The planned IPO for Shein, whose near-term goal of listing in New York was made public 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 taken hold especially among young people. As much as all the studies point to them as the most aware of the environment and causes such as those being discussed these days at COP28, the lack of financial resources conditions the ecological principles. Several girls explained it clearly at the opening of Shein's first ephemeral store in Barcelona when they were 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 climate change, but we don't have much money and we also like to look pretty."
In the strictly business sense, the tailwinds are blowing for mass fashion. The parent of Zara, Lefties or Bershka has been breaking record after record for several quarters and has reached highs on the stock market, with a 52% revaluation in the last year that has raised its capitalization above 118 billion euros In the first half of the year Inditex sold clothes for nearly 17,000 million euros, up 13%, and the consensus of analysts points to a new historical figure for revenues and profits for the third quarter of its financial year - it will give results on 13 december
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The markets have identified their renewed potential and are bringing them on a tray. "The stock markets are going through a general period of growth, but in addition, it is expected that these companies will continue to grow, since they now do not have the supply and inflation problems of recent times", points out Javier Molina, eToro analyst.
In the case of Shein, his assessment is based on estimates and the moment of truth will come when he jumps onto the floor, presumably next year. Now, the phenomenon of this ultra-fast fashion company is not the flower of a day, stresses José Luis Nueno, professor of commercial 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 broken through, an operator that copies Shein's strategy and has forcefully entered the United States, where the popular republic of fashion has its main market.
Both Shein and Temu are the standard-bearers 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 heart 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 stocked have become distributors under the logic of "we sell to the public what we produce 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, there may be an important paradigm shift 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 fast fashion. "Without a doubt, low-cost consumption is driving it", comments the IESE professor, who already identified the phenomenon in his study Todo es terrible, pero yo estoy bien (los españoles ante la coste de la vida crisis) , edited by Aecoc. After analyzing a Fintonic and Intent HQ database with 250,000 consumers and 190 million purchases between January 2022 and April 2023, it notes the polarization of consumption in that period, with an increase of brands and luxury goods as from the cheapest stores. "But once the savings levels of that time drop, part of the population that bought in more expensive stores returns to the lower-priced stores," he insists.
The decrease in the income of the new generations indicated by the report Finanzas de los hogares 2000-2022, published by the Fundació Afi Emilio Ontiveros this week, leaves the field ripe for the business of low-cost mass production. "If we look at the average total net wealth per household in the various countries by age of the head of the family, it is possible to verify how, just like in Spain, the behavior of wealth per household has been comparatively better for households of advanced ages than not for those of younger people, except in the case of Italy", he indicates. Although it is created, 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 unstoppable due to many environmental and responsible consumption campaigns that are launched by the administrations and the oenagés. The UN identifies the fashion industry as a whole as the second most polluting on the planet, only behind fossil fuels, prompting the EU to promote ambitious legislation to be developed over the next year – see attached article. In parallel, large groups such as Inditex or H
