Shein's aggressive US offensive threatens local retail giants' market share

It is learned that on June 26, CNBC disclosed a research report sent by UBS to investors, showing that Shein's market share in the United States is constantly climbing and is impacting the market share of local retailers. Analysts even regard Shein's growth as an indicator to lower the stock ratings of other retailers.

Shein was the second most downloaded shopping app in the U.S. in the past month, behind Temujin, according to UBS. Shein ranked first in downloads in four of the other 10 countries tracked. Shein is also the most searched retailer in the U.S., with searches up 29% in May, a two-year annual growth rate.

According to the Wall Street Journal, Shein's latest round of financing raised its valuation to $66 billion, and it plans to increase its revenue by 40% this year from last year's $23 billion. Last year, Shein's net profit was $800 million. Although Shein has not yet confirmed its plan to go public in the United States, it still has an impact on the US retail giants that have already gone public.

Shein has gained a foothold in the United States. What are its advantages?

The report pointed out that Shein's popularity in the United States is rising not only because its products are priced lower than its competitors, but also because it has built a brand community through social media marketing activities, with high customer engagement. According to statistics, Shein is the clothing brand with the most fans on TikTok; on Instagram, Shein is the third clothing brand with the most fans, and became the clothing brand with the most likes in May.

Shein has seen strong growth among female consumers in the U.S. Only 0.6% of the approximately 4,000 women surveyed in June 2020 said they bought most of their women's clothing at Shein, according to UBS data. That share rose to 2.5% by June 2022 and hit a new high of 4% this month.

Although Shein is often seen as more popular among young people, the report shows that Shein's most loyal customers are female consumers around 35 years old. These customers spend $100 per month on women's clothing at Shein, which is 60% higher than the average female consumer.

Meeting consumers' need to pursue trends is another important factor driving Shein's growth. At Shein, 44% of consumers believe that new trends and styles are important to them, compared to only 22% of adult consumers in the United States.

Shein consumers are also more brand-conscious than the average American consumer. Data shows that nearly 25% of Shein consumers do not pay much attention to promotions, which is much higher than the average. This may indicate that in addition to price, factors such as product mix, marketing and supply chain also affect consumer sentiment.

Furthermore, Shein’s customer base tends to be younger and have slightly lower incomes than the average American adult consumer, and for them, the brand’s values ​​are relatively unimportant.

The UBS survey of 8,000 shoppers found that the top three reasons women choose to shop for apparel are price, selection and quality. In contrast, "environmentally responsible companies," "socially responsible companies" and "ethical business practices" ranked 29th, 30th and 32nd, respectively.

Shein impacts US retail industry, which giants are most affected?

The UBS report reportedly noted that Shein's growth in the United States could affect sales at other retailers and revealed the retailers with the highest audience overlap with Shein.

Among typical clothing retailers, people who shopped at Shein were most likely to have also shopped at TJMaxx in the past three months. Three in 10 consumers who used Shein said they also visited TJMaxx, which is known for its discount prices, the study showed.

There are several other publicly traded retailers that have an overlap of between 20% and 30% with Shein, including Victoria's Secret, Macy's, Gap's Old Navy, Kohl's, Ross, American Eagle, H&M and Goodwill.

Among retailers other than apparel, Shein also has high overlap with Amazon, Walmart and Target. Meanwhile, the retailers with the lowest overlap with Shein include Express and Rack, at just 10%. Gap's namesake brand and Banana Republic follow closely behind, with 11% overlap each.

Editor✎ Ashley/

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