• Could Shein be shifting to London?
• What could a London listing deliver for Shein?
• And what obstacles standin the way of Shein finding a new home on the London Stock Exchange?

Shein, a world leading fast-fashion brand, could be making plans to relocate its initial public offering (IPO) to London from New York. But scrutiny over its supply chain and links to China could make this a challenging move.

Founded in Nanjing, China in 2008, Shein is now headquartered in Singapore, though it continues to list in the US. The company officially became the world’s largest fashion retailer in 2022, with a valuation of $80 to $90 billion being sought in late 2023 ($10 billion less than its value in 2022, a reduction mainly down to a sector-wide decline in venture funding).

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Will Shein leap and go for an IPO in the US?

Shein of London?

Shein is known for its vast range of affordable, trendy clothing, accessories, and other fashion items, primarily working via its online platform. With its extensive selection of products and a high turnover, the e-commerce company is able to keep up with the rapid nature of altering fashion trends. Its low prices and continuous, constant introduction of new staples has gained a substantial following, particularly among younger consumers.

IPO change of location

Currently, Shein’s IPO is based in New York, but reports suggest it is in early talks to switch to London. This relocation is reportedly influenced by the suspicion that the US Securities and Exchange Commission is unlikely to grant approval for Shein’s IPO. Other possible IPO locations allegedly being discussed include Singapore and Hong Kong.

The US remains the retailer’s preferred location, but it is still working on its application to list in the country. If Shein decides to switch to another country, it will have to file a new listing application overseas with Chinese regulators.

A listing in London could present a much-needed boost to the IPO market after a torturous period over the last year. Valued at $90 billion, Shein could potentially raise $9 billion if 10% of its shares go public, just slightly behind the $9.1 billion IPO Porsche enjoyed in 2021.

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Given the challenging IPO market conditions and the comparatively lower fundraising in the UK through IPOs in 2023 (approximately $1 billion, the lowest in decades), a potential London listing could introduce renewed capital and attention to the beleaguered market, attracting investor interest and helping revitalize the IPO landscape.

This move goes against the current trend of firms upping sticks and moving from the UK to pastures new in the wake of Britain’s severing of ties with continental European markets. For instance, TUI AG shareholders voted to delist from the London Stock Exchange (LSE) and move its trading to Germany. Arm Holdings Plc moved its IPO to New York from London in 2023, deepening the UK’s struggle to stop the mass business exodus. The UK government tried to intervene by lobbying for a domestic listing, but its attempts failed.

Experts believe that Shein’s discussions to list on the LSE is a short-term compromise. It’s about choosing certainty over valuation and liquidity in the immediate term. While this move could be a substantial one, especially in the realm of IPO, it’s unlikely other Chinese firms will follow suit and list in the UK, as the London market is much smaller compared to other major financial hubs, like the US and China.

Shein faces challenges

Why would Shein benefit from the LSE?

In 2023, Shein filed, albeit confidentially, to go public, but it faces various challenges to do so in the US. There is scrutiny and certain concerns surrounding Shein’s supply chain, with US lawmakers lobbying to delay the company’s public offering until it is proven that there is no forced labor in its supply chain.

Shein has faced allegations that it uses forced labor to help produce its $5 t-shirts and $10 sweaters, but the retail giant has repeatedly denied such reports, stating that it does not manufacture in Xinjiang, a region where allegations of human rights violations have been raised. Government officials and advocates have accused China of using Muslim minority groups and Uyghurs to work under poor conditions, but Beijing has (naturally) denied any abuses.

The main regulatory hurdle faced by Shein will be convincing regulators and governments that its supply chain is clean. Congresswoman and Democratic Representative Jennifer Wexton said that Shein must “prove to American consumers that its products are not sourced from forced labor.” In 2023, Wexton also led a bipartisan call for the SEC to stop Shein’s IPO, until it can verify no forced labor is used in its supply chain.

There have also been calls for the SEC to audit Shein by another group of Republican attorneys general from 16 US states.

A spokesperson for Shein said the company has a “zero-tolerance policy for forced labor” and was “eager to engage and continue to be transparent with all stakeholders, including Representative Wexton and her staff.”

