• by Sarah Mahoney , Staff Writer @mahoney_sarah, January 3, 2024

Environmental concerns may be increasing among younger U.S. fashionistas, but so is economic pressure. A new ranking from Consumer Edge, a data insights company, finds that Shein, the controversial Chinese fast-fashion ecommerce site, notched a 20% increase in the first 10 months of 2023. And Uniqlo gained 28%.

Overall, spending on fast fashion grew about 2%. The category includes names like H&M, where spending dipped 2%, Inditex’s Zara, Mango and Forever 21.

That growth contrasts sharply with the 7% decline in luxury purchases made through direct-to-consumer channels. (In 2022, such spending had jumped 22%.)

Shoppers may be making fashion trade-offs. “Our data points to the challenging macroeconomic environment having a considerable impact on spending habits in 2023,” Michael Gunther, vice president and head of insights, writes in the report. “The bifurcated performance, with more affordable fast fashion increasing while luxury brands decrease, is likely because of a squeeze on real incomes.”

Consumer Edge reports sizable spending drops at some of the best-known names in luxury, including Gucci, Burberry and Louis Vuitton. The biggest winner?Hermès is up 15% in the 10 months.

Consumer Edge’s numbers are based on transactions in both fast-fashion and luxury on some 40 million credit cards in the U.S.

Shein, which entered the U.S. market in 2017, has enjoyed a meteoric rise and is reportedly mulling an initial public offering that values the company at roughly $66 billion. Its 2022 sales are said to have topped $23 billion.

Consumer Edge estimates that Shein now has about 40% share of the category in the U.S. Worldwide, Reuters and Coresight report that Shein is also the leader, with about 18% market share. That’s projected to rise to nearly 20% by 2027, while all competitors are forecast to lose share.

Newness is what makes shoppers love Shein, and the ecommerce site adds up to 10,000 new items each day. It’s galloped into the hearts of American teens, now ranking as the No. 2 favorite ecommerce site, second only to Amazon, according to Piper Sandler.

Building love with an elaborate influencer marketing strategy, #SHEINHaulVideos has made the company one of the most Googled fashion brands, overtaking names like Nike and Adidas.

Shein also has plenty of haters. Besides contributing to fast-fashion’s massive environmental problems, Shein has a bad rep for labor tactics. Multiple published reports have found that Shein workers in China endure unsafe conditions, often working 75 hours a week and earning just $20 a day.

Shein, which has experimented with pop-up locations in the U.S., also made headlines last year when it acquired a third of Sparc Group. The deal gives Sparc a minority stake in Shein. Sparc is a joint venture between Simon Property Group, which owns shopping malls, and Authentic Brands Group, a brand management company that owns Forever 21, which competes directly with Shein. Sparc also owns companies like Aeropostale, Brooks Brothers, Lucky Brand and Nine West.