The planned IPO of Shein, whose objective of listing in New York in the short term has emerged this week, coincides with a sweet moment for the fast fashion industry. The main fast fashion groups are recovering value and have increased sales and profits in recent months, driven by low-cost consumption that seems to have become entrenched, especially among young people. As much as all the studies point out that they are the most aware of the environment and causes such as those being discussed these days at COP28, the lack of economic resources conditions ecological principles. Several girls explained it clearly at the inauguration of the first Shein ephemeral store in Barcelona when asked about the impact of a model that encourages constant consumption at low prices and that is among the most polluting industries: “we are concerned about climate change "But we don't have a lot of money and we also like to look pretty."
On the strictly business side, the winds are blowing tailwinds for mass fashion. The parent company of Zara, Lefties and Bershka has been breaking record after record for several quarters and has reached maximums on the stock market, with a revaluation of 52% in the last year that has raised its capitalization above 118,000 million euros. In the first half of the year, Inditex sold clothing for around 17 billion euros, 13% more, and the consensus of analysts points to a new historical figure for revenues and profits for the third quarter of its year – it will report results on December 13. –.
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The markets have identified their renewed potential and are carrying them. “The stock markets are experiencing a general moment of rise but it is also assumed that these companies will continue to grow, since they no longer have the supply and inflation problems of recent times,” says Javier Molina, eToro analyst.
In the case of Shein, its valuation is based on estimates and the moment of truth will come when it hits the trading floor, presumably next year. Now, the phenomenon of this ultra-fast fashion company is not a flash in the pan, emphasizes José Luis Nueno, professor of business management at IESE. “It marks the beginning of a trend and depending on how it does on the stock market, it will have a calling effect for other actors, who will follow its model,” he adds. At the moment, Temu, also Chinese, has already emerged, an operator that copies Shein's strategy and has strongly entered the United States, where the popular republic of fashion has its main market.
Both Shein and Temu are banners of a movement of technology-based companies focused on textiles. The algorithm they use to identify trends and position products on social networks, especially TikTok, is at the center of their success. Its second differentiating element is found in a vertical integration of the fashion chain. Asian manufacturers from which all the world's brands are supplied have become distributors under the logic of "let's sell what we produce to the public ourselves", which further accelerates their commercial times and lowers costs. “If the large production centers in Pakistan, India and other parts of Asia imitate the Chinese Shein or Temu, an important paradigm shift could come in the industry,” says Nueno.
In addition to the power of social networks and the productive system, economic constraints work as an ally of the new ultra fast fashion. “Without a doubt, low-cost consumption is driving it,” comments the IESE professor, who already identified the phenomenon in his study Everything is terrible, but I am fine (the Spanish in the cost of living crisis), published by Aecoc. After analyzing a Fintonic and Intent HQ database with 250,000 consumers and 190 million purchasing acts between January 2022 and April 2023, it confirms the polarization of consumption in that period, with an increase in both brands and consumer goods. luxury as well as the cheapest stores. “But once the savings levels seen then drop, part of the population that bought in more expensive stores returns to lower-priced stores,” he says.
The decrease in the income of the new generations indicated in the Household Finances 2000-2022 report, published by the Afi Emilio Ontiveros Foundation this week, leaves the field fertile for the business of low-cost mass production. “If we look at the median total net wealth per household in the different countries by age of the head of the family, it is possible to verify how, as in Spain, the behavior of wealth per household has been comparatively better for households of advanced ages than for the youngest, except in the case of Italy,” he indicates. Despite the creation of jobs, the purchasing power of households decreases little by little and young people are poorer than their parents, the report concludes.
With this breeding ground, fast fashion advances unstoppably due to many environmental and responsible consumption campaigns that are launched by administrations and NGOs. The UN identifies the fashion industry as a whole as the second most polluting on the planet only behind fossil fuels, which has led the EU to promote ambitious legislation that has to be developed over the next year – see article attach-. In parallel, large groups such as Inditex or H
