South African Clothing Retailers Losing Lustre in face of Shein juggernaut
by Georgina Crouth, Daily Maverick
August 24, 2023
The fashion industry is the world’s second-biggest polluter and fast fashion is at the very heart of the problem, with ultra-low-cost, cross-border retailers accused of human rights violations, environmental degradation, social problems and waste, because returned products are not recycled or resold – they’re destroyed.
These international e-commerce giants are also starting to eat South African clothing retailers’ lunch, even if they won’t admit it publicly.
Last week, Takealot’s Superbalist announced it had commenced a Section 189 process, to restructure its business. Days earlier, Takealot – clearly twitchy about global behemoth Amazon’s pending arrival – announced it was trialling an on-demand service, which offers customers in Durbanville, Parow and surrounds in northern Cape Town a selection of about 500 products, which will be delivered within the hour.
The Naspers-owned Takealot Group – comprising Takealot.com, Mr D and Superbalist, is under pressure. Not only is it yet to post a profit since its launch in 2011, but on 27 June this year, the group reported a $22-million (then R407-million) loss – more than three times higher than the previous year.
‘Deliberate’ restructuring
Superbalist, meanwhile, denies that its retrenchment process has anything to do with a loss of market share to local and international competitors.
It told Daily Maverick that its business planning was in “no way” linked to competitor activity.
“Superbalist has embarked on a process to restructure its business as part of a deliberate shift in its efficiencies and in response to actual business realities. We remain conscious of the need to ensure relevance with the current consumer realities and a generally poor economic outlook.”
It said, like many other businesses, it was faced with the reality that growth post-Covid had not reached the levels that had been forecast.
“As such we need to reevaluate our structures to ensure that the business operates effectively in this current economic environment.
“We are deeply conscious of the impact a change in business operations may have on our people. Our first and most important focus is on doing what is right for them, while still being conscious of the decisions we must make to deliver a business geared for a long-term future. We will work hard to balance these two realities at all times,” it said, adding that its downsizing was unrelated to the rest of the group, because each operating company was measured against its own strategy and performance.
Founded in 2010 by Luke Jedeikin and Claude Hanan, Superbalist (then known as Citymob) quickly became South Africa’s biggest online fashion retailer, which is why it was deemed to be such a catch when Takealot acquired the business four years later.
Daily Investor reports that at the time, former Takealot CEO Kim Reid said he was excited about the acquisition because the millennial generation was deemed to be the most powerful and relevant market. Superbalist operated as an independent brand under Hanan and Jedeikin, who quit in 2019 and joined the Foschini Group (TFG) in 2021.
In February this year, Jedeikin and Hanan launched Bash – TFG’s online shopping platform which sells clothing and home brands including Foschini, Fabiani, Jet, Exact, American Swiss, GStar Raw, @home, Sneaker Factory and Granny Goose. The hybrid retailer has shot up rapidly in both the Apple and Google Play stores, outpacing Superbalist.
Despite Bash’s success, it too is faced with unstoppable competition from the East. Fast fashion retailers such as Shein, which operates online, market primarily through influencers (especially micro-influencers) and distribute parcels using local couriers.
Shein, in particular, has invested millions in online campaigns, advertisement deals and even a social media reality show co-hosted by Khloé Kardashian.
A sprawling online marketplace for about 6,000 clothing factories in China, Shein uses software that collects near-instant data about which items are selling and which aren’t to visibly boost the popular items on the website. An investigation by Rest of World revealed that Shein added anywhere between 2,000 and 10,000 individual styles to its app each day between July and December 2021.
These international giants are undercutting local retailers and have been accused of bypassing customs duties. Customers pick up the tab for the import duties, which vary wildly between 10%–45%, as observed on the Shein South Africa community group on Facebook.
Shein is coining it here. Hanan told Daily Maverick: “Our recent back-of-a-matchbox calculation – and no one knows for sure – combined with a few reports, suggests Shein’s revenues in South Africa [are] in the region of R5-billion. Just in a little corner of Africa.”
The Department of Trade, Industry and Competition announced in March this year that it had launched an investigation against Shein but there was no further information on progress.
