Shein Could Gain A Major Market Share In The Clothing Industry
Shein Could Gain A Major Market Share In The Clothing Industry
Updated on July 07, 2023 16:32 PM by Andrew Koschiev
According to UBS, Shein, the fast-fashion e-commerce juggernaut, is poised to continue taking market share in the United States. That is motivation to remain negative on attire stocks, composed investigator Jay Sole on Monday.
About 4,000 women are surveyed monthly by UBS about their shopping preferences. Only quite a while back, just 0.6% of review respondents said Shein was their go-to retailer for ladies' garments. Sole wrote that by June, that number had reached a new high of 4%.
Online stores are getting bigger
This suggests that the business is still gaining traction with customers and that, although other online retailers are expanding at a slower rate, the reopening of the U.S. economy following the pandemic has kept its expansion strong.
In a note to clients, Sole stated, "We believe SHEIN's momentum to continue, and the company could take major market share from US Softlines companies." Another reason we have a bearish outlook on Softlines stocks is the rise of SHEIN over the past four years.
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Selling products online at lower prices
The company Shein, pronounced "shee-in," was established in China and later relocated its headquarters to Singapore. The privately held company has become a favorite among Gen-Z women over the past few years. These women flock to its website and app, searching for trendy clothes that typically cost less than $10.
"The discernment among certain financial backers is SHEIN's ascent was just about offering merchandise online at lower costs than others were doing," Sole composed. " That wasn't all of the story, " our expert call explained.
Price was significant
He said that while the price was important to many Shein customers, they also valued having the latest styles and trends, quality, and product options. Sole wrote that the way the company has established a one-on-one connection with customers through in-person marketing events and a flourishing social media presence is an underappreciated aspect of Shein's rise.
Shein has more TikTok followers than any other apparel retail brand, the third most Instagram followers, and the most Instagram "likes" in May compared to peers, according to UBS data. According to a UBS analysis of Google data, Shein was also the most searched-for apparel retailer in the United States, with searches for the name increasing 29% from a year earlier in May.
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Shein was generally represented
As of late, Barron's contended that despite its developing fame among U.S. customers, few retailers or financial backers genuinely considered Shein a danger and that disregarding the organization's development could be an outrageous misstep. As per Bloomberg Second Measure, an information investigation firm, Shein generally represented 50% of U.S. quick-style deals as of November 2022.
Shein customers have a significant amount of brand loyalty. UBS found that, even though the typical Shein customer is younger and earns slightly less than the typical U.S. shopper, they spend approximately 60% more monthly on clothing than the average U.S. female consumer. The average Shein shopper made $66,200, while the average shopper made $65,300.
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The habit of shopping online has grown
Sole believes that as online shopping becomes more ingrained in consumer habits and technology like generative AI improves, many Shein customers will purchase clothes at other brands and in physical stores. "We believe this would be bad for many of SHEIN's competitors, including Off-Price retailers as well as Department Stores and Specialty Retailers," Sole stated.
Others in the field agree. GlobalData's managing director and retail analyst Neil Saunders told Barron that Shein's appeal among middle-class teenagers and young adults could put the company in competition with legacy apparel retailers in the middle of the market.
Privately owned company
Only 32% of the soft lines stocks that UBS covers are rated as Buy, indicating that the bank is mostly bearish on the apparel industry. Forty-five percent have a rating of "Neutral," while 22 percent have a rating of "Sell." Shein is not rated because it is a privately held business.
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