“We’re aware of that, but it doesn’t worry us in the least,” Kamani concluded.

Anyone older than Gen Z would probably have had the same answer until recently. But do not get me wrong. Like Boohoo – whose shares are down more than 60% since that call, in the face of eye-popping competition from Shein – we’re all likely to feel the impact of its $5 dresses and $10 jeans very soon.

The retail juggernaut is eyeing a funding round at a $100 billion valuation and is in talks with investors including General Atlantic to raise about $1 billion, people told Bloomberg News this week. close to the file.

These numbers aren’t particularly outlandish. Shein could post $20 billion in revenue in 2022, according to Morgan Stanley, enough to overtake Fast Retailing Co. and make it the world’s fourth-largest apparel retailer. Valuations of at least five times sales are more or less a rite of passage for fast fashion brands in their splendor (Boohoo was valued at up to 10 times sales at one point) and would seem more than deserved by Shein’s double-digit growth rate.

It’s a sign that China’s garment trade, long seen as having lost ground to rivals in Bangladesh, Vietnam and even Europe, still has plenty of life left in it. It is proof, too, that fast fashion, far from slowing down, is only accelerating. The avant-garde moves from the speed at which clothes can be produced to predicting consumer tastes before they even know them.

In some ways, Shein’s business is quite conventional. Rather than relying on a global network of high-tech factories or automation, the heart of its supply chain would not seem out of place in the 19th century. Based on a report published last year in Jiemian, a local business news website, the company operates as a tight-knit group of more than 300 suppliers sweating under ceiling fans and churning out hundreds of pieces a day. day on table sewing machines.

Zara of Inditex SA managed to revolutionize fashion in the 2000s by reducing the time it took to get new clothes from concept designs to retail stores from months to weeks. Shein goes one step further, with the product cycle taking only a few days at best. It’s also mostly the result of old-school efficiencies, such as placing small orders and using local clothing stores. Most are within a five-hour drive of its Guangzhou headquarters, Bloomberg reported last year. The majority are in a single suburb.

What’s unique about Shein isn’t its supply chain, but how it marries that traditional style of business with a breakneck pace of market research and customer acquisition. Founder Chris Xu has a background in search engine optimization — the dark arts of getting your results to the top of Google’s rankings — and those talents are evident in Shein’s extensive social media presence. It is the most visited fashion website in the world, and Google searches for the brand have recently overtaken those of H&M by Hennes & Mauritz AB and Zara by Inditex SA:

In his meteoric rise, Shein has drawn his fair share of criticism, accused of everything from selling racist phone cases, ripping off designers and contributing to overconsumption. It also benefited from some quirks of Trump-era tax policies in China and its end markets that allowed the company to undermine competition.

Still, the biggest threat to Shein at this point isn’t a backlash from any of those angles. Inditex and H&M were once the standard bearers of unethical and disposable fashion. But as their base population has aged, they’ve cleaned up their image and moved upmarket, something Shein is already doing with its MOTF brand. While these tax advantages certainly give the company an unfair advantage, this advantage may also prove surprisingly resilient, given China’s desire to support forward-looking export industries and the reluctance of Western governments. to impose costs on one of the few categories of products where prices go. down these days.

The biggest risk for Shein, in fact, is the same one it now poses to mainstream fashion brands: that the barriers to entry for world-renowned apparel retailers keep falling. Once upon a time, Zara and H&M were destroying the conventional rag business. Then Asos Plc and Zalando SE put those in-store retailers on the defensive with faster, cheaper, online-only models. Shein’s nocturnal arrival as the new giant slayer suggests the game is far from over. In a business that always changes with the seasons, winter will come one day for Shein too.

Related to Bloomberg Opinion:

Anxious shoppers are hurting Asos and the online boom: Andrea Felsted

What did your favorite brand do in the war, dad? : Ben Schott

From Gucci to De Rucci, innovation is always born of imitation: David Fickling

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

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