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Shein vs Temu: an ecommerce explainer

Intellectual Property (IP) issues, as well as the forced labor allegations, will undoubtedly make it difficult for Shein to achieve its public status, even if the company provides additional disclosures about its operations. Tie in the growing US-China trade tension and worries of Shein’s possible connections to the Chinese Communist Party, and the company faces more questions about how much control Chinese regulators have over it.

Shein’s potential move to the LSE from New York is ultimately a response to geopolitical tensions and regulatory scrutiny in the US. By listing in London, Shein may benefit from a perceived tax loophole, as well as geopolitical shifts.

With Jeremy Hunt, the British Chancellor, reportedly encouraging this move by having discussions with Donald Tang, Shein’s chairman, we could see the relocation this year, though Shein has some serious questions to answer before this becomes a viable prospect.

The post London calling: Shein could be moving its IPO across the pond but faces challenges appeared first on TechHQ.

• 72% of retail shoppers use the store as all or part of their primary purchase method
• Reasons given included touching and feeling products before buying them, picking and choosing their own products, and getting products right away
• Gen Z consumers surveyed are most likely to be a ‘hybrid shopper’ compared to other age groups

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Retail trends that sellers should consider heading into 2022

Over the last two years, retail shopping has evolved tremendously around the world due to the COVID-19 pandemic. While physical retail shopping experiences are still preferred by many, emerging technologies like Augmented Reality (AR) and advancements in AI for better and faster retail analytics have enabled online shopping to be a whole new experience for shoppers as well.

In fact, a global study of over 19,000 surveyed consumers shows hybrid shopping, which is a mix of physical and digital channels in shopping journeys, is on the rise as retail shopping habits consumers adopted out of necessity during the COVID-19 pandemic are becoming routine.

The global study was released at NRF 2022, organized by National Retail Federation (NRF), the world’s largest retail trade association. The “Consumers want it all: Hybrid shopping, sustainability, and purpose-driven brands” study conducted together with IBM reveals rising consumer preferences for sustainability and shopping journeys splintered across multiple digital, physical, and mobile touchpoints.

With hybrid shopping being the future of retail shopping, retailers must become more agile to meet customers where they are, integrating digital and in-store experiences. The study also revealed that 72% of respondents use the store as all or part of their primary purchase method.

When it came to physical shopping, the top reasons given included touching and feeling products before buying them (50%), picking and choosing their own products (47%), and getting products right away (43%), though what in-store shoppers are looking for varies by product category.

(Photo by Frederic J. BROWN / AFP)

Despite only 27% of respondents report hybrid shopping is their method of choice, the Gen Z consumers surveyed are most likely to be a ‘hybrid shopper’ compared to other age groups. This is partially due to the fact that new online shopping experiences such as the use of AR tools and shoppertainment, as well as social media being strong influencers.

The study also shows that sustainability has become increasingly important to surveyed consumers’ purchase decisions and brand preferences since 2020. Purpose-driven consumers, who choose products and brands based on their values like sustainability, are now the largest segment of consumers surveyed (44%). 62% of respondents are willing to change their purchasing habits to reduce environmental impact, up from 57% two years ago.

Half of the respondents say they’re willing to pay a premium for sustainability, an average premium of 70%. This is roughly double the premium from 2020. However, there’s a gap between intention and action as only 31% of respondents say that sustainable products made up most or all of their last purchase.

For Mark Mathews, Vice President of Research Development and Industry Analysis at the NRF, the hybrid approach is a fundamental shift in consumer behavior.

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“While many surveyed consumers still place a high value on the traditional in-store shopping experience, they also now expect the flexibility to build their own shopping journey – according to the behaviors prevalent to their age range, available tools, and the product category they are looking to purchase,” he added.

Luq Niazi, Global Managing Director IBM Consumer Industries said the survey showed that although sustainability became increasingly important to consumers, though there’s still a gap between their intentions and actions due to a lack of information in the buying process. Increasingly, it’s becoming essential that retail brands demonstrate sustainable choices and options in each step of the customer experience.

At the same time, Niazi pointed out that hybrid shopping has taken hold in most categories, particularly in home goods and apparel; and while stores continue to play the predominant role in grocery, hybrid shopping is growing in these categories too.

“Retail brands are continuing to rapidly transform operations, customer experience, and supply chains with technologies like AI, hybrid cloud, and blockchain to help serve these multiple customer preferences,” he added.

The post Retail shopping remains hybrid despite emerging tech appeared first on TechHQ.