Is the fashion industry racing towards unsustainable practices or can it find a responsible path?

  • Shein is set to become the UK’s sixth-largest apparel retailer by 2027.
  • The company has received FCA approval for its IPO but faces scrutiny over labor practices.
  • Sustainability and ethical concerns are increasingly influencing consumer purchasing decisions.
  • Traditional retailers struggle to compete with Shein’s speed and pricing.
  • Regulatory scrutiny is essential for ensuring fair practices in the fashion industry.

Shein has rapidly transformed from a small player in the ultra-fast fashion sector to a global powerhouse, known for its incredibly low prices, swift supply chain, and strong social media presence. According to GlobalData, Shein is projected to become the sixth-largest apparel retailer in the UK by 2027. Recently, the company secured approval from the UK’s Financial Conduct Authority (FCA) for its initial public offering (IPO), although it still awaits clearance from Chinese regulators. As Shein continues to grow, it raises an important question: Are other fashion retailers mimicking Shein’s unsustainable pricing model, or can they find a balance between affordability and responsibility in a market that is increasingly scrutinizing both? With a £50bn IPO on the horizon, Shein’s controversial practices, particularly regarding supply chain transparency and labor standards, could significantly impact its perceived value among investors. The company has faced challenges from campaigners seeking to block its listing due to allegations of benefiting from forced labor, claiming its profits could be ‘proceeds of crime.’ Additionally, recent changes to US tariffs could disrupt its business model, potentially leading to higher import duties on shipments to the US, which may affect sales and growth plans. Despite these challenges, industry experts like Jack Stratten from Insider Trends believe Shein’s valuation may remain stable. He notes that while sustainability and ethics are becoming more important to investors, the UK financial sector is eager for a high-profile IPO, which might overshadow concerns about Shein’s ethical practices. Stratten also points out that many consumers are either unaware of Shein’s unethical practices or indifferent to them, suggesting that consumer sentiment may not change significantly in the near future. Sarah Johnson, founder of Flourish Retail, emphasizes that governance is crucial for Shein’s future growth. The company’s lack of transparency regarding supply chain practices and labor standards poses a significant risk to its long-term prospects, potentially affecting profitability. Brands like Boohoo and PrettyLittleThing have already experienced declining valuations due to changing consumer perceptions. Johnson warns that if ethical and sustainable consumption continues to gain traction, Shein could face similar challenges. Shein’s success is attributed to its speed, data-driven design, and small-batch production, allowing it to quickly respond to trends. However, this ultra-fast model raises environmental concerns, such as overproduction and overconsumption, alongside allegations of poor working conditions and child labor. As Shein approaches its London IPO, its controversial supply chain practices remain under scrutiny. Johnson believes that Shein’s long-term success depends on its ability to address supply chain transparency, environmental impact, and worker treatment. However, she notes that consumer priorities have not yet necessitated this shift. Rhea Fox, former digital director at Ted Baker, highlights the challenges facing low-priced fast fashion, primarily due to Shein’s ability to produce designs at a speed and scale that traditional retailers struggle to match. Established fashion retailers with slower production cycles find it difficult to keep pace with Shein. Despite Shein’s dominance in speed and pricing, sustainability concerns are increasingly influencing consumer choices. Fox points out that while Zara’s small-batch model reduces waste, it cannot match Shein’s speed without compromising quality and ethics. She suggests that Gen Z’s awareness of ethical issues may not significantly impact their purchasing decisions. Shein surpassed Boohoo in the UK last year, with sales rising 38% to £1.55bn, compared to Boohoo’s £1.09bn. Shein’s pre-tax profits in the UK doubled from £12.2m to £24.4m in 2024. Fox notes that platforms like Vinted are also gaining market share, with a 61% sales surge last year, indicating a rising demand for sustainable fashion alternatives. For traditional brands to remain competitive, Fox recommends focusing on brand-building, customer loyalty, and offering premium, sustainable items to differentiate from Shein’s hyper-fast trends. Stratten adds that Shein serves as an excuse for other fast-fashion brands that fail to innovate. He argues that the market is saturated, and brands like Boohoo and Asos do not stand out, leading to a lackluster shopping experience. Shein’s growth strategy has been based on gaining market share at any cost, often prioritizing volume over profit. Stratten believes that Shein’s success is linked to its ability to engage Gen Z through social media and influencer partnerships, emphasizing the importance of authenticity in marketing. Fox agrees, noting that traditional brands struggle to resonate with Gen Z shoppers as Shein’s influencer-driven campaigns create a sense of authenticity that legacy retailers cannot match. As Shein’s dominance grows, traditional retailers face the challenge of competing with its ultra-fast, low-cost model. The question remains: can they balance sustainability with speed and affordability, or should they rethink their approach entirely? Shein’s use of small-scale suppliers allows it to quickly scale production, a key factor in its success. For traditional retailers, improving supply chain agility without compromising ethical standards or quality is a significant hurdle. Johnson suggests that fashion brands should consider bringing production closer to home to speed up time to market and reduce overproduction. However, she also highlights the need for a critical shift in the industry, moving away from focusing on intake margins to exit margins, which reflect profitability after discounting. This shift could help traditional retailers improve sustainability efforts but raises the question of whether they should even attempt to compete with Shein on price and speed. Fox believes there is room for differentiation in sustainability and ethics, citing brands like Primark that are adopting more sustainable practices. However, she acknowledges the difficulty in attracting sustainability-focused shoppers when competing with Shein’s low prices. Competing on sustainability while maintaining price and speed is a challenging balancing act, and Fox believes many fast-fashion brands may struggle to succeed in this area. Stratten agrees, stating that traditional fast-fashion brands cannot compete with Shein’s speed and pricing if they prioritize sustainability. He suggests that the only way for legacy fast-fashion brands to compete while attempting sustainability is to premiumize their offerings and leverage their unique assets, such as physical stores. Johnson believes regulators should hold Shein to the same standards as UK-based brands, ensuring compliance with minimum wage laws and fair working conditions. She emphasizes that accountability must start at the regulatory level to create a level playing field in the industry. As Shein’s dominance continues to reshape the fast fashion landscape, its growth presents significant challenges for traditional retailers, regulators, and consumers alike. While its low prices and speed have set a new benchmark, the long-term sustainability of its model remains in question. With Shein’s £50bn IPO approaching, its pricing strategy and production scale could define not only the company’s future but also the broader fashion industry, raising the question of whether the sector is locked in a race to the bottom or if a shift toward more sustainable, ethical practices is achievable.·

