Shein rise hits UK rivals as River Island slumps to £32m loss

River Island is the latest British fashion retailer to feel the impact of Shein’s meteoric rise, falling into the red as it struggles to keep pace with the Chinese-founded online retail giant.
The high street chain warned of “increasing competition, especially in the digital space” as it reported a pre-tax loss of £32.3 million in the year to the end of December, down from a profit of £7.5 million the year before.
The rise of online newcomers such as Shein, founded in Nanjing in 2012, has put pressure on fashion players in Britain, particularly among online rivals such as Asos and Boohoo.
The Singapore-based retailer, which is considering a float on the London Stock Exchange, recently overtook Boohoo Group, where UK sales were £1.09 billion last year. Revenues in Shein’s UK arm rose from £1.12 billion to £1.55 billion in the year to the end of December.
Shein sells ultra-cheap clothes, some costing as little as 39p, direct from factories in China to shoppers in Britain and the United States. Its prices have attracted younger customers but it has also drawn criticism for its environmental and business ethics.
In its latest accounts, River Island noted increased demand among UK shoppers “for more diverse, convenient and speedier shopping journeys”.
Revenue at River Island declined by 15.1 per cent to £701.5 million, down from £825.8 million in 2022. As well as difficulties in adapting to the evolving retail environment, it also attributed its struggles to a mix of increased operating costs “primarily due to wage price increases”.
Like other high street players, River Island, which has more than 300 outlets across the UK, faced particular hardship during the pandemic, when e-commerce firms such as Shein thrived, and had to shut several stores during the lockdowns.
Shein’s momentum has shown no signs of slowing and it is forging ahead with plans for a blockbuster float in London. The retailer is said to be planning to hold informal investor meetings in the coming weeks during which an IPO-bound company fields investors’ questions and tests their investment appetite.
A flotation is estimated to value the business at £50.3 billion, which would make it one of the largest deals for London in a decade.
However, the plans have prompted concerns about its environmental, social and governance credentials, notably its labour and supply chain policies. Several senior politicians have said that a listing should be subjected to greater scrutiny, while retailers have complained that Shein gets a price advantage by avoiding duty and VAT for British consumers.
Shein had originally hoped to list in America but the US Securities and Exchange Commission told the company that its application would not be accepted unless it submitted a public filing.