Shein and Forever 21 Team Up in Fast-Fashion agreement

August 28, 2023: Fast-fashion competitors Shein and Forever 21 have joined forces.

On Thursday, the retailers reported a contract to make two brands with a strong following of young shoppers and a reputation for trendy garments and accessories at a lesser price.

As part of the collaborative venture, Shein will acquire about a third of Forever 21’s operator, Sparc Group. Sparc will even take a minority stake in Shein.

Shein’s deal with Forever 21 comes as it tries to distance itself from sharp criticism and gear up for a widely rumored U.S. initial public offering. Among the backlash, the online retailer has faced allegations of violating U.S. import tariff law, filling landfills with its super cheap items, and relying on underpaid or forced labor. Those charges have prompted scrutiny by lawmakers and blowback on social media.

The company has also tried to distance itself from China, where it was founded. Its headquarters are now in Singapore. The ties with China have become a risk for the company. U.S. regulators and lawmakers scrutinize companies with close connections or offices in China, such as social media app TikTok.

While Shein and Forever 21 have similar shoppers, they have catered to those customers differently. Shein sells its merchandise online. U.S.-based Forever 21 is mainly known for its mall stores.

Shein and Forever 21 will have new ways to reach customers by teaming up. Some of Forever 21’s apparels, shoes, and other merchandise will be available through Shein. The online retailer has 150 million users, Shein said.

For Shein, the deal will give the company a more significant presence in U.S. malls, where its current and potential new customers shop. According to a news release, the company plans to test new approaches, such as shop-in-shops and allowing customers to make returns in stores.

Shein has already dipped its toe into brick-and-mortar retail. The company has had limited-time pop-up shops in cities like Dallas and Los Angeles, attracting eager customers and long lines.

Sparc, the company taking a stake in Shein, is a joint venture that includes Authentic Brands Group, a brand management company with a portfolio of well-known retail names like Brooks Brothers, Lucky Brand, Nine West, and Simon Property Group, the most prominent shopping mall owner in the country.