There’s a buzz in the air as young people line up for Shein’s Montreal retail pop-up.
“It’s cheaper,” said Diana Quentero, who lined up to shop. “I can find everything … If I want something for a special occasion, I go Shein.”
Global fast-fashion giant Shein is expanding, launching an online marketplace similar to Amazon. (Illustration by Andrew Nguyen)
The line on Thursday was hundreds of people long and snaked around the corner of an outdoor mall. Online fast-fashion giant Shein, founded in 2008, doesn’t have any brick and mortar stores other than a few in Asia. So a pop-up is novel for shoppers.
Shein, a Chinese company based in Singapore, has seen its popularity explode on social media for its $3 tops, $5 dresses and nearly endless webpages of styles. According to Business Insider, Shein has more than 74.7 million active shoppers, and in 2022, the company was worth $100 billion US.
Now, the company is expanding from selling its own branded apparel to become a global online marketplace to compete with some of the biggest online e-commerce brands. Its online marketplace will see third-party vendors sell everything from housewares to appliances, directly to the consumer, similar to Amazon.
It’s one of many companies moving into the marketplace business. This week, The Wall Street Journal reported that TikTok is also building an Amazon-like marketplace. And Temu, a Chinese owned e-commerce platform, launched in the U.S. in 2022 and in Canada this February.
WATCH | Shoppers line up for a Shein pop-up:
Montrealers line up for Shein retail pop-up
1 day ago
Duration 0:55
People lined up Thursday for a retail pop-up hosted by Shein in Montreal. The company’s popularity has exploded among young shoppers on social media for its $3 tops and $5 dresses.
But some say Shein needs to clean up its act first. The company has faced tough scrutiny over its environmental impact and its human rights track record, and an expansion could make things worse, say experts.
“The fashion industry is already complex enough. There are already enough problems for Shein to solve to improve,” said Sheng Lu, an expert in the global textile and apparel industry at the University of Delaware.
In its May press release, Shein said it’s expanding to meet consumer demand. Shein did not respond to CBC News’ request for an interview.
“Shein is committed to delivering the best shopping experience for customers,” Sky Xu, Chief Executive Officer, said in the release.
Shein has more than 74.7 million active shoppers, and in 2022, the company was worth $100 billion. (Yuichi Yamazaki/AFP/Getty Images)
A rival to Amazon?
Shein became the largest fast-fashion retailer in the U.S. in 2021, according to Ernest Analytics. And now, with its sights set on expanding, some experts say that looks to be just the beginning.
“I don’t think there’s any reason why another company couldn’t rival what Amazon is doing … It seems like Shein is trying to do that,” said Elizabeth Cline, a New York-based author and journalist who covers fast fashion and sustainability.
It’s already launched its online marketplace in Mexico, Brazil and the U.S., and plans to roll out in Europe later this year. There is no word yet on when the marketplace could roll out in Canada.
Shein’s ability to deliver on dirt-cheap prices will make a stiff competitor in the e-commerce space, said Cline.
“Amazon is known for speed and low price, but you can always go lower,” she said.
Shein’s already-established popularity could help propel its new marketplace, said Dave Xie, expert at Oliver Wyman consultancy focusing on China’s retail sector. Shein already has brand recognition, he said, and can charge merchants commission.
“It’s kind of easy money for the platforms to make, but only under the condition that as a platform you have a very big traffic base,” said Xie. “So basically I think that’s the strategy of lots of platforms, for example, Amazon.com.”
And it can lean on its ability to detect trends in the retail sector, allowing it to understand what will sell well, and what won’t, he added. He says the company has the ability to scrape data from social media and other websites to detect new trends.
“New design, new colour, new theme, even new fabrics are available and then designers from Shein will combine those design elements …to produce the newest product.”
Shein’s online marketplace will see third-party vendors sell everything from homewares to appliances. (Richard A. Brooks/AFP/Getty Images )
Pressure on supply chain
Xie says Shein is able to keep up with demand by using a “small order, quick response” model, which allows it to have a tight command of its supply chain, only mass producing the highest-selling items on its site.
“They’re just ordering very small batches of clothing and then if there’s demand for the product, they’ll scale it up,” Cline said.
But Cline says Shein’s business model creates pressure on its supply chain to make clothes for cheap, which ultimately causes factories to cut corners on environmental and human rights standards.
In 2021, Shein emitted about 6.3 million tons of carbon dioxide equivalents, according to The Business of Fashion. And a recent U.S. Congressional report raised concerns that the company had links to forced labour in its supply chain.
Last September, Shein committed to reducing its supply chain emissions by 25 per cent by 2030. In comparison, Zara recently announced its plans to cut emissions along its value chain by 50 per cent in 2030 and to achieve net zero by 2040.
WATCH | Shein PR campaign goes wrong:
Influencers on blast: how a Shein factory trip backfired | About That
1 month ago
Duration 6:18
A group of influencers has come under fire after attending a brand trip with Shein, one of the world’s largest fast-fashion makers, which has been accused of labour law violations and an outsized environmental footprint. Andrew Chang explains how this PR campaign went so wrong.
Cline questions how Shein’s newly announced sustainability plan will play into its new marketplace, and how far down the supply chain its sustainability initiatives will really go.
“There are concerns around how Shein creates this kind of culture which encourages consumers to keep purchasing cheap clothing and dump them,” Lu said.
Lu says amid all the scrutiny, Shein should take the opportunity to revisit its business model.
Ultimately, Cline says Shein presents a lot of different tensions.
“People are kind of grappling with that,” said Cline. “What does that mean that we live in this age of sustainable awareness and we’ve also somehow fed and created the world’s biggest, fastest, cheapest fast fashion company.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
