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When news broke that Chinese fast-fashion startup Shein was valued at $100 billion, we wondered what’s driving its success, when our research shows that consumers are seeking ways to shop more sustainably online.  So we asked our analysts how fast fashion, social media influencers and sustainability converge to create a company that now has more app downloads than Amazon.

 

Jocelyn Dong, Fashion and Luxury Analyst, Mintel Reports China (Shanghai)
The rise and growth of Shein come from the precise control of the market, aiming at the consumers’ mindset of seeking low prices and trendy fashion, especially Gen Zs overseas. Mintel Global Consumer data shows that 79% of consumers think that price is an important factor when shopping online. Shein’s high good money value is one of its essential competencies. The other one would be its early and successful attachment to social media.

Back in 2010, when social media and KOL (‘key opinion leader’) concepts were not fully in vogue, Shein established its strong consumer base overseas via social media. The company registered official accounts on Facebook, Instagram, YouTube and other overseas mainstream social platforms at the early stage of the brand’s establishment, and launched a large number of advertisements and campaigns to improve its exposure, which attracted many overseas consumers who were active in social media.

Meanwhile, Shein also gives free clothes and coupons to many fashion influencers in exchange for sharing their products on social accounts. Later, Shein launched the commission program to attract more consumers with commissions, which helped to not only attract more new consumers, but also retain existing consumers. Such a strategy increased the brand’s exposure and the number of followers on social media, forming a strong and deep moat.

Although Shein’s fast fashion model has brought low prices to consumers, it has also triggered a series of discussions on sustainability. Mintel data shows the rising trend of slow fashion with more than 60% of Chinese Gen Z in agreement. Shein is responding to this by announcing a new product line – evoluSHEIN – in 2022, which uses environmentally friendly materials in its products. We believe that in the short term, consumers are still unable to resist fashionable and low-priced products, which will continue to be the driving force for Shein’s growth. When the market gets more mature and consumers are more accepting of the sustainability trend, Shein’s early planning will put them ahead and ready for a new fashion era. 

 

Tamara Sender Ceron, Associate Director, Fashion and Retail, Mintel Reports UK (London)
Shein has succeeded in tapping into the rising popularity of online-only fashion retailers among young British women and it is now a key competitor in the world of young fast fashion in the UK. It has experienced a boom in usage among young Gen Z women aged 16-24 in the last 12 months, putting it at loggerheads with other key online-only players in the UK market among this demographic such as Asos and Boohoo.

Mintel’s latest brand research shows that like its competitors, Shein is seen as stylish due to its ability to keep up with the newest fashion trends, but unlike Asos it also benefits from being perceived as a brand that offers good value. Shein’s focus on smaller, low-priced items such as dresses and accessories allows it to keep the value of an average basket size lower than other fashion retailers that have a wider product offering that also includes more expensive outerwear garments. Amid the ongoing cost-of-living squeeze this puts it in good stead to draw new customers.

While young UK women are still avid fast-fashion buyers, they are beginning to place increasing importance on the quality of clothing alongside price. As awareness of sustainability when buying fashion grows, they also understand the benefits of purchasing pieces that are well-made and that will last longer, with the potential to be resold in the future to fund new purchases. In the UK, Shein is one of the fashion brands most closely associated with being unethical. As its core customer base of young Gen Z females prefer to be linked with companies that align with their values, and as the questions surrounding Shein’s ethical and environmental practices grow louder on social media, some of these consumers may feel under increasing pressure to distance themselves from this e-tailer, despite its low prices. 

 

Katie Hansen, Retail and eCommerce Analyst, Mintel Reports US (Chicago)
Shein has significant opportunity in the US market: 92% of US consumers have shopped for clothing for themselves online in the last 12 months. The pandemic pushed consumers to increase their ecommerce usage and while they are returning to shopping in-store, ecommerce remains a compelling channel for consumers. Purchasing clothing online makes it more convenient for consumers to shop and make informed decisions. For example, consumers can browse many different brands and retailers all from their home, utilize augmented reality to see how an item might look, and chat with associates to ask questions about items of interest, to name a few options. Furthermore, online retailers like Shein offer the opportunity for consumers to order items online, try them on at home, and make final purchases of items they want to keep, returning items they don’t want – a top factor for continuing to purchase online for a third of US consumers.

Shein’s social media and influencer strategy resonates with US shoppers. Consumers who shop for clothing online actively use social media during their path to purchase. As they browse social media, over a third of Americans say they save ideas for future purchases and a quarter look for ideas on how to use purchases and follow people they don’t know personally for style inspiration. Shein’s partnership with influencers helps US consumers see how different pieces can be styled and Shein’s own Instagram page provides shoppers with insight into new designers, helping consumers feel more personally connected to the brand.

Finally, with rising consumer prices, consumers are looking for low-cost brands that can help them keep up with new trends without breaking their budget. Consumers gravitate toward Shein and other online retailers as they incorporate online exclusives (eg items not sold in store) and buy-now-pay-later platforms to provide consumers with greater value as they shop. 

*Data from upcoming Mintel Report Online Apparel Retailing – US, 2022

 

Rebecca McGrath, Associate Director, Media and Technology, Mintel Reports UK (London)
Social media and influencers now have a significant impact on the fashion market, particularly on youth-orientated, cheaper fast-fashion retailers such as Shein. It has become very commonplace for influencers to post photos and videos of themselves trying on, and reviewing, a wide-variety of outfits from a retailer. The affordability and high volume of clothing and accessories available means influencers are inclined to frequently utilise a fast-fashion brand in their content, even when not being sponsored.

Such influencer content not only highlights what is available but adds a layer of legitimacy and trust to an online brand that a consumer may not have heard of yet, while the aspirational nature of influencers helps promote a retailer as trendy and desirable. This enables some brands, particularly those targeting younger audiences, to gain rapid success, as Shein has achieved. Furthermore, seeing an influencer experiment with ordering a wide-variety of cheaper clothes helps the perception among consumers that they too should be frequently adding to and changing their clothing, prioritising volume and variety over long-lasting quality, aiding the success of fast-fashion retailing. However, influencers do additionally have the ability to undermine a fast-fashion retailer, by highlighting any flaws in products and questioning the ethics of its operations.