Shein’s meteoric rise to becoming one of the biggest online fast fashion retailers is clouded by serious concerns over ethical practices, and raises the question of which are more important to consumers.
Criticism levelled at the Chinese group has included the poor wages and working conditions at its factories, as well as that the company just send most customer returns to landfill as it is cheaper than properly processing them.
An undercover investigation by Channel 4 shed light on the issue and comes as a study by Simon-Kucher & Partners found that 90% of global consumers seek out more sustainable options, while 75% of UK adults said they changed their purchasing habits to be more sustainable.
Yet a week after the documentary aired, Shein reported its busiest day for website visits since the summer, with 616,000 visitors.
While sustainability in the fashion sector has become a big topic in recent years, with many of the big retailers, such as Zara and H&M, implementing ways to reduce their carbon footprint, Shein seems to have pivoted the other way and concentrated on maximising its margins while also trying to keep prices as low as possible.
This can lead to ethical issues, as highlighted that the Channel 4 documentary ‘Untold: Inside the Shein Machine’, which showed factory workers on 18-hour shifts for seven days a week, with employees being paid the equivalent of 3p per item produced.
Staff were allowed only one day off per month, the documentary revealed, and any mistakes in production were hit with a heavy fine of £12, which was a quarter of an average worker's salary.
Shein, which was founded by American-born entrepreneur Chris Xu and is based in China but focused exclusively overseas, was valued at £76.5bn after an investment round earlier this year and amid reports over the past three years that an IPO is in the works.
Having overtaken Amazon as the most downloaded shopping app in the US last year, its rise suggests that low clothing prices are more important to consumers than what they may say in surveys on sustainability and ethical practices.
“Many shoppers do not care about ESG, its all price, price, price,” said Clive Black, a retail analyst at Shore Capital.
Price-focused customers allow labels like Shein to make headway, Black added, and alongside concerns over plagiarism, Shein’s model comes across as “rather unsavoury.”
“We have seen in the past already with Boohoo, when news about poor pay and working conditions their suppliers’ factories came out in July 2020, that there was no real impact on sales growth,” said Anubhav Malhotra, a consumer analyst at Liberum.
“In fact, sales grew strongly for almost 18 months from that point on.”
“Consumer surveys often suggest they care, but in terms of actual buying patterns, we have not seen this in action.”