Factuality Level: 7
Factuality Justification: The article provides a comprehensive overview of Shein’s business model, its impact on the fashion industry, and the ethical concerns surrounding it. However, it includes some opinions and predictions that may not be universally accepted, which affects its objectivity. While it presents relevant information, there are instances of redundancy and a slight bias towards the challenges faced by traditional retailers compared to Shein.·
Noise Level: 8
Noise Justification: The article provides a comprehensive analysis of Shein’s impact on the fashion industry, discussing sustainability, ethical practices, and market dynamics. It holds powerful entities accountable and explores the consequences of Shein’s business model. The article is well-supported by data and expert opinions, maintaining focus on the topic without irrelevant information. However, it could benefit from more actionable insights for traditional retailers.·
Financial Relevance: Yes
Financial Markets Impacted: Yes
Financial Rating Justification: The article discusses Shein’s rise as a major player in the fashion industry, its upcoming IPO, and the implications of its pricing model on the market. Financial topics include Shein’s valuation, potential impacts of regulatory scrutiny, and the effect of US tariffs on its business model. The article also highlights how Shein’s practices could influence investor sentiment and the competitive landscape for other fashion retailers, indicating a significant impact on financial markets.·
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: The article discusses the business practices and market position of Shein, a fashion retailer, but does not report on any extreme event that occurred in the last 48 hours.·

Reported publicly: www.retailgazette.co.uk