Shein to return to India: Why the Chinese fast-fashion label will be a differentiator for Reliance Retail

The expected launch of Chinese fast fashion brand Shein by Reliance Retail is being viewed as a key strategic decision. Apart from merely enhancing Reliance Retail’s portfolio, it will give it valuable insights into key aspects of the industry, like supply chain management. This will be Shein’s second innings in India after it was banned — along with 59 other Chinese apps — in June 2020 after tensions escalated between India and China on the Himalayan borders.

The Indian fast fashion market — western plus ethnic — is estimated to be around $10 billion and most research reports estimate it to hit $50 billion in about a decade. “Shein is known for its design capabilities, strength in e-commerce and a very robust supply chain. That has helped the brand in reducing turnaround time and effectively taking on some of its biggest rivals,” points out J Suresh, Senior Advisor, BCG and ex-MD & CEO, Arvind Fashions.

The fast fashion market in India (only western wear) is dominated by Zara and H&M, while there is a significant chunk that sits in the ethnic space. The typical turnaround time for the biggies in fast fashion is about a month and Shein disrupted that by bringing it down to a week. The deal with Reliance Retail is expected to reduce the brand’s dependence on the Chinese market. In India, the game will now play out in the affordable fast fashion space where Shein will take on the like of Zudio, Max and Myntra.

According to Harminder Sahni, Founder & Managing Director, Wazir Advisors, Reliance Retail can gain substantially from Shein’s supply chain strengths. “It is about launching new designs quickly and at affordable price points. That expertise can easily cut across the rest of Reliance’s portfolio,” he says. In terms of price range, Shein sells products for as low as $3 and as high as $100. “Even their entry level offerings are very good. The game is about technology and in the process, getting it right on supply chain.” In China, Shein is a mass brand with a large base of vendors.

For FY24, Reliance Retail had a revenue of over Rs 3 lakh crore and an EBITDA of Rs 23,000 crore. During the fiscal, it opened close to 800 new stores taking the total store count to 18,836. “For Reliance Retail it could be a significant opportunity to dominate the fast fashion market, more so with a back-to-back sourcing agreement,” says Suresh.