The fast-fashion wars got intense in 2022 as relative newcomer Shein outpaced a competitive set, including H&M, Uniqlo and Zara, setting up a battle for primacy in 2023.
This, as the world’s second-largest fast-fashion player, H&M, announced Friday (Jan. 27) that its fourth-quarter profits fell 68% to $84 million.
“Our decision to wind down the business in Russia, which was an important and profitable market, has had a significant negative impact on our results,” CEO Helena Helmersson said in a statement. “The hikes in raw materials and freight costs combined with a historically strong U.S. dollar resulted in extensive cost increases for purchases of goods.”
Read also: Fast-Fashion Giant H&M’s Sales Reflect New Competition
Not mentioned in those results was the meteoric advance of Shein, a privately held, Singapore-based apparel maker and eCommerce seller that topped fast-fashion-related web searches in 2022 with a social influencer-centric marketing approach that’s made it a hit with younger consumers living with inflation.
Widely reported in mid-January was the fact that Shein has blitzed the category since 2020, leading to a valuation of $100 billion by 2022, the third-highest valuation for any private company, next to SpaceX and ByteDance. Seeking capital in a tight market, Shein may see its valuation drop to the $64 billion range due to investor concerns, as reported by the Financial Times Jan. 18.
That’s widely attributed to its famed supply chain discipline with small production runs based on consumer feedback and trends in sales data. It is reported to be exploring a new online marketplace model similar to Alibaba and Amazon.
Read more: Shein Eyes Martketplace Model to Add Product and Attract Customers
The Wall Street Journal reported in December that an internal Shein memo said: “The marketplace platform makes available a range of additional merchandise and shipping options, and we expect it to result in increased customer engagement and satisfaction.”
Shein announced Jan. 18 that it had invested over $55 million since 2021 in its Shein X program “to empower nearly 3,000 aspiring designers and artists from more than 20 countries, supporting them in their journey to launch their own fashion collections to global audiences.”
Meanwhile, Spain-based fast-fashion titan Inditex, the owner of the Zara brand, reported in December that its portfolio sales increased 19% for the first nine months of 2022 compared to the same period the previous year, driven by sustainability efforts that resonate with its typically younger customers.
See more: Inditex Focuses on Sustainability in Crowded Fast-Fashion Space
Japan-based Uniqlo, owned by conglomerate Fast Retailing, which also owns more upscale brands like Theory and Helmut Lang, reported in mid-January that earnings slumped by 2% to $889.8 million in the three months ended in November, which was below estimates.
In that filing, the company said: “The Fast Retailing Group is determined to strengthen initiatives designed to expand our business operations and promote sustainability in order to become a global No.1 brand by focusing on creating customer-oriented products; accelerating global store openings; building purchasing experiences that fuse physical stores and eCommerce; and helping to solve various environmental and social issues.”
“We are working especially hard at Uniqlo International, as the pillar operation of the Fast Retailing Group, to accelerate new store openings in all markets and to strengthen our eCommerce operations,” it added.
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