Our planet is changing. So is our journalism. This story is part of a CBC News initiative entitled “Our Changing Planet” to show and explain the effects of climate change. Keep up with the latest news on our Climate and Environment page.
If you haven’t come across Shein by now, it’s probably because you were never meant to.
The Chinese fashion site has grown exponentially in recent years with a hyper-targeted social media strategy that’s captured the attention — and wallets — of gen-Z and millennial shoppers.
For younger consumers with a desire to be fashionable and often less disposable income, Shein feels almost irresistible.
“I don’t think there are many players in the world that target younger consumers like Shein does,” said Charles de Brabant, the executive director of the Bensadoun School of Retail Management at McGill University in Montreal.
Toronto resident Jai Elanko says she shops at Shein when she’s looking for an affordable basic or a one-time wear for an occasion.
“I’m like, ‘okay, I’m going to wear it one or two times or a few times, but I don’t really care too much about the quality itself,'” said Elanko.
And although the material isn’t on-par with other brands, the 27-year-old says the price makes up for it.
Shein is now said to be valued at a whopping $100 billion, overtaking large players in the industry like Zara and H&M as it proves itself to be a leader in e-commerce. However, the company has faced criticism over sustainability concerns from, among other practices, the staggering pace of production.
While Zara has some 600 products labelled “new” on their site, Shein pumps out upwards of 6,000 new products in a day at significantly lower price points than its competitors.
A CBC Marketplace investigation last fall also found Shein was one of several online retailers selling products with elevated levels of toxic chemicals, which were then removed from its site.
Despite much attention over the years to the unsustainable practices of the fashion industry — and a youth demographic who claims to care about the environment — the site’s rise is evidence that fast fashion is getting even faster.
According to the United Nations Environment Programme, it’s estimated that every second, the equivalent of one garbage truck of textiles is landfilled or burned. (Martin Bernetti/AFP/Getty Images)
A native online player
Shein was founded in 2012 by current CEO Chris Xu as a business-to-consumer retailer that acquires products from manufacturers domestically and sells them globally.
According to their U.S. site, their “digitally empowered agile supply chain” enables them to arrange small-batch orders from manufacturers that can be delivered quickly to consumers, to see what’s hot.
Shein’s ability to execute small production batches and test them out with customers exceeds the capabilities of other retailers, says Montreal-based McKinsey senior partner Sandrine Devillard.
“Because you have all the advanced analytics, you’re able to read the customer and identify that this is going to be a smashing hit or this is going to be a flop, and then you’re able to replenish in less than three weeks,” said Devillard.
“You are on the amazing winning formula, and that’s what they’re doing.”
Unlike other retailers that have had to adapt to the rise of e-commerce, de Brabant says Shein’s operations have been designed with a digital-first approach.
“The huge advantages there are you could pretty much sell anywhere, or which is what Shein has done incredibly effectively,” said de Brabant.
And while the absence of physical stores does come with disadvantages, Shein eliminates some of the hesitancy associated with online shopping by offering customers free returns and free shipping on orders over $49 Cdn.
But what stands out to experts who have been watching Shein’s rise is its site algorithms that serve virtual window shoppers exactly what they want to see. According to McKinsey, Shein uses “behavioural economics and gaming principles” that gets customers to spend an average of 8.5 minutes on the website, longer than every other U.S. fashion site.
WATCH | Brazillian musician Anitta collaborates with Shein on collection: [embedded content]
Shein has also excelled at its ability to direct customers onto its site. The retailer has cultivated a strong social media presence through influencers that promote their products predominantly on Instagram and TikTok, reaching the next generation of consumers.
“We believe that this is the primary driver of their growth,” said Devillard. “They are able to use their clout to reduce investment.”
Shein partners with all levels of influencers, from celebrities like Brazilian singer Anitta to micro-influencers with follower counts in the thousands. Some have even replicated the same outfits using products from Shein and traditional competitors to contrast the price and products.
“All of them reinforce [Shein’s] credibility in fashion,” said Devillard.
Affordable, trendy and unsustainable
Shein’s success with young consumers is at odds with their expressed values about the environment and sustainability.
The clothing and textile industry is responsible for two to eight per cent of global greenhouse gas emissions, according to the United Nations Alliance for Sustainable Fashion. That’s in addition to the industry’s significant use of water for production and the environmental impact of products ending up in landfills.
According to an Ipsos poll from last fall, young Canadians listed threats against the environment and climate change as a top-five concern. A sample of 501 Canadians aged 18 to 29 were surveyed from September 3 to 6, 2021. For comparison purposes only, a probability sample of the same size would yield a margin of error of +/- 5 percentage points, 19 times out of 20.
Shelley Haines, a lecturer at Toronto Metropolitan University’s fashion school, published a study last year on the discrepancy between consumers’ attitudes toward sustainability and their actions.
“I found that [the participants’] wardrobe did not express the same level of sustainable interest that they were expressing in terms of their interest and their values,” said Haines.
Some of the barriers to sustainable behaviour the researcher found related to price, style, and a lack of knowledge on how to care for and repair garments.
“I had one participant tell me that they purchased the same skirt twice in a very short period of time, simply because the zipper on the first skirt that they had had broken,” said Haines.
Elanko says price is really what’s driving young people to turn to fast fashion, despite knowing its impact on the environment. Those with less financial means shouldn’t be made to choose between style and sustainability, she added.
“I really think it’s because they really can’t afford anything else,” said Elanko.
Consumers do have more options today to shop consciously with independent sustainable brands offering alternatives to fast fashion. However their prices are often much higher than large retailers for a range of reasons, including cost of materials and scale of production.
Haines says sustainable fashion is more accessible for those with privilege. For shoppers looking to balance their finances with their values, Haines recommends allocating some of your fashion budget to buying fewer but more sustainable items, wearing fast fashion items for longer, or exploring second-hand stores.
WATCH | Trying to ditch the fossil fuels behind fast fashion:
Disrupting the environmental impact of fast fashion
13 days ago
Duration 6:13
The clothing and textiles industry is responsible for an estimated 2-8% of all greenhouse gas emissions, but these Canadians are trying to disrupt the environmental impact of fast fashion. 6:13
The future of fashion sustainability
Major brands have been investing more in sustainable products and practices in recent years. Zara outlines on its website its timeline for a list of environmental targets, including reducing their supply chain water impact by 25 per cent by 2025. And recently, H&M announced its baby line was fully compostable.
Shein has also dedicated a page on its website where they list some ways its operations incorporate sustainability, including the use solar-powered vehicles for transporting products and testing out small batches before mass-producing an item.
Shein’s success is likely capturing the attention of competitors and raising concerns about the future of the industry. Devillard predicts Shein will continue to grow and their success will push other retailers to “up their game.”
But de Brabant is tepid about whether their growth can be sustained, especially given the razor thin margins.
“I’m always a little bit wary about exponential growth rates like that,” he said.
For traditional players in the industry, de Brabant doesn’t recommend trying to compete on price with Shein and instead says they should focus on their business models that bring stable but good growth.
Shein’s success might leave the impression that it’s found a way to evade any consequences for its role in accelerating fast fashion. However, both de Brabant and Devillard believe the company will eventually face a reckoning with consumers over environmental, social, and governance concerns.
“At [some] point, the behaviour is going to follow the mindset,” said Devillard.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
