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Dive Brief:
- Shein has inked a deal with Forever 21’s operator that would allow the fast fashion rivals to distribute each other’s products through both companies’ digital and retail channels, according to a news release Thursday.
- Under the deal, Shein will hold a one-third interest in Sparc Group, a joint venture between Forever 21 parent companies Authentic Brands Group and Simon Property Group, and Sparc will become a minority shareholder in Shein.
- The partnership allows for increased distribution of Forever 21 to Shein’s customer base, per the companies, and gives Shein the opportunity to test its brand experiences in Forever 21 stores across the United States, including shop-in-shops and return-to-store initiatives.
Dive Insight:
Financial details for the transaction weren’t disclosed. A spokesperson for Shein declined to provide further detail beyond the release.
The two companies hope the partnership will “utilize their complementary platforms and expertise to accelerate product innovation, explore new business strategies, enhance customer experiences, and grow their presence in the marketplace,” per the release.
“SHEIN is thrilled to have SPARC Group as a partner and minority shareholder and we look forward to finding new ways to delight our customers through the potential of this partnership,” Donald Tang, Shein’s executive chairman, said in the release. “The powerful combination of Simon’s leadership in physical retail, Authentic’s brand development expertise, and SHEIN’s on-demand model will help us drive scalable growth and together make fashion more accessible to all.”
Sparc — which is an acronym for Simon Properties Authentic Retail Concepts — also operates Aeropostale, Brooks Brothers and Eddie Bauer, among others. Authentic has been on a recent deal making streak, having added Rockport, Hunter Boots and Vince to its portfolio.
“We are excited for the partnership with SHEIN as it reflects our shared vision of providing customers with unparalleled access to fashion at affordable prices,” Marc Miller, CEO of Sparc, said in the release. “By working together, we will provide even more innovative and trendsetting products to fashion enthusiasts around the world.”
The partnership with a rival marks a significant shift for Shein, which faced legal challenges with other fast fashion competitors, including retailer H&M and e-commerce company Temu.
The partnership between Shein and Forever 21 is a benefit for both companies, said Neil Saunders, managing director of GlobalData.
“While Forever 21 isn’t premium, it is a credible brand that adds more fashion heft to Shein’s offer and may help attract some new consumers,” Saunders said in emailed comments. “Shein will also hope that the addition of a well-known American name will help to lessen focus on its manufacturing practices, which have come under scrutiny.”
Shein is under investigation by United States lawmakers over its labor practices along with Temu, Nike and Adidas. The Securities and Exchange Commission has also been asked to halt a potential IPO from Shein until it proves it does not use forced labor in its supply chain.
Forever 21, meanwhile, is struggling in the fast fashion sector — it fared the worst among Sparc’s brands in 2022 — and selling products through Shein could help it supercharge growth, Saunders said. The danger for Forever 21 would be if it became too reliant on Shein.
“However, as Shein has taken a stake in the parent of Forever 21, the eventual [game plan] might be for the eventual takeover of the brand,” Saunders said.
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