Fast fashion retail giants, Shein and Forever 21 have joined forces in a strategic partnership that is set to expand both companies' reach. The deal, which was announced today, will see Shein acquiring about one-third of the shares of Sparc Group, the parent company of Forever 21. Sparc Group, a joint venture between Authentic Brands Group and Simon Property Group, has owned Forever 21 since the retailer emerged from bankruptcy in 2020.
The partnership is expected to be mutually beneficial for both parties. For Forever 21, which has been struggling in the fast-fashion world, this deal could provide a much-needed boost. The brand's merchandise will now be available on Shein's website and app, which boasts about 150 million online users. This digital exposure could potentially supercharge Forever 21's growth.
On the other hand, Shein, primarily an online company, will gain access to Forever 21's retail stores. This arrangement could allow Shein to test its brand experiences in physical retail locations across the United States, including potential shop-in-shops and return-to-store initiatives.
However, the partnership also comes with its share of controversies. Shein has faced numerous investigations into its labor practices, with allegations of workers enduring 75-hour shifts in unsafe conditions. In 2022, Shein's parent company, Zoetop, was fined $1.9 million by US authorities for its inadequate response to a data breach. Despite these challenges, Shein has managed to maintain its popularity, recording a whopping $22.7 billion in sales and $700 million in profits in 2022.
From a retail perspective, the partnership between Shein and Forever 21 is seen as a strategic move. Jeanel Alvarado, Founder & CEO of RETAILBOSS, notes that the collaboration "is fitting for both fast fashion companies. She suggests that the addition of a well-known American brand like Forever 21 could help Shein avoid more unwanted negative attention over their poor labour practices. It could also be a sign that Shein may be considering rebranding under the Forever 21 name if the Shein name continues to be tarnished.
