive and consider long-term growth more than ever.

Capital cooperation, platformization and offline retail layout are all corresponding answers.

“LatePost” mentioned in May this year that SHEIN has completed the delivery of 2 billion US dollars in financing. This round of financing enables SHEIN to have sufficient funds to build infrastructure for the global market and to cope with subsequent competition. The new financing has brought in capital from many important markets of SHEIN, such as the United States, South America, and the Middle East, and established connections with investors from different backgrounds in an increasingly complex environment.

This round of transaction with SPARC is also the result of SHEIN expanding its international resources through capital cooperation.

Since March last year, SHEIN started the process of platformization acceleration and took the lead in testing the local platform model in Brazil. Brazilian merchants open stores directly on SHEIN and are responsible for operations and logistics by themselves, just like opening a store on Taobao. Previously, SHEIN mostly designed products by itself and placed orders to purchase products from factories. The brand integrated resources and work in the entire chain such as product design and development, manufacturing, after-sales logistics, and marketing at the forefront. Thirteen months later, SHEIN officially launched the e-commerce platform under the name of Marketplace in Brazil, and soon covered the United States and Mexico. Next, its platform e-commerce will enter more regions.

In order to introduce more merchants as soon as possible, SHEIN covers a wider range of product categories, including large furniture with high cross-border delivery costs. Merchants stationed on the SHEIN platform were also exempted from commissions for the first three months, and many Chinese overseas brands soon entered. “LatePost” learned that the sales of overseas sports shoes brand Maimai Technology on SHEIN have exceeded its own independent website.

After this transaction, Forever 21 will enter SHEIN’s e-commerce platform, bringing it a relatively well-known new brand. ABG CEO Jamie Salter also said that with the further platformization of SHEIN, other brands under the SPARC Group will also enter the platform one after another.

From its own brand to a two-line development platform, SHEIN needs to face some new issues. For example, how to balance the display and search traffic of self-operated and platform products; build a more convenient logistics and distribution system in the global market; how to adjust the fast fashion channel image established in the past ten years to a new full-category mentality, so that consumers can develop in this world. The habit of buying other products on the platform.


SHEIN will open a pop-up store in Toulouse, France in 2022.

Since the beginning of this year, SHEIN is also trying to make some more serious attempts to adjust the once distant and low-key image of cross-border sellers and get closer to consumers in different regions. In May, SHEIN launched its Europe, Middle East and Africa (EMEA) headquarters in the heart of Dublin, Ireland, as the operations center and IT hub for the region. In Turkey, Brazil and other countries with a certain base for manufacturing clothing and small commodities, hundreds of local factories have started to produce SHEIN brand products.

SHEIN plans to open about 30 pop-up stores in EMEA in 2023. Pop-up stores in Paris, Madrid, and Barcelona are now opening. At the same time, there are pop-up stores in Japan, North America, and Latin America.

In 2011, Xu Yangtian, the founder of SHEIN, made the most important decision since he started his business. He stopped more than a dozen cross-border independent e-commerce websites of different categories, devoted himself to fast fashion women’s clothing, and made up his mind to establish his own supply in Guangdong in 2014. chain.

Ten years later, SHEIN has grown into a fast fashion unicorn valued at US$66 billion following the trend of e-commerce and globalization. In the new environment, it faces many choices again. From capital, brand, traffic distribution, to business scope and supply chain distribution, SHEIN is trying new possibilities. These attempts will ultimately determine whether SHEIN can go any further.

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