Rights abuses
A documentary by the UK’s Channel 4, Untold: Inside the Shein Machine reports that workers are paid as little as 0.27 yuan, or just under 4 cents per item, working 18-hour shifts. Channel 4’s team also found sweatshop conditions where children allegedly worked without contracts or minimum-wage requirements, and in one case, the base salary of $20 would be docked by $14 if any garments had mistakes.
A spokesperson for the Clean Clothes Campaign told Euronews: “The garment industry, not only the fast fashion industry, is built on poverty wages and sweatshop conditions.
“These working conditions are no mere flaws of individual factories, but they are driven by an industry practice of pushing for the lowest price and shortest lead times in an eternal race to the bottom.”
Shein has also been accused of wanton greenwashing. In June last year, Shein announced a donation of $15-million to an NGO working with textile waste workers in Ghana. It was then called out by Greenpeace, which had despatched a research team from Greenpeace Africa and Greenpeace Germany to Kenya and Tanzania to find out where many of the cheap clothes produced by ultra-fast fashion brands end up. They found them on huge dump sites, burnt on open fires, along riverbeds and washed out to sea, with severe consequences for people and the planet.
The pictures and stories that Greenpeace Germany published in its report Poisoned Gifts are similar to those from Ghana where the NGO the Or Foundation, the recipient of Shein’s donation, works.
Denial
Shein, though, denies claims it is bad for the planet, people and even animals.
The retailer’s website claims, when others go big, they go small. “That means we only produce 50 to 100 pieces per new product to ensure that no raw materials are wasted. Only when we confirm that a style is in high demand do we implement large-scale production.
“Our fabric printing presses produce a fraction of the pollution of traditional screen printing. And we only use this process when there’s demand for it which means we reduce the consumption of raw materials. When selecting materials we do our best to source recycled fabrics such as recycled polyester non-virgin fibre, that has little impact on the environment and reduces damage to the original material.”
It says its automated systems optimise workflow and reduce energy and carbon emissions, meetings are kept to a minimum to conserve electricity and power and water automatically switch off when not in use.
“We also use solar-powered vehicles to transport products on site, which significantly cuts down on carbon dioxide emissions.”
It has a strict no-animal policy: “That means we only use fake fur/leather and we prohibit animal testing in our products. All our offices and partnering factories must comply with our standards as well as local environmental laws.”
It also denies that it’s exacerbating waste. “We’ve implemented an incentivising recycling programme that encourages customers to bring in unwanted clothes to our pop-up and college campus events in exchange for Shein gift cards. The donated clothes are then refurbished and given to various charities to help people in need.”
‘Not even sweating’
In June this year, a Shein influencer trip backfired, after The Daily Beast reported it had sent six beauty and fashion influencers to the Shein Innovation Factory, apparently to check out working conditions. The influencers then posted favourable videos and commentary promoting Shein, with one, Dani DMC, sharing an Instagram reel (that has since been deleted) declaring, “I was really excited and impressed to see the working conditions. I was able to interview a woman that worked in the fabric cutting department… She was very surprised at all the rumors that have been spread in the US.”
Another influencer, Destene Sudduth, said that factory workers she spoke to were “confused and taken aback” about questions of child labour, lead in clothing and other negative claims about Shein. “I expected this facility to be so filled with people just slaving away … but honestly everybody was just working like normal, like chilled, sitting down; they weren’t even sweating.”
Problems back home
South African clothing retailers – who have seen declining sales year on year – must look at them with dread. Last month, StatsSA’s retail trade data revealed a weakening, which is adding pressure on retail shopping centres.
Shein is South Africa’s fastest-growing apparel retailer, according to the latest 22Seven Insights report, which was released last month and is based on the spending of 50,000 South African consumers.
It said the average Shein shopper spent R1,062 per month on apparel in 2022 – that more than doubles what non-Shein spenders spent on apparel. These shoppers spent 20% of their total 2022 spend on apparel at Shein.
The researchers also identified significant growth in Bash transactions in June this year, based on the value of spend, but while 22Seven users recorded a comparable number of transactions on Shein.com in June 2023, as they did on bash.com, customers spent 75% more on Shein. DM
This article first appeared on Daily Maverick and is republished here under a Creative Commons license.
