Day 77: The rise of ultra-fast fashion

9/9/2024

Day 77: The rise of ultra-fast fashion

The fast-fashion industry is undergoing a major transformation, and 2023 saw an acceleration of this shift. Companies like Shein, Temu, and others have revolutionised how quickly and cheaply fashion is produced, leaving the first and second generations of fast-fashion giants scrambling to keep up. According to the BoF-McKinsey State of Fashion 2024 report, the rise of third-generation fast fashion has disrupted the competitive landscape by delivering trendy items at unprecedented speed and low cost.

Fast fashion, which first became popular through brands like H&M and Zara, has always focused on quickly replicating runway styles at affordable prices. These brands changed how we think about clothing consumption by making it easier for consumers to access trendy, disposable fashion. The second wave of digital-first companies, including Asos and Boohoo, further sped up the process by offering online-only platforms and faster production timelines.

However, the third generation of fast-fashion companies, led by players like Shein and Temu, has taken speed and affordability to new extremes. Shein, in particular, has gained enormous popularity for its ability to offer thousands of new items daily at prices that are often half of what other fast-fashion companies offer. The 2023 State of Fashion report notes that Shein’s average price per item is just $14, compared to H&M’s $26 and Zara’s $34, showcasing the gap between the old and new generations.

The secret to these companies’ success is not just in their pricing but also their operational model. These ultra-fast fashion brands utilise data-driven trend analysis to rapidly introduce new products, and their supply chains are lean and agile. For instance, Shein’s turnaround time from identifying a trend to having a product ready for purchase is a mere 10 days, compared to the 21-day industry minimum for other players. The report highlights that this speed “does not always translate to delivery times”, with customers sometimes waiting weeks for their items to arrive, but the allure of affordable, trendy clothing often outweighs this inconvenience for many buyers.

Shein and Temu, in particular, have captured significant market share in Western countries. According to the BoF-McKinsey State of Fashion 2024 survey, 40% of US consumers have shopped at Shein or Temu in the past year, and that number rises to 26% in the UK, where these retailers are still relatively new. Consumers are also planning to spend more with these brands, with “net future purchase intent for Shein and Temu… 18 percentage points higher than that of first-generation competitors,” further signaling a shift in the industry.

The third generation of fast fashion isn’t just about low prices and fast production. Companies like Shein and Temu have mastered customer engagement, using social media, gamification, and loyalty programmes to create deeply loyal communities. Shein, for example, offers loyalty points to customers for uploading reviews, watching live streams, and even participating in outfit challenges. These tactics keep customers engaged and increase repeat purchases, ensuring that their app adoption rates remain high, the State of Fashion report says.

Despite their success, third-generation fast-fashion companies are not immune to criticism. The sustainability challenges that have plagued fast fashion for years are only intensified by these new players. The State of Fashion report acknowledges that “small-batch, reactive production” is often promoted as a way to reduce waste, but in reality, this rapid turnover of trendy, ultra-cheap products encourages overconsumption and quick disposal. As consumers become more environmentally conscious, fast fashion’s negative impact on the environment has come under the spotlight.

The report highlights that third-generation fast-fashion companies may soon need to evolve again to address growing concerns over sustainability and regulatory scrutiny. Shein, for instance, is already diversifying its model, experimenting with physical stores and pop-up shops and expanding its supply chain beyond China to include manufacturers in the US, Europe and Brazil.

Despite these challenges, the report suggests that third-generation fast fashion is here to stay, at least for the foreseeable future. These companies are doubling down on their marketplace models and gamification tactics to attract and retain customers. While their rapid growth has been impressive, the report warns that the “long-term prospects of the third-generation business model may face some challenges as players mature”, particularly in light of potential legal and public backlash.

Everything I wore on day 77 of the 90 days of Shein challenge: