Online fast fashion retailer Shein has reached an agreement with the department store owner Société des Grands Magasins (SGM) to open its first permanent physical stores in France in November. This move has quickly sparked strong criticism in the French retail industry.
According to reports from multiple media outlets on Thursday (October 2nd), these stores will be located in the BHV department store in the center of Paris and in five other Galeries Lafayette stores in different cities in France. So far, the company has only had temporary marketing pop-up stores globally.
SGM President Frédéric Merlin defended the collaboration, stating that this launch will attract a younger customer base for SGM, and added that customers may buy a Shein product while also purchasing a designer handbag, thus driving overall sales.
However, according to the franchise agreement, which entrusts the operation of these stores to the Galeries Lafayette group owned by SGM, the latter strongly opposes this move, believing it violates the franchise agreement and plans to prevent it from happening.
The group stated in a release: “Galeries Lafayette strongly opposes this decision because the positioning and practices of this fast fashion brand conflict with the products and values that Galeries Lafayette offers.”
Shein relies on the preferential treatment of duty-free small e-commerce packages provided by customs to send individual packages directly from Chinese factories to global buyers, rapidly capturing the market with highly competitive prices (such as dresses for 12 euros, jeans for 20 euros). As a result, the company is facing pressure from French and global retailers, politicians, and regulatory authorities.
Yann Rivoallan, Chairman of the French Fashion Retail Association, criticized in a statement: “They are building a new Shein superstore – a brand that, after destroying dozens of French brands, is attempting to flood our market with a larger-scale dumping of goods.”
In fact, French fast fashion retailers such as Jennyfer and NafNaf have already entered bankruptcy proceedings earlier this year.
French legislators have supported a draft law aimed at regulating fast fashion, which, if implemented, would prohibit Shein from advertising.
In addition, Shein is facing challenges due to increasingly stringent global regulations: its largest markets, the United States and the European Union, are planning to phase out the “lowest tax-free threshold” treatment for small packages, forcing Shein to change its low-cost pure online business model.