Fast-fashion rivals Shein and Forever 21 have announced a partnership, merging two brands known for their popularity among young shoppers and their offerings of trendy, affordable clothing and accessories.
As part of this joint venture, Shein will acquire roughly one-third of Sparc Group, the operator of Forever 21. In turn, Sparc will obtain a minority stake in Shein. The financial specifics of the agreement have not been disclosed.
This partnership comes at a time when Shein is striving to mitigate intense criticism and prepare for a much-anticipated U.S. initial public offering.
The online retailer has faced allegations of violating U.S. import tariff laws, contributing to environmental waste with its inexpensive products, and relying on underpaid or forced labor.
These accusations have led to scrutiny from lawmakers and backlash on social media, though Shein has denied the allegations.
In an effort to distance itself from its origins in China, Shein, which was founded there, has now established its headquarters in Singapore.
The company’s ties to China have posed risks, particularly as U.S. regulators and lawmakers increasingly scrutinize businesses with connections to or headquarters in China, such as the social media app TikTok.
While Shein and Forever 21 attract similar demographics, they have traditionally reached their customers through different channels.
Shein operates exclusively online, whereas U.S.-based Forever 21 is known for its physical mall stores.
By joining forces, Shein and Forever 21 aim to expand their customer reach. Forever 21 will begin offering some of its dresses, shoes, and other products on Shein’s platform, which boasts 150 million users.
For Shein, this deal provides an opportunity to establish a more significant presence in U.S. malls, attracting both existing and potential customers.
The company plans to experiment with new strategies, including shop-in-shops and in-store return options, according to a news release.
Shein has already explored brick-and-mortar retail through limited-time pop-up shops in cities like Dallas and Los Angeles, which have attracted eager crowds and long lines.
Sparc, which will acquire 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, and Nine West, and Simon Property Group, the largest shopping mall owner in the U.S.
