Two competing fast-fashion giants just got a whole lot closer.
Shein on Thursday announced it has acquired a one-third interest in SPARC Group, the joint venture between Authentic Brands Group and Simon Property Group. Under the agreement, SPARC Group has become a minority shareholder in Shein, which is expected to help expand SPARC Group’s distribution of Forever 21 to Shein’s platform of more than 150 million users. At the time time, Shein will also test shop-in-shops, returns and other experiences in Forever 21 stores across the U.S.
“We are excited for the partnership with Shein as it reflects our shared vision of providing customers with unparalleled access to fashion at affordable prices,” said CEO of SPARC Group Marc Miller. “By working together, we will provide even more innovative and trendsetting products to fashion enthusiasts around the world.”
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The new partnership leverages different capabilities between the two fast-fashion giants. That is, Shein’s online presence and on-demand model and Forever 21’s foundation in physical retail.
“Shein is thrilled to have SPARC Group as a partner and minority shareholder, and we look forward to finding new ways to delight our customers through the potential of this partnership,” said Shein executive chairman Donald Tang. “The powerful combination of Simon’s leadership in physical retail, Authentic’s brand development expertise and Shein’s on-demand model will help us drive scalable growth and together make fashion more accessible to all.”
After going bankrupt in September 2019, Forever 21 was snapped up by a joint purchase between Authentic Brands Group, Simon Property Group (or SPARC Group) and Brookfield Property Partners.
According to managing director of GlobalData Neil Saunders, the new deal will likely be beneficial for both parties, though he predicted that overall it could yield more for Shein than Forever 21.
“Although both companies stand to make gains, Shein has an advantage as it is operating from a position of strength and is already taking share away from Forever 21 and others,” Saunders wrote in a Thursday note to investors. “Comparatively, this is something of an admission by Forever 21 that it is not able to engineer growth in its own business in the way that it would like. There is an element of ‘if you can’t beat them, join them’ in Forever 21’s thinking